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Middleville Plant Review March 14, 2008. Agenda. Facility Overview Safety Quality System Status Staffing Capacity and Output End State Analysis Commercial Issues . Plant Profile. Manufacturing Space is 125,000 sq. ft. on 3.25 Acres Current Employment
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Middleville Plant Review March 14, 2008
Agenda • Facility Overview • Safety • Quality System Status • Staffing • Capacity and Output • End State Analysis • Commercial Issues
Plant Profile • Manufacturing Space is 125,000 sq. ft. on 3.25 Acres • Current Employment - 108 Full Time Hourly - 56 Hourly Temporary employees - 31 Salary - 195 Total • Union Free • Self Directed Work Teams • TS-16949 Registered • ISO-14001 Registered
1954 Days With No Lost Time Awarded the 2007 Environmental Health & SafetyGold Recognition Flag
Quality System Status • TS Audit – November 5 and 6, recommended suspension • Follow-up audit January 21-23 – Certification Restored • All Corrective Actions reviewed and closed by TS Auditor, BSI • No new Non-Conformities found • Chrysler December 12 Supplier Development Review • Well received, cultural change noted • Chrysler QAAT summary • All items on Q4 deck complete, marked improvement • GM Dec 3-5 audit summary • Very complimentary, rated Middleville better than Warren • Ford MSA summary • Q1 revoked January 21 for August ‘07 servo issue, no new quality issues
2008ChryslerNCTCauses • January (3) • (2) JK Broken tool in machining, part not quarantined • Instituted clean point verification after each broken tool found • (1) JK No threads in water pump hub (pass through) • Instituted vision system on line, to detect threads • February (4) • (1) RT cracked motor Mount (Pass through from Gamco) • (1) RT cracked cam sensor boss (Pass through from Gamco) • (1) RT water pump surface finish (passed in MD, awaiting part) • (1) JK loose water pump bolt • Modified station to verify torque and angle • March (3) • (1) JK crank seal bore oversized • (1) RT sand hole in water inlet (FSI from Nov. 07) • (1)JK extra material at church window (pass through from DMI)
Commercial Issues • Chrysler RT • Gamco price increase of $18.80/piece • $10.00 recovery until 10/1/2008 • Need full recovery of increased casting cost effective 10/1/2008 • Systrand contract for 400 units/day at $23.00 ea • GAMCO exposure • $2.4M line down charges pending from Chrysler • $500K foundry scrap in dispute (9,000 pieces) • $200K Middleville manufacturing inefficiencies in Jan & Feb due to sorts and lack of material • $34K excess transportation (Jan- Mar) • Chrysler excess transportation to be determined (planes, trains and automobiles) • Chrysler JK • AceCo has now been approved for new tools – delivery in April • DMI piece price increase? • External quality cost recovery – core sand inspection (cost of $14,000 per month – 3 people) • End Cover • Seoul Industries – hub • Moving surface finish sort to Seoul industries effective March 1 • Middleville to sort 92,000 pieces in house ($27.6K not budgeted) • $210K December debit
Commercial Issues • End Cover, continued • Contract with Faxon for 500 pieces per day @ $10.60 each • International • Opportunity to re-source machining to DMI at $18 per piece v. $22 Middleville cost • Currently using Systrand at $40 per piece for low volume V162 • 4.0L Oil Pump • Pricing demand to Chrysler at $5.00 per piece • CM currently at 0% due to 95% material content • MyungHwa quality issue; Die 3, Die 4 • Total charges incurred on Loctite issue $92k, pending debits from Chrysler $160k • Servo • Price increase of $1.95 per piece to Ford for extended life of program • Substantial Chiron repair, maintenance and increased output over the last two months (total repair supplies, outside R&M and technical labor is $356.7k – July through Dec)
Chaincase Module Commercial Recovery – JK & RT • Chrysler JK • $5.00 increase effective 2/15/2008 • Chrysler to market test with results by 4/1/2008 • Pricing firm unless unforeseen commercial issues result from Chrysler sourcing decision • Financial Impact: • At 650 units per day, annualized recovery is 780k • Casting cost increase risk of up to $1.00 each (annualized cost of $156k) • Chrysler RT • $10.00 price increase effective 4/1/2008 • New (final pricing) negotiated by 7/31/2008 with effective date of 10/1/2008 • Final pricing must be at least $2.00 higher than the casting cost increase that is now $18.80 per piece • Some potential opportunity with Gamco to reduce the $18.80 per piece increase • Financial Impact: • At 1,300 units per day, monthly impact from now until 10/1/2008 is $229k • 6 month impact $1,374k • Effective 10/1/2008 annualized (12 month) recovery is $648k
Primary 2007 Cost Performance InhibitorsJuly 2007-February 08 • $2.173M Machine scrap • $1.77M Temporary labor • $1.46M Systrand machining • $1.33M FSI Foundry Scrap • $1.05M Maintenance Supplies • $ .88M Perishable Tooling • $ .82M Overtime Expense • $ .82M External Quality • $ .76M Outside Technical Services • $ .46M Gamco Pricing