32 — Friday, June 12, 1992 ~- North Shore New: Automakers reducing expenses in many areas - WHEN AUTOMAKERS want to cut spending and reduce expenses, dramatic measures are sometimes taken. : OVERDRIVE General Motors, for example, has been the centre of media at- tention fately with management: shakeups and plant shut-down announcements. The reduced manpower and overhead will save the company billions of dollars. Japanese firms are also reducing investments and spending as a result of the recession in Japan. We are more likely, then, to associate cost-reduction plans with layoffs, plant shut-downs, and delayed model instructions. But when you inspect and careful- ly digest what is actually going on inside a car company, cost-reduc- tion plans cover more than just the ‘‘big’’ announcements. As a matter of fact, automakers are saving by reducing expenses in the most unnoticeable areas. Let’s examine the operation of the Suzuki Mofor Company in Japan. Because Suzuki's model line-up covers mainly small, fuel-efficient cars with equally small profit margins, it’s much tougher for them to generate substantial profits from the sale of these cars. So when compared to a company like General Motors, Suzuki is significantly pickier in cutting costs. For them, every penny counts, regardless of where the savings came from. When you walk into the Pro- duction Engineering Department at Suzuki headquarters in Hamamatsu, Japan, the first thing you will notice is the utilization of space. . / About 20 desks are grouped together, side by side, all along the floor space. On this particular floor, where engineers crank out equipment details for cars like the Swift, about 500 technical people are working. Even with all these people, however, there are only two washrooms, two fax machines, two large meeting areas, and one phone per 10 employees. Think about that for a moment. That’s a lot of people trying to use the phones and fax machines. As a matter of fact, the phones never stop ringing, and people mever stop talking. It’s an ex- tremely busy and crowded place that makes offices in the Big like Three car companies look mansions in comparison. One Suzuki engineer com- mented, ‘It’s so noisy here with all the phones ringing. Often, 1 have to work on the drafting boards just to get away from the phones and noise."’ But this is just the beginning. Soon you notice that the photocopiers use a credit card-like system. Each department can only copy a pre-determined number of copies per month. If you exceed the department’s quota, tough luck, you'll just have to beg for the ‘‘credit’’ from your buddy in a different department. This may sound extreme, but don’t Jaugh. Suzuki has re-““ced copy expenses by thousan.'- of dollars by implementing this system. By the way, when you make an error while copying, you National housing programs expected to assist market TOTAL NATIONAL hous- ing starts are forecast to reach 177,000 units this year and increase to 194,000 units in 1993 as the economy continues to re- cover, according to Canada Mortgage and Housing .Corporation’s (CMHC’s) second quarter National! Housing Outlook. The revised level of housing ac- tivity in this update is marginally lower than in CMHC’s previous forecast due to the slower-than- * expected performance of the economy and its impact on con- sumer confidence and home- buying intentions. But the situa- tion should turn around in the coming months as the economy improves and the effects of the two new national housing pro- grams take hold. “There are a number of positive factors currently shaping the eco- nomic environment,’’ explained Gilles Proulx, CMHC’s chief economist. ‘‘These include better growth prospects abroad, a lower Canadian doilar and continuing fow interest rates which will grad- ually restore consumer confidence and spending.”’ Construction of single-detached dwellings is expected to rise by 17% to 101,000 units this year, with a further 13% gain to 114,000 units in 1993. Multiple units are expected to be up 9% in 1992 to 76,000 units and will rise slightly to 80,000 units next year. The western provinces will post the strongest percentage increases in starts this year. in British Columbia, Saskat- chewan and Manitoba, starts are expected to increase by more than 27% this year. Alberta won’t be far behind with a growth of 22.5%. Ontario starts will increase 24.8% this year, largely prompted by government-sponsored rental housing. Prince Edward Island and New Brunswick housing mar- kets will also be stronger this year. Quebec, Newfoundland and Nova Scotia will experience a decline in starts this year but will recover in 1993. The resale market is expected to benefit from the overali recovery and the eligibility of existing hous- ing under the two new national housing programs of 95% lending and RRSP downpayments. Sales of existing homes are expected to rise by 5.8% this year and 6.6% next year, a slight increase from the previous forecast. Average prices for existing houses are expected to be some- what higher this year in all pro- vinces except Ontario and New- - foundiand. The average price in- crease will, however, be moderate due to the stronger activity at the entry level of the market by first- time buyers and the large supply of resale units. « don’t trash the paper. {t’s kept in a box so that the other side may be used for taking memos and notes. Nothing is wasted here. When an equipment specifica- tion is prepared, no fancy word processors are used. Most engineers write them by hand, then blueprint them for distribu- tion to the vendors. Why? Simple — writing by hand cuts unneces- sary typing time and blueprinting documents saves money because it's cheaper than photocopying them. There’s more. Department memos are not distributed to everyone, only to the department head. He or she then circulates the memo among the group, thereby saving printing of unnecessary copies. These same cost-cutting measures are also applied to the management. Unlike Big Three managers who get new company cars, Suzuki managers only have access to company cars during work hours. Only at the director level are staff actually assigned a company car — and the company cars are pre-production pro- totypes that were buih during the plant start-ups, not cars. At the plant, hourly workers are trained to perform maintenance and trouble-shooting, so that the number of specialized, skilled workforce can be reduced. Spare Parts are kept to a minimum, bas- ed on the history of the equip- ment. : Some of these cost-cutting ideas have been adopted by North American car companies. The General Motors-Suzuki joint ven- ture plant in Ontario, for exam- ple, banned post-it sticky notes. Instead, employees are asked to use the previously-mentioned ‘used’ copy papers that are neat- \ PLUS FREIGHT — NET OF REBATES * brand new- ly piled up beside the copy machines. All Japanese automakers use various cost-reduction and quali- ty-improvement ideas, such as flexible machines, continuous im- provement, and just-in-time pro- duction, but not every one of them takes the idea of cost reduc- tion as far as Suzuki. In some Cases, such as the crowded office area, the idea does seem to go too far, but most implemented ideas make sense. So, even though major cutbacks get the most attention from the public, automakers such as Suzuki are quietly reducing expenses in virtually every area of the com- pany. One employee at Suzuki’s head office summed it up when he said to me with a grin, “Hey, even if you only save $1! per car, that’s over a million dollars in savings when you sell one million cars!"” _ “IF YOU HAVE AN IMPORT IN THE FAMILY, THEN YOU SHOULD TRY GEO (SEE US FOR DETAILS — SOME RESTRICTIONS MAY APPLY) TH FUEL STOROUR SWINGS CAN MANE YOUR PATENT CONSIDER THIS! 1. (Based on driving 1230 milesimo.) 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