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World Class Manufacturing

World Class  Manufacturing Scott Garberding Scott Garberding Chrysler Group LLC 2010? 14 Business Plan Chrysler Group LLC 2010 14 Business Plan November 4, 2009 World Class Manufacturing (WCM) headlines … From Turin they remark that the essential element in order to have  everything working well is the human component, since without full  involvement of the workers nothing could be made. …In the internal ranking, the Marchionne Code, which is in the company language described as Fiat Group  Automobiles Production System (FAPS), finds its best application in Tychy Plant in Poland, and in Melfi Plant  in Italy.

Now the attempt is to elevate to acceptable standard also Pomigliano Plant… 6, December 2007 Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 2 Journey to WCM Fiat Group  p 2004 WCM Launch C au c Fiat Group focus – Holistic approach World Class Manufacturing • 20 Pillars 2005 2006 2008 2009 2010 One common  manufacturing  operating system p g y Chrysler Group LLC 2004 2005 2006 2008 2009 WCM Launch 2010 Chrysler Focus • Safety • Q lit Quality • Harbor Report Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 3 WCM structure & objectives Safety Cost  deployment

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Workplace organization Quality Maintenance Logistic Method & std. Focus Total industrial  engineering Total quality  q y control Total productive  p maintenance Just in time Just? in? time Productivity Quality improvement Technical efficiency Service level Target Values zero  waste zero  defects zero  breakdowns zero  inventory People involvement, value creation, customer satisfaction Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 4 Why implement WCM? Introduction of WCM Fatality Severe Injury Lost Time Injury Recordable Injury / Illness First Aid Cases Lost w work day inc cident rate

Near Misses 17% 15% 7% Unsafe Conditions Unsafe Acts Teaching us to see new  opportunities 35% improvement 2005 2006 2007 2008 (NAFTA manufacturing) 2009E ytd 2010E Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 5 Why implement WCM? Introduction of WCM 26 25 24 Harbour Hours Pe er Vehicle Rigorous methodology  for improvements f i t 5. 7% 1. 3% 9% 23 22 21 20 19 2004 2005 2006 2007 2008 2009 ytd E 2010E 2011 E (Assembly) Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 6 New leadership model Previous Structure Previous Structure Plant Manager Current Structure

Plant Manager Team Leader Team Leader Team Member Team Leader Team Member Fully engaged  workforce Direct  Communication Ownership at  Operator Level Quick Decision  Making Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 7 WCM in action Working together Execution Results Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 8 WCM in action Before After Flexion angle of the waist Level 1 More  than 30° Flexion angle of the waist Level 1 More  than 30 than 30° Level 2 15° ? 30° Level 3 0° ? 15° Level 2 15° ? 30° Level 3 0° ? 15° 52% elimination of ergonomic risks

Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 9 WCM in action Before After • Inventory reduced • Material delivered to point of use  • 57% reduction in operator walk time 57% reduction in operator walk time Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 10 WCM in action Before After Equipment  co d o s conditions  hidden Eq quip Maintained  o easy for easy  inspection Equip Equipment restored to original state Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 11 WCM in action Before After Improved work conditions Chrysler Group LLC 2010? 14 Business Plan

November 4, 2009 12 Transforming Jefferson Prepare for Prepare for  People 360 degree  transformation Place Passion Process Product Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 13 WCM implementation Chrysler Group LLC Chrysler Group LLC Chapter  11 begins 11 begins Chapter  11 “ends” 1st Plant   re? opens Bronze Bankruptcy 4th Qtr ‘09 Cost  opportunities  identified  2010 2011 Management /  Union  leadership  World Class  training and  commitment Manufacturing teams  and training           30 Plants 30 Plants Silver 2012 2013 Gold 2014 1st audits audits 3rd party audits Every plant – Every year • Increasing depth and rigor Methods & results Wide expansion Learning & implementation Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 14 Expected results for 2010 Injuries ? 30% Operating cost ? 8% 2009E 2010E 2009E 2010E Manufacturing first? time quality +15% Productivity +10% 2009E 2010E 2009E 2010E Employee involvement +100% 2009E 2010E 2009E Projects +80% 2010E Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 15 One Team, One Goal, One Vision World Class Manufacturing World Class Manufacturing Chrysler Group LLC 2010? 14 Business Plan November 4, 2009 16

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