World

Class
Manufacturing
Stefan Ke)er

April 21, 2010 Fiat Investor Day 1

World Class Manufacturing
Achievements to date

mn ~44,000 Target 2010

(Lingo(o plan Nov 2006)
WCM projects 500mn

~730mn

April 21, 2010 Fiat Investor Day 2

WCM evolution
Pillars

10 Technical Pillars

LogisBcs & Early

Cost Focused Autonomous Professional Quality People
Safety Customer Equipment Environment
Deployment Improvement AcBviBes Maintenance Control Development
Service Early Product

10 Managerial Pillars

Allocation
Commitment Competence Motivation
Management Clarity of Roadmap of Highly Time & Level
of Level of
of of of
Commitment Objectives to WCM Qualified Organization Organization Budget Detail Expansion
Operators
People

Evolution has yielded

11 standard Specified
3,000 best
2006 practices
250 tools practice training 2010
books program

April 21, 2010 Fiat Investor Day 3

WCM evolution
Plant rollout

April 21, 2010 Fiat Investor Day 4

WCM evolution
Cost deployment

mn
Improved waste identification with
greater project coverage and
savings

2X B 44%
(of B)

22%
(of B)
3X
A 32%
(of A) 7%
13% 4X (of B)
(of A) 4%
(of A) 4X

Cost perimeter Identified losses Losses covered by Saving

projects

2006 (Baseline) 2009

April 21, 2010 Fiat Investor Day 5

WCM evolution
People involvement

Over 50% of Blue/White Collars Involved

Fiat Group WCM

Development Center
70 270
WCM
Specialists
Pillar leaders
4 1,400

100
Main project leaders
350 3,500

1,000
Blue-collars
60,000
(Team leaders 5,900)
2006

April 21, 2010 Fiat Investor Day 6

WCM evolution
People involvement

Collection & evaluation

IDEA FORM FILLED IN
REALIZABLE IN AWARD
O.U ..? COMMUNICATION

SKIMMING
REALIZATION BY

Targets
AWARD
THE
THE PROPOSER
PROPOSER
FEASIBILITY COMMUNICATION
AND
AND TEAM
TEAM EXPERT
EXPERT
EVALUATION

Weekly evaluation
ACTION
PLANNING
KO
REALIZABLE?
COMMUNICATION

KAIZEN AND
NOTIFICATION TO
FI PILLAR
REALIZATION BY
SUPPORT
SUPPORT FUNCTION
FUNCTION Feedback
Fiat Group
Key achievements
Manufacturing training system to date
Quality Gates
Focused training
Suggestions generated
1 million suggestions
(4x 2006 level)

Team conventions Average 10 proposals/

Periodic workshops person per year (15 in
Focused discussion
Suggestions generated
best plants)
Absenteeism reduced by
14% vs. 2006
Recognition & rewarding
Plant Manager review
Best proposals
Best benefit/cost ratio reward

April 21, 2010 Fiat Investor Day 7

WCM results
Safety

Tychy Plant Fiat Group safety

(FGA) (Frequency Index 2006 vs 2009)

Fatal
-34%
Injuries -70%
(2006 vs 2009)

Near misses Best sector in the Group

-53% reduction in
Unsafe acts & Conditions
frequency index

April 21, 2010 Fiat Investor Day 8

WCM results
FGA Environment

Energy Reduction

Electrical energy
Electric motors controlled by inverter
Substitution of old motors

WCM is a key contributor

Compressed air to Sustainability Plan
Leakage reduction
Pressure optimization
20% energy reduction
from 2006 to 2009 (GJ/

Heating Cooling vehicle)

Insulation
Heat recovery from exhaust gas 13% CO2 reduction from
2008 to 2009 (tons/
Green energy vehicle)
Purchase of green-certified electrical
energy
Photovoltaic generation
Use of other green energy sources
such as landfill gas

April 21, 2010 Fiat Investor Day 9

WCM results
Quality: Iveco Suzzara plant

Quality gates

ALERT

Prompt feedback

Counter-measures

80% warranty cost

reduction from 2006 to
2009

April 21, 2010 Fiat Investor Day 10

WCM results
Productivity: improvements at FGA european plants

100%

LOSSES LOSSES
Technical
efficiency
Waste/Rework
Line Balancing

-25%
NVAA
NVAA (*)

VAA
VAA (**)

Workstation redesign reducing unnecessary movements

and increasing productivity

(*) NVAA : Not Value Added Activities; (**) VAA: Value Added Activities

April 21, 2010 Fiat Investor Day 11

WCM results
Reduction of not value added activities (NVAA)

Golden zone & one-

piece flow application

Magneti Marelli CNH

Corbetta plant Burlington plant

25% NVAA reduction 14%

April 21, 2010 Fiat Investor Day 12

WCM results
FGA Logistics

Transportation & Handling Logistics Cost

FGA European plants

Reengineering of handling
processes based on
-26%
2006 vs 2009
Standards Automatic Guided
Vehicles for
Just-in-Sequence (JIS)

