Justin Sullivan, Getty Images
Tesla Warns of Supply Chain Shortage

Tesla: What's Really Going on, on the Plant Floor

Sept. 12, 2018
Is Elon Musk reinventing the auto industry, or reinventing the wheel?

Brilliant, vaguely altruistic, confessional at times, and occasionally a world-class a-hole, Tesla CEO Elon Musk is the antidote to the CEO-in-a-box who can’t innovate his car into a tight parking space and requires a 10-person communications team to orchestrate every utterance.

But behind every pot-laced cigarette and late-night Twitter fugue, a fundamental question persists: Will Tesla actually get the job done? Will Musk succeed in mass producing the Model 3, or will the whole operation end up as kindling for a glorious bonfire?

Fourteen months after Model 3 mass production began at its factory in Fremont, California, Bloomberg reported that Tesla was up to producing 3,857 cars per week, still short of its 5,000-per-week target. (Other estimates were less optimistic.) How much do those deadlines matter? Tesla fans so far seem willing to put up with delays.

Still, reports of multiple paint-room fires, a much higher-than-industry-average number of safety incidents (including reports of a leg amputation of a worker playing chicken with a forklift in the parking lot), an exodus of top people and oh yeah, those missed deadlines, have manufacturing vice presidents the world over wondering: SEC investigations aside, what the heck is going on in that plant?

We asked several auto manufacturing veterans to share their back-of-the-napkin impressions from what they’ve observed in news reports, social media, a video of the plant and in one instance, the golden ticket of a plant tour.

Wanted: Cadence and Stability

Jim Morgan, senior advisor for the Lean Enterprise Institute and a former director of engineering at Ford, thinks Tesla has “the magic dust”—great products, and “a powerful, passionate customer base.” But their situation “seems chaotic, and fraught with constant firefighting—very episodic. There’s a lot of drama, creating unnecessary calisthenics. From an outsider’s perspective, it’s difficult to see the method behind the madness.”

What Tesla appears to lack, he says, are experienced people in the right roles (Tesla has hired some great people, like senior engineering vice president Doug Fields, who have left recently), as well as a person at the top who can bring “cadence and stability” to the organization and a powerful operating system.

“I think a management system is made up a combination of leadership behavior or leadership capability times your operating system,” Morgan says. “And the reason I put it that way is if either one of these is low, your product is low or even zero.”

Morgan worked at a flailing Ford beginning in the early 2000s, when, much unlike Tesla, “they didn’t have the products that customers loved.” CEO Alan Mulally arrived in 2006, and he was able to turn things around by bringing structure to people who already knew their jobs. He established clear leadership expectations and an operating system that brought executives out of their fiefdoms and into weekly leadership reporting sessions where they each presented on their progress toward their goals.

After watching  a video of a Musk-led tour Tesla’s Fremont plant, shot in August, Morgan pointed out a couple of big things he noticed, and a bunch of small things:

Relatively Easy to Fix

High, leaning stacks of cardboard boxes and other items make it difficult to see. “There was stuff piled up on the floor, and the stuff was dirty. There were hilos (fork trucks)—I haven’t seen hilos in an assembly floor in a long time. Most of the AGVs (automated guided vehicles) that they were so excited about were empty. I’m not sure what’s going on with that. The aisles were narrow and crowded, and some of the stuff, piled up, was leaning into the aisle. My take was that ‘This is the kind of assembly plants that there were when I first got in the car business, years ago’.”

Morgan didn’t see much evidence of visual management, and green lighting over work stations makes it even harder to see.

Rear doors are on the Model 3 body going down the main assembly line, while the front doors aren’t. “I think most everybody does doors off now. I don’t know their process—it was just unusual to see. In most of the plants I’ve been in, all four doors are off while it’s going through the main interior assembly so the workers can get better access, and the doors don’t get damaged,” he says.

“The other small thing I noticed, were there were lots of people just walking around. That seemed really odd to me. You don’t see that so much at other plants.”

Flexible components are being installed by robots instead of people. “That was another thing that was a little bit reinventing the wheel,” he says. “Some of the things like wire harnesses are better put on by people. I think the auto industry has known that forever, and why he would attach that with a robot is really curious to me. I’m not sure why his team would let him go there. Does it point to a bigger problem? Maybe he’s got very competent people that he doesn’t really leverage."

Bigger Issues

Musk mentioned in the video that he had 10,000 people working in the Fremont plant. When General Motors and Toyota had their NUMMI operation in the Fremont facility, 5,000 people produced an average of 5,000 cars per week. Say Morgan: “The guy who was making the video was clearly a Tesla fan, because anybody else would have said, ‘What is up with that?’”

