04/08/97 - 08:01 AM ET
STUTTGART, Germany - If the Porsche factory here gets any busier, a child could predict the company's next capital investment: a traffic light.
As it is, this factory produces 911s and Boxsters at a clip that finds test drivers narrowly missing each other as they hit the streets for a final quality check.
"The company is still a gold mine," Porsche Chairman Wendelin Wiedeking, 44, proclaims. "The only problem at this moment is the day only has 24 hours."
In 1993, record losses had the legendary German sports-car maker at death's door.
It was time to gamble.
Soon after being given the company's steering wheel that year, Wiedeking stunned colleagues from the boardroom on down by handing the keys to two former Toyota executives who were at the helm of Japanese consulting firm Shin-Gijutsu.
Despite a proud German workforce that was sure to take offense, Wiedeking knew what Detroit had learned the hard way: The Japanese system of lean production - parts delivered just in time for assembly, a skilled workforce capable of doing more than one job - was not to be ignored. The problem was that while Porsche cars looked and performed well, they were getting wildly overpriced.
But now the gambler is winning big. This year, Porsche will produce 30,000 cars at prices ranging from $40,000 to $105,000 each, double its volume just a few years ago.
In the USA, Porsche 911 sales in February were fives times higher than three years ago. The Boxster, the company's first new model in 18 years and now on display at the New York Auto Show, is a sellout with a nine-month waiting list. A sport-utility vehicle could be next.
"Porsche is a real car company again," says industry veteran and Automobile Magazine editor David E. Davis Jr. "Wiedeking's gamble didn't just pay off, he revolutionized Porsche."
People were fired; staff dropped 20% to 7,400. More than $150 million was spent on high-tech tools; workspace clutter was reduced 20%. Suppliers were cut by two-thirds to 300; just-in-time deliveries or quality targets had to be met.
"It was a risky time. Even my board members said don't do it," Wiedeking says. "But the Japanese had the best production system. It was time to understand it, and make it happen here."
Time running out
After losing $270 million from 1992 to 1995 - a strong deutsche mark kept U.S. prices high while Japanese products lured customers - Porsche posted a profit last year of $28 million. The company's share price has tripled since 1992.
"The market was used to Porsche making great products at a loss. No more," says Chris Will, European auto analyst for Lehman Bros. "Porsche is turning more profitable than any time in its history." He sees the stock continuing to rise.
If this is indeed Wiedeking's finest hour at the helm of the resuscitated 67-year-old independent institution, he can easily recall what might have been his final one. "It was five minutes to midnight for our company when I started my ideas. There was no more time for discussion, just action, boom, boom, boom," says Wiedeking, a large man whose small office is littered with model cars, all Porsches. "Customers weren't willing to pay for engineer-driven details. We had excellent cars, but much too expensive. The question was, why?"
Enter the Shin-Gijutsu duo, Yoshiki Iwata and Chihiro Naka. In a now-legendary scene, the consultants greeted suspicious German workers by barking in Japanese: "We said bring us to the factory! This is a warehouse!"
They then drafted Wiedeking, insisting he take a circular saw and cut down 10-foot-tall shelves because the height slowed the production process: "When he took that saw, the workers understood that this new way was the right step," says Uwe Loos, whom Wiedeking hired in 1993 to head production. "There was no other way."
Implementing a Japanese system could have been done without importing the real thing. But the CEO knew his audience; German workers are well-paid craftsmen not keen on taking advice from anyone, let alone the competition.
"You can hear 'Gee, we need to cut costs' and it doesn't mean anything," says David Cole, director of the University of Michigan's Office for the Study of Automotive Transportation. "By cutting down those shelves, it was like a public beheading. Which is a good way to get attention."
Factory-culture shock
The biggest challenge that faced Wiedeking and other management was getting changes accepted by a workforce steeped in hierarchy.
"For 11/2 half years, we were frustrated," recalls Porsche research and development director Horst Marchart, who joined the company in 1960. "We had old leaders asking, 'Who is responsible, me or you?' In the new system, there are teams. There is compromise."
During a recent interview, Loos unveils Porsche's production blueprint, a binder filled with transparencies.
The diagram headings include "Total Porsche Maintenance" (each worker is responsible for keeping his station tidy); Porsche Quality Culture ("It's not about manuals, it's about what a worker thinks quality is," says Loos); and "Training" (in 1993, there were an average of 12 minutes of training per employee per year; now it stands at 45 to 50 hours per year).
The factory in the Stuttgart suburb of Zuffenhausen, once a slow-moving place that produced three different models with no shared parts, is an airy, spit-polished machine humming with quiet efficiency.
Hanging above workers' heads are signs that proclaim various Japanese-accented slogans such as "Quality = Teamwork."