New foldable containers for components improve

truck utilization

April 21, 2010 Fiat Investor Day 13

WCM results
Assembly line restructuring

Iveco Brescia FGA G.Vico

(Assembly shop) (Assembly shop)
Before

3 Lines
After

1 Line

X Current X Eliminated X Closed

stations stations stations

33% throughput time reduction 12%

April 21, 2010 Fiat Investor Day 14

WCM extension
Suppliers

Alignment of Production System for all new contracts

APV() w/o FIAT Group companies

~60% APV
Production System
Alignment Agreement
~20% APV for all new sourcings
WCM Program for Specific
Supplier Plants
2006 2009 2014 E

Support FIAT Group Plants

Supplier Plants

FG
PLANT SUPPORT

SUPP
~ 60%

ORT
SUPPLIERS near to Fiat
2006 2009 2014E
Group plants
APV = Annual Purchase Value
April 21, 2010 Fiat Investor Day 15
WCM extension
World Class Logistics applied to parts distribution

Parts distribution logistics is a key Parts operations system

factor for competitiveness Fiat Group and Chrysler

Activity examples First results

Program launch in 2009

10 depots involved in the

program worldwide

23% productivity
improvement in model area
OrganizaCon of internal (CNH Modena)
handling

April 21, 2010 Fiat Investor Day 16

WCM Plan 2014
Fiat Group roadmap

World
Class
9
Leaders

26

Gold
Advanced 2

Intermediate

Silver
13 51

Bronze
Beginners
23 52

Intermediate
76

138 plants involved

~70% of Group plants & 95+
% of cost perimeter

Beginners
16

April 21, 2010 Fiat Investor Day 17

WCM Plan 2014
Challenges

Extension

CURRENT
STEP1-3 INTERVENTION AREAS

STEP 4
Depth

REMAINING
STEP 5
PLANT AREAS

STEP 6 Team-Leaders/Supervisors
WCM Engagement at All Levels
STEP 7

WORLD CLASS
PLANT COVERAGE

2009 2014
Advanced Methods
Advanced Waste Identification
40% 100%

April 21, 2010 Fiat Investor Day 18

WCM Plan 2014
Fiat Group savings 2010 - 2014

Fiat Group savings 2010-2014

~ 1,900
mn

~6% savings per year

over plan period
(2.6bn cumulative
savings since 2006)

~ 190k new projects

(230k cumulative
projects since 2006)

April 21, 2010 Fiat Investor Day 19

WCM Chrysler
Perimeter

May 16th 2009: WCM kick-off

Etobikoke
Brampton Etobicoke
Brampton

Sterling
Mackx2 Sterlingx2
Windsor
Axle
Konner Warrenx2
Warren x2
Kenosha MTDE Jefferson North
WindsorNorth
Jefferson
Belvidere
Belvidere Dundee
Dundee Trenton
Trenton
Toledo x3
WCM launched in 30 plants in Toledo x3

USA, Canada, Mexico Indiana x2

Satillio x 4
Kokomox2
Cost perimeter 2010: $3.2bn Kokomox 2
Saltillo
x3

27,000 people trained on WCM Toluca X 2

principles Toluca

Full UAW & CAW commitment

April 21, 2010 Fiat Investor Day 20

WCM Chrysler
Fiat Group support

On average, 20 Fiat Group WCM Specialists active at any time out

of a team of 100 supporting Chrysler

Best
Common Training Audit Resources Benchmark
projects
Workshops
sessions
practice
system exchange visits
sharing

Best
Common Training Audit Resources Benchmark
projects
Workshops
sessions
practice
system exchange visits
sharing

April 21, 2010 Fiat Investor Day 21

WCM Chrysler
Jefferson North plant restructuring

Utilization of 1-month temporary shutdown (Oct 09)

Extensive training (~1,250 employees)

New Grand
Cherokee 2010
Line Restructuring

$1.4mn savings in 09
Prepare for
$15.8mn savings forecast for 10

446 projects 360

transformation
1,800 employee suggestions

April 21, 2010 Fiat Investor Day 22

WCM Chrysler
Savings 2010-2014

Economics Projects
Cumulative WCM savings Cumulative number

87,000
>$1bn

~$200mn 15,000

April 21, 2010 Fiat Investor Day 23

World Class Manufacturing
Our roadmap to world class plants

WCM common language

One standard

Shared practices totally transferred to Chrysler Group

Key contributor to Fiat Group Sustainability Plan

Enlarging scope of intervention over 2010-14 period

Involvement of 90% of workforce

190k projects

Extension of WCM program up to 550 supplier plants

By 2014, targeting
Award area to include all Group plants

Cumulative savings of 1.9bn during 2010-14 period

April 21, 2010 Fiat Investor Day 24