Rationalizing Production kid Market Development
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IR British manufacturers of commercial vehicles are to 'compete successfully in post-war world markets it is imperative that they maintain unsurpassed quality and reduce the price of their machines. The achievement of two such apparently paradoxical requirements will not be accomplished without a great deal of 'thOught and energy being given to the task, but it is by no means an impossible one. In the first place, rapid strides have been made in the development of _ new and better structural materials. The quality and strength of steel have improved, plastics have been put to new uses, new methods of production have been introduced and, what are, perhaps, the most significant factors, the production of aluminium and the development of its alloys and their heat treatment, have improved almost beyond belief.
Furthermore, not only has the range of useful materials been vastly increased, but, in addition, their appeal has been broadened by steadily increasing output with equally steady reductions in prime cost over a number of years; the postwar period, it is believed, will see further cuts in cost, •
-These benefits, derived directly from the necessities of war, whilst assisting us, have an equally beneficial effect on the motor industry of our competitors se that, whilst the price of our products can be reduced as a result of the improvements, that of foreign-produced chassis can, likewise, be ca.
How, then., can chassis prices be reduced to such a level that foreign trade will be assured and the home operator benefited? The answers lie, I think, in mass production.
It is a well-known basic fact that the larger the quantity of an article produced the lower will be its cost, and hence its selling price.. There must be an economic limit to output, but it does not appear to have yet been reached in the motor-vehicle industry. The huge American plants produce many times more vehicles than our largest British factory at very low cost and, if British machines are to compete with American, they must be both better and cheaper. We must, therefore, not only imitate the American production methods, put improve on them. 11.
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Quality Not Dependent on Mass-production Methods There are, unfortunately, two schools of thought on the subject of chassis quality. It is not my object in this article to go into details to prove that the quality of massproduced vehicles is in no way inferior to those manufactured by other means, but it might be wise to quote an instance in which the production of an extremely intricate piece of machinery was converted from the individual to , the mass or continuous process.
At the beginning of the war the demand for the RollsRoyce Merlin aero engine could not be met by supply. It was argued that such a unit could not possibly be produced by any method other than that requiring the highest mechanical skill, but necessity over-rode all arguments, and the engine has been mass-produced for some tinie past with absolutely no reduction in operating efficiency. If such a highly important and intricate mechanism can be produced satisfactorily by the continuous method there can be no possible argument against the mass-production of vehicle, chassis of the finest quality.
Of the 53 companies manufacturing commercial vehicles in 1938, no more than six were employing mass-production methods. It is true that a few were manufacturing in fairly large batches but, at the end of the stipulated quantity, machine tools had to be broken down and reset for different products. Whilst large-batch production approaches very near to mass production, it is not truly continuous and must, therefore, be more expensive. The first efforts of manufacturers, then, must be directed to converting their plant and machinery to continuous •
Assuming, next, that mass production has been introduced, what vehicles are-to be made and in what quantity? Quoting again from the 1938 figures (the last available) the 58 manufacturers were marketing 27 different models ranging.from 5 cwt, to 18 tons capacity. But the vehicles produced were not restricted to 27 types, for each manufacturer had his own version of his particular models with varying wlaeelbases, thus multiplying the gradings manyttimes.
If we compare the motor-vehicle industry to a single factory producing nuts, the production of chassis on the scale defined above is equivalent to the nut manufacturer producing a range of products with every thread known, but instead of machining, say, a thick and thin nut— a castle and cap nut in each class—he is making a • multiplicity of nuts varying in thickness by 1/64th in., so that a large percentage of his output is redundant. Similarly, many chassis produced by present methods are, I would say, needless repetitions of the best models.
The second task to be tackled by the industry, therefore, is the reduction of the number of models and the number of manufacturers of those models. The accompanying Table 1 shows the complete range of 27 types, classified by pay-load, together with the number of manufacturers of each model, whilst Table 2 shows the number of new registrations of vehicles of given unladen weight.
An examination of Table I will demonstrate, at once, the futility of the 27 models which vary by as little as 1 cwt. or 2 cwt. in pay-load. How much better it would be to restrict the types to unladen weight, as in Table 2, and stiphlate the maximum pay-load of each vehicle; in this way the number of models would be cut to. 11 with, perhaps, two lengths of wheelbase for each.
The mass production of 11—or 22 models if the varying wheelbases be taken into account—by 53 manufacturers would still result in repetition and consequent lack
Up to 12 cwt. /2 cwt.-1 ton 1-11 tons 11-2tons , 2-21 tons 21-3 tons of economy. The purchase prices of the vehicles would not be at their lowest and, therefore, not competitive. Were 6 the price not competitive, foreign trade
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accommodate the increased production of vehicles which it could not do. A means for further reducing the price must, then, be found so that the greater number of vehicles manufactured by mass production could be sold.
We have already compared the motor
1,500 industry, as it exists to-day, with a •• 400 single factory producing a large pro
se
46 portion of redundant goods. If, how 24 ever, it be, in effect, a single factory
producing the correct number of models in the correct • quantities the resulting saving in expenditure would be enormous.
