The use of globally competitive countries, otherwise known as leading competitive country (“LCC”) at Nissan, are promoted at Nissan, as they are excellent in both pricing and service.
Mexico is an important LCC for Nissan, as it is a production base for both the American and European markets. I recently visited Nissan Mexicana's headquarters (“Nissan Mexicana HQ”) and the Aguascalientes plant.
Part 3. Aguascalientes plant
Since commencing operations in 1983 as the second plant in Mexico, the Aguascalientes plant is located approximately an hour's flight from Mexico City with a 30-minute drive from Aguascalientes airport. As the plant emerged from the wilderness, I was amazed by its size (electric carts are used for plant tours), greater than expected automation and the adjacent station used for vehicle transportation. The following includes the plant's background by Mr. Armando Avila, VP of the Manufacturing division in Nissan Mexicana, and a summary of the plant tour.
- Major centers in Mexico -
- Aguascalientes airport -
- Exterior of Aguascalientes plant -
1. Plant Profile
The second plant in Mexico after the Cuernavaca plant, the Aguascalientes plant initially produced pressed parts and engines with vehicle production beginning in 1992. At the end of fiscal 2007, the plant totaled 5,533 employees, comprising of 3,690 workers for vehicle production and 1,863 for powertrain and engine production. The plant features a young workforce with an average age of 30 for men and 29 for women. Its production models are the Platina, Versa (Tiida in Japan), Sentra and Renault Clio.
The following summarizes the main reasons Aguascalientes was selected for the site. Incidentally, the location did provide the expected results after its establishment.
- True to its name, there is water, which is essential to the plant (water in Spanish is agua).
- Located in the center of Mexico, with easy access to places within and outside of Mexico.
- Competitive labor costs.
- Strong relationship between the labor union and local commerce.
- State support.
The most noticeable change was the recent increase in production capacity from 203,000 units to 350,000 units, which was achieved mainly through the introduction of the two-shift with three groups system in August 2006.
The two-shift with three groups system means that three groups handle two shifts per day with the aim of uninterrupted operations. With the introduction of this system, the number of operating days at the Aguascalientes plant has become a consistent six days per week. The total number of operating hours per annum has increased by 46%, as uninterrupted operations have almost become a daily occurrence.
An additional 1,400 persons were hired to launch the new system. Despite the lower-than-expected staff turnover rate after the system launch, the rate continues to be well below the initial standard. Furthermore, based on a recently conducted survey, we discovered that the labor population within the area is approximately 10,000 persons. There appears to be no shortage of labor, even in the event we should expand our operations in the future.
Given this dramatic increase in production capacity resulting from the two-shift with three groups system, with virtually no facility investment, Nissan Mexicana won the 2006 Global Nissan President Award.
The two-shift with three groups system also contributed to the improvement in production cost per unit to one of the best in Nissan. It has become Nissan's benchmark on a global level. Furthermore, the quality of the Versa is also as high as that of the Oppama plant in Japan.
To further strengthen its competitiveness, it aims to increase the local procurement rate, such as the purchase of continuously variable transmissions (CVT) from JATCO Mexico, located adjacent to the plant. The plant has also focused on supplier education in recent years.