Car Guys vs. Bean Counters - Bob Lutz [66]
Global Epsilon, carrying behind it the resolve of the corporation to finally engineer a given set of cars once, was an icebreaking ship: it moved forward, slowly edging through an iceberg of regional rules, edicts, requirements, sometimes in direct conflict with one another. Week after week, this process would flush out dozens of issues that had to be resolved in favor of one solution, either by Manufacturing or Engineering, or both.
One such issue involved the location of the central locking control: North American customers expect it on the driver’s side door, Europeans on the center console. Neither subsidiary would give, each considering it important for customer satisfaction. In that particular case, we decided we had to do both, even though it introduced different wiring harnesses and interior plastic tooling.
In its early phase, Global Epsilon’s vehicle line executive was one Jon Lauckner, a lifelong GM engineer and planner. With a sharp wit, an argumentative nature, and a very un-GM propensity to recognize bad performance and do so out loud, Jon was respected more than loved. Jon never ran in a popularity contest but was always intent on getting the job done for the shareholder. He was later to play a key role in the creation and development of the revolutionary extended-range electric Chevrolet Volt.
Lauckner, as was his nature, was more than pleased to captain the icebreaker as it smashed through oceans of frozen bureaucracy, creating a clear, unencumbered path for global programs that were to follow on Epsilon’s heels.
One of the first things Lauckner did was to ascertain the supplier prices for the major components of the then-current Epsilon cars: the Opel/Vauxhall Vectra, the Saab 9-3, the Daewoo Epica, the U.S. Chevrolet Malibu, and the Pontiac G6. Jon’s team analyzed the costs for all these cars of such “invisible” things as seat frames, window lift mechanisms, fuel tanks and fuel management systems, heating and air-conditioning, brake systems, and many more. Quite logically, we expected some divergence in the prices paid for these functionally similar but geographically disparate and differently engineered and manufactured parts from various global suppliers.Ten percent, perhaps even fifteen.
None of us was prepared for the shock we received when we saw the results: some seat frames cost three times as much as others. Heating and air-conditioning was no different: there were huge divergences in component cost. Lauckner’s assigned purchasing executives immediately went to work, picking the best features and then dangling a huge prize in front of the global supply base: instead of 200,000 parts here, 150,000 different parts there, the supplier companies were now asked to bid on as many as one and a half million identical parts. Finally, GM was able to tap true economies of scale.
Heating and air-conditioning was sourced at what had to be a record low price, and other components followed suit. Epsilon was well on its way to achieving a double-digit cost reduction in its base architectural components, despite many engineering enhancements and quality improvements. The point was proven: global engineering saved money.
With global Epsilon (later dubbed “Epsilon 2”) solidly on its way, Lauckner was brought back to the United States from the architecture team’s German home base and was promoted to the task of overseeing all global vehicle line executives reporting to me. (With fifty or so Jon Lauckners, I’ve often observed, GM would have been a far more stressful and less convivial place to work.We would also have been far more effective.)
Lauckner was replaced by another of GM’s very finest: a superb engineer and executive in his late forties named Jim Federico. With a radically bald head, a powerful, swift-moving body, and a broken-looking, aquiline nose, he could be cast as a successful prizefighter or, in a black suit and sunglasses, as a Mafia lieutenant working his way up to don. His piercing gaze missed nothing and intimidated everyone.