Musk also mentioned having three assembly lines for three vehicles, which is considered inefficient in modern auto manufacturing. “If you consider their volume and you think about what the rest of the auto industry is doing, everybody has multiple vehicles going down the same lines nowadays,” Morgan says. “At Toyota, it’s not uncommon to have 5,6,7, different vehicles going down the same line. Why he would have so many lines is curious to me. Is there a reason for that, or does that point to a bigger problem? I don’t know.”

Tent City Blues

Carla Bailo, president and CEO of the Center for Automotive Research and former senior vice president of research and development at Nissan North America, says that the low production numbers, with the number of workers and the size of the facility, indicates inefficiencies where the manufacturing team is doing a lot of manual work instead of optimizing the production process. The fact that the entire outdoor area—a collection of tents—is set up for rework “says to me that they’re having fundamental issues with quality,” Bailo says. “All the vehicles are going to that facility, whatever the issue is.”

Bailo also suspects, from the square footage they’ve filled up, that they’re doing reworking inside the plant. “You can stop the line and try to do it, but you try to avoid that like the plague, or you can go through the repairs at the end of the line,” which also slows down the operation, she says.

 “The company needs a COO, and they need it tomorrow,” she adds. Given the ability to lead (and not micromanaged by a CEO pulling all-nighters in the plant), a good COO would have the expertise to quickly determine which innovations can work, and which are a dead end, rather than going off in 10 directions at once.

The ideal candidate, Bailso says, would be a leader who has worked in manufacturing at a major automaker, “maybe with manufacturing guru experience,” with a track record of project  and budget management, who understands logistics and supply chains, purchasing and working with product planning and knows how to train people on the line. “Someone who can manage those everyday efforts,” Bailo says.

‘Leave Him Alone’

Joe Barkai, a manufacturing technology and organizational consultant who has advised Chrysler, Ford and IBM, visited the Fremont plant when the Model 3 was only in its first weeks of production, and noticed it was still very much a work in progress, with some robotic cells still dark and the state-of-the-art Schuler stamping presses not in operation yet, with unstamped panels stacked up along the sides.

“They first focused very much on high levels of robotics and automation, only to realize how difficult it was, and now they’re scaling back,” Barkai says. “So they wasted time ramping up and going back so they could get to the levels of automation that they thought they could. It’s very likely that someone with real, deep manufacturing experience could have realized it early enough.”

The fact that production numbers have risen substantially in the past six months are a bright spot, though. “There is finally momentum,” he says. “I’m almost tempted to say, ‘Leave him alone; let him get it done.' Of course, he needs to let his manufacturing experts do that.”

Barkai believes that despite the revolving door of executives, Tesla still has the star quality to get good manufacturing people in the door. “[Musk] still has a very strong brand, but he needs to let these people work,” he says. “I assume they are leaving because they are not getting enough free hand.” Also, the California location may be a disadvantage on the manufacturing side. “They need people with much more expertise,” he says. “But you would assume there are fewer in Silicon Valley that in Detroit.”

Barkai’s advice: Continue to ramp up slowly, and get a contract manufacturer to build volume. “There’s not many manufacturers that can do that,” he says. “The name that came up in the past is Magna Steyr. I don’t’ know if there’s anyone else set up for this. But he needs to find a partner that can take ownership.”

Morgan, who has a PhD in engineering, sees Musk as having more success at SpaceX because the challenges are largely with the engineering of the product; with Tesla, he needs “his Tim Cook” to hem him in. Tesla’s engineers are spending too much time solving production problems, says Morgan, and they aren’t able to give the product development process the attention it needs to design the cars that come after the Model 3.

“The technical challenges he has taken on [at SpaceX] and accomplished, like reuse of rockets, from an engineering perspective, I’m just open-mouthed. It’s just awesome. That’s a very different challenge than making 300,000 Model 3s a year.”

“By all appearances the guy’s brilliant, but that may not always be a great thing,” Morgan adds. “It leads to some hubris. For instance on the Model X with the gullwing doors, a guy who’s been around vehicle bodies would take one look at that thing and just kind of shudder: How are you going to build that thing?”

Follow Laura Putre on Twitter

Email Laura at IndustryWeek

About the Author

Laura Putre | Senior Editor, IndustryWeek

I work with IndustryWeek's contributors and report on leadership and the automotive industry as they relate to manufacturing. Got a story idea? Reach out to me at [email protected]


Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!