Make To Order Gravatai Essay

4779 words - 20 pages

Make-to-Order Automobiles at GM’s Gravataí Plant1
Introduction
In December 2007, 7 years after the launching of the Chevrolet Celta, Roberto Tinoco,
the plant director, proudly recalls the inauguration of the Gravataí plant in mid-July 2000, an
event that caught the eye of professionals and the academia both in Brazil and abroad. The core
notion was: To sell cars made to order for final consumers. The project, known internally by the
handle “blue macaw,” is considered to be a true landmark for the world’s automotive industry.
The Gravataí plant brought about a true revolution in how cars are made, from its concept to the
direct-sale model, through its production management system. ...view middle of the document...

The only
participation of the company was the final inspection, a necessary step for the approval and
payment of the suppliers. Until 1990, the entire Brazilian automotive industry revolved around
four major automakers (GM, Volkswagen, Fiat, and Ford) who controlled the whole supply
chain. At that time, car makers tended to concentrate all the intellectual product development
work, limiting outsourcing to the production of low-complexity individual parts, produced
according to strict specifications. Car makers also used many efforts to push down the prices of
parts, both by means of invitations to bid and by encouraging competition among suppliers of a
given item.
With the lifting of trade barriers in the early 1990s, from a market with few choices, high
prices, no credit, and known for its technologically obsolete products, Brazil became the world’s
newest automotive phenomenon, turning into a region of potential sales growth for all
automakers. The competition started in a more aggressive way and at the same time, the buying
power of the people also increased resulting in more Brazilian sales as shown in the following
table.

1

© Dr. João Mario Csillag (joao.mario.csillag@fgv.br), Titular Professor in Operations Management, EAESP-FGV
(Escola de Administração de Empresas—Fundação Getúlio Vargas), São Paulo, Brazil. Used with permission.

Year
Production

1990
914,466

2004
2,317,227

2005
2,539,840

2006
2,611,034

The Gravataí Automotive Industrial Complex
Worldwide, GM was divided into smaller operations, a constellation of plants focused on
market niches. This is the case with GMBG, charged with making compact cars for an entrylevel South American market. Despite the fact that the Brazilian operation answers for less than
5 percent of GM’s global business, it has gained strategic importance and become an innovation
center, opening very flexible plants and rapidly releasing new products.
The Gravataí Automotive Industrial Complex (GMBG) project came to be as a result of
an idea by General Motors Brazil (GMB) top management to build a plant where the assembly
line and the Internet-based sales system were connected and were led by a single conductor: the
customer. The entire plant was to operate synchronously like clockwork. Recently, the capacities
have increased by 30 percent and the number of employees by 40 percent.
GMB began setting up its team of suppliers in 1995, when 17 of them were selected to
work alongside the company in connection with the development of the product and process of
the future GMBG. To come up with this team, Roberto Tinoco sponsored an international bid
that had 70 companies running. The enterprise required global investments of US$554 million,
borne by GMB, module suppliers, and the Rio Grande do Sul State Government, employing
2,700 people at first. The fact that system members and GM were in the same building made
everything work like a single unit. The plant...

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