Imagine, then, our 53 factories to be 53 departments of one huge plant, each department being responsible for one vehicle, or part of a vehicle, according to its capacity. Those companies which, at present, specialize in the heavier classes of vehicle would, naturally, still produce those:machines. Unfortunately, the market for chassis of high unladen weight is insufficient to demand mass production, the total number of new registrations of vehicles of over 3 tons unladen weight being only 2,050. Little, therefore, can be done to decrease the cost of these vehicles; especially as the market for them will, it would appear, always be limited in extent.
The demand for machines of less than 8 tons unladen weight is sufficiently great for their mass production to be a sound proposition. The 2I--3-ton class is the lowest at 2,500, but it is most likely that this model will be the one in greatest demand abroad, especially in the Colonies where roads are sometimes not all they should be and a great deal of cross-country work must be resorted to.
It has lotig been the custom of manufacturers to build chassis intended for export on more robust lines than those of thu same capacity marketed at home, Thus, vehicler weighing from 2-24 tons unladen for hbme use would very likely be from 4-3 tons in a/ight when exported. Assuming that six manufacturers are to be responsible for all chassis above 3 tons unladen weight and for all p.s,v.s (of which .almost 6,000 were registered for the first time in 1938), we have 47 companies to manufacture six different models, each with a choice of two wheelbases, the minimum total of vehicles being 63,500, a figure which should be far exceeded when foreign markets are open. It should be a simple matter to arrange for the six factories, with capacities for the quantities of vehicles shown in Table 2, to manufacture„one model each but what of the remaining 41 plants? The factories which are capable of undertaking the production of a model in the quantities required were, before the war, manufacturers of our most popular cars. After the war they would he engaged, once more, on car production and may not, therefore, be in a position to produce their own commercial vehicle in its entirety, but they will, because of their vast experience of line assembly, be able to assemble the chassis at a far greater rate than companies which do not possess similar experience. The remaining 41 factories, then, could produce units and subassemblies for the larger plants to assemble. Provision in the scheme would be necessary for the production of any special vehicles which may be required by people prepared to pay for them. One factory could be delegated to this work. The scheme is, undoubtedly, revolutionary, but, nevertheless, I believe, practicable, as has been shown by the amalgamation of various industries to form "rings." It is not proposed that the commercial-vehicle industry should follow this lead, but that a "benevolent monopoly" be formed in which prices are cut to the bone because of the advantages accruing from the increased production and the pooling of resources.
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Advantages of Planned Working on Co-ordinated Lines These advantages are many. With only one design of each model, jigs, fixtures and machine tools will not be reqUired in many different forms, only one set being necessary, thus greatly reducing initial production costs. The continuous production of one model, or part of a model, by one factory will enable operatives to become .so familiar with their jobs that valuable time—and hence money—will be saved.
Manufacturers cannot possibly lose by it, for the increased markets will result in greater profit, which will be shared throughout the industry. Wages can be maintained at a good level by the employment of suitable incentive systems, So that workers will likewise benefit. But, perhaps, the most attractive advantage will be the absence of fluctuations in the labour market.
In peace-time, it was the practice of manufacturers, when they became slack, to lay-off men to balance their wage
bills with their production. This resulted in men who became idle in one part of the country seeking employment in another, district, thus causing a continual shifting of labour. My proposal would effectively remedy this, for no one factory could become slack while the next continued to be busy, sothat there would be just as much work in one part of the country as in another.
But.what of the disadvantages? Although the scheme is one in which a "benevolent monopoly" is contemplated, how can one be sure that prices will be fixed to benefit the vehicle operator and not, perhaps unwittingly, merely to swell profits for the manufacturer? The initial object is to reduce the selling price of vehicles so that extended foreign markets can be obtained. The Americans will, likewise, be attempting to maintain and improve their export trade, and one market which they are almost sure to cultivate is in this country. By removing the tariff on imported chassis the Government would automatically force manufacturers to compete with American prices at home as well as abroad: Were it found impossible to compete at the outset, the tariffs could be adjusted to give the home-produced vehicle the advantage, but, when production reached its peak, this would not be necessary.
It might he argued that design would suffer under a monopoly. This, however, would, not be so, for each factory would be specializing in one particular item---the large assembly plants on layout and the smaller plants on individual units. By this means each manufacturer would be able to expend all his energies on one small detail rather than on an entire chassis, so that better results would be forthcoming. Furthermore, although home competition would be eliminated, foreign, competition would still exist, so that the British product would still need to be the best.
It might also be argued that the scheme stifles enterprise.
There is -no reason, nowever, why a new manufacturing concern should not enter the field. It would, of course, have to establish its vehicles or units in the open' market, which, if they were to have any success at all, would mean that they would be better and/or cheaper than those produced under the plan. Thus, if an improvement on popular machines were shown, the industry as a whole would benefit.
There would, naturally, be many little snags and pitfall in such a big undertaking, but no serious ones are apparent. Even some Americans are considering cartels, which are, in effect, monopolies. for the very purpose discussed here. It might be wise, therefore, for our own manufacturers to adopt a' similar but improved scheme, which would benefit all concerned, including the operator.