A video monitor displays each shift's production goal.
Workers are encouraged to invest more than time in the company. The prize for the best employee idea once was a Harley-Davidson motorcycle; today, it's a year's use of a 911.
The result of empowered workers: The hours required to produce a 911 were halved, to 70. Defect rates plummeted. In 1994, Porsche, infamous for building cars twice, saw the first defect-free 911 roll off the assembly line to a dealer without going back for adjustments. That year, the new efficiency enabled Wiedeking to introduce an improved 911 with a rollback in price.
The wheels were back in motion at the company founded by the now-deceased Dr. Ferdinand Porsche, a man equally infamous for his execution of Hitler's automotive obsession, the Volkswagen, and his passion for the rear-engined, air-cooled, six-cylinder sports car. Wiedeking made clear that the firm would stick to those roots. A proposed four-door version was killed, as were the four-cylinder 968 and eight-cylinder 928. Wiedeking promised that a popular show car would see production.
Enter the Boxster.
Porsche roots
Thanks to Mazda's Miata, the monster roadster market was awakened in 1989. Skeptics were silenced as the nimble and affordable Miata garnered acclaim and a following.
The water was safe; the sharks dived in. Most recently, BMW (the Z3) and Mercedes-Benz (the SLK) have proffered their take on the $40,000-range roadster theme. Porsche design chief Ham Lagaay knew his car had to impress. But with one production line pumping out all 911 variants (Carreras, Turbos, Targas and convertibles), he was faced with a challenge.
"The surprise was that the strategy was to build two cars with common platforms without those cars being the same," says the dapper Dutchman from his offices at Porsche's renowned Weissach research and design center.
Weissach was the birthplace of the 911 and today is headquarters for a profitable design consulting firm that dedicates 30% of its time to outside projects.
"We were all very excited about the Boxster, because it represented a return to a strong '50s design, with a midship engine," Lagaay says. "But how do you make sure it looks like a Porsche?"
All-important feature
The nose. Lagaay lobbied for approval to create a sloping 911-like snout resembling a frog's face, despite the high cost involved in producing the subtly curved sheet metal. "Had I been at Ford," says Lagaay, who once worked there, "they would have never given me the money to do it. But we needed it to get our look."
After 10 designs, Lagaay and his staff of 12 designers sent their baby to the Porsche factory in Zuffenhausen. True to his mandate, Lagaay's Boxster will share a quarter of its parts with the revamped 911, called the 996 and possibly making its debutlate this year. Automotive magazine spy photos show that the 996 shares the Boxster nose Lagaay fought for.
To guarantee its renaissance, Porsche not only had to refocus its model lineup and cut costs, it had to recapture its share of the U.S. sports-car market.
The U.S. market "is crucial for Porsche. In its heyday, Porsche's success was U.S.-driven," says Richard Johnson, editor of Automotive News Europe, referring to 1986, when 54,000 Porsches were made and the lion's share came to the USA. The Boxster's $40,000 price-point has introduced Porsche to a new range of customer. Where the 911 is aimed at 45- to 60-year-old men with household incomes of $225,000, the Boxster is aimed at 35- to 50-year-olds with household incomes of $150,000.
More women are showing interest: 10% of Porsche owners are women, and Porsche North America CEO Fred Schwab hopes the Boxster can raise that figure to 25%.
"Without the new, lean production implemented by Wiedeking, this car would not be competitively priced," Schwab says. "I can safely say that he saved the company."
Today, nearly a third of all Porsches are made for the U.S. market. With those two models, the 911 and Boxster, firing on all cylinders, it is no surprise that a third is rumored.
"Success in our core business gives us a chance to grow. And only a company that grows will have a future," Wiedeking says. "We've done studies that show that the sport utility segment would be very good for us."
'Classic' redefined
In an hour of animated conversation, Wiedeking repeatedly states that this "new Porsche" is about constant improvement, constant innovation.
Odd words for a company whose signature product, the 911, has changed very little over the past three decades. This sameness of product landed the 911 classic status, which "by definition," design chief Lagaay says, "means something that stays the same over the years."
But Porsche might not remain the producer of "classic" cars.
"To stay unchanged today, that means you will not be as competitive as you were in the past," Lagaay says.
Industry watcher Cole says vigilance is particularly virtuous in today's auto world.
"The competitive nature of the business today means that no one is home free," he says. "There's no time to go home and say, 'We've done it.' World class is a moving target."
Wiedeking is taking aim. He is focused on further reducing the number of hours it takes to make a 911 and boosting Boxster production. He recently announced that, beginning this fall, nearly 5,000 a year will be built at the Valmet auto plant in Finland.
"The market is there today," he says.
"Maybe not tomorrow."
By Marco R. della Cava, USA TODAY