Date Visited: October 7, 1993
Report Author: N. Naclerio
Mark R. Hunter
Nippondenso is a leading manufacturer of automotive components and electronic systems. In 1992, Nippondenso had sales revenues of about $12 billion. Approximately 9% of sales was invested in capital and another 7.3% in R&D. About 56,718 people were employed by Nippondenso in 1992. (The above figures are based on consolidated 1992 data.)
Some of the themes that drive Nippondenso's business strategy are high performance, safety, and fuel efficiency. In-house research ranges from semiconductors to micromachines to materials, and from AI to telecommunications to control theory. Fuzzy logic systems have been developed and are in use for anti-lock braking systems (ABS), cruise control, and suspension systems. Nippondenso uses its micromachine technology to manufacture accelerometers and other sensors for automotive applications. As a demonstration of its micromachine prowess, it built a miniature car, barely 5 mm long, complete with electric motor. Nippondenso plans to fuse automobile technology with state-of-the-art electronics to generate new products in many fields. Examples of nonautomotive products we saw included portable cellular phones, hand-held bar code scanners, and factory automation systems.
Nippondenso manufactures components and systems for nearly every automobile manufacturer in the world. While Toyota is its largest shareholder and customer, it also sells components to most of the other Japanese auto makers, the Big Three U.S. companies, and most European companies. Nippondenso claims to be a leader in 14 product areas including electronics, fuel injection systems, braking control, navigation, air conditioners, fuel pumps, and radiators. Nippondenso product groups do their own product development and manufacturing but do not have their own sales forces since most of their products are sold to a few automobile companies.
THE KOTA PLANT
Activities at the Kota plant include manufacture of automotive ICs, electronic control units (ECUs), and communications equipment. This plant is located in Aichi Prefecture on 274,000 sq. m2 and was dedicated in April 1987 after one year of construction. The site is about 50% developed, with three main buildings. A new wafer fabrication facility occupies about 18,000 sq. m of floor space, and a four-floor electronics factory occupies 173,000 sq. m. The total value of the products manufactured in the Kota plant in 1992 was about $160 million per month. There are approximately 5,000 pieces of equipment and 3,700 employees.
Nippondenso's IC production is being transferred from a 5" line at the head office in Kariya to a new 6" line at the Kota plant. Nippondenso has been in the IC business for 25 years. While its people recognize that they cannot compete with large merchant IC companies in products like general purpose microprocessors or memories, they still feel that in-house IC manufacturing gives them a competitive advantage. Two advantages of building devices in-house cited by Nippondenso are (1) the ability to produce specialized products not available on the market, and (2) the ability to avoid sharing proprietary designs with potential competitors. Nippondenso manufactures complex, more expensive VLSI chips that are specially designed for automotive applications.
Engine Control Unit Assembly Line
The main four-story building at the Kota site houses chip assembly, hybrid manufacture, SMT board, and final assembly. Five different engine controller product families including over 120 different engine controllers are made on a single assembly line. The line begins with traditional surface mount assembly including adhesive application, component pick-and-place, add form component assembly, and test. After testing, a conformal environmental coating is applied to the boards. The boards are then assembled into metal enclosures that are sealed and marked. The completed modules go through high-temperature burn-in before final outgoing test. After testing, the modules go into a stocker on the factory floor to await a daily shipment to nearby Toyota automobile assembly plants.
The entire 1,170-meter manufacturing line, including assembly, burn-in, and test, has only one direct labor worker who folds multiple rigid boards connected by flex cables into a metal enclosure. We were told that this operation had not been automated because the necessary machine would be too expensive. There is zero changeover time between products on the line. In fact, we were told that complex and relatively simple engine controllers were intentionally mixed to balance the throughput of the line. As a practical matter, controllers are usually made in batches of 16 since that is the size of the cassettes used to transport boards on AGVs. In order to simplify material handling, all of the products have a common width, but appeared to vary in length by as much as a factor of three. Every board type is identified by a bar code, and every piece of equipment on the line has its own bar code reader. As a result, the number of different components that must be simultaneously loaded on the pick-and-place machines is probably higher than on most lines producing only one product at a time.
Almost all of the manufacturing equipment we saw at the Kota plant was produced internally by Nippondenso. Our hosts claimed that because of the company's unique needs, it is actually cheaper to develop equipment in-house rather than purchase more general-purpose tools. One tool for visually inspecting solder joints reportedly took over two years to develop internally. Over 200 people at the Kota site are involved in the development of production equipment and processes. The average piece of equipment on the manufacturing line is either replaced or upgraded every three to four years. Some of the larger pieces of factory equipment are developed at another Nippondenso site dedicated entirely to that purpose, but many of the smaller pieces of equipment are developed and manufactured on-site. In all cases, customization of the equipment, fixture development, and programming is the responsibility of the manufacturing site. Nippondenso is just beginning to market production equipment such as robots to external customers. Factory equipment and production processes are designed by teams that include both hardware and software engineers. The Kota plant was the first to implement a factory-wide CIM system, now in place at all other plants. This system unites data from the head office and all the factories to meet quality standards and delivery times. (In addition to factory-level data, information from design and sales is also included.)
We saw some ceramic MCM modules or hybrid assemblies built at this plant using flip-chip assembly. The flip chip used is similar to that employed by some U.S. automotive manufacturers and involves plated copper bumps with solder. The main Japanese concern with the wider use of MCMs is reportedly cost. Nippondenso says that MCM-L is very close to introduction in some of its automotive applications. Its automotive customers are not too anxious to have risky "new" technologies used in their cars; however, Nippondenso thinks that MCM-L will be the lowest-cost solution for many ECU products.
Another driver for the use of MCM technology will be miniaturization of engine control functions so that they can be mounted directly on sensors and/or actuators. Nippondenso representatives feel that by 1998 multiple functions will be combined into modules containing sensors, processors, and actuators. These distributed processors will share data across a vehicle-wide network.
Impact of Automation on Productivity
The highly automated production line at Kota results in a high degree of flexibility, very high manufacturing quality, and the elimination of most direct labor. During the time the JTEC team spent in the ECU assembly plant, we did not see any modules in reject bins. According to one host, only a couple of modules per month fail final test. In five years Nippondenso expects to have added a second wafer fab and 50% more assembly area while also hoping to reduce by half the total number of people on the site to less than 2,000 from the current 3,700.
Nippondenso has close ties to its automotive customers. Large customers provide regularly updated five-year production requirements. Engine control units are essentially built to order and delivered to customers every day. In order to provide similar service to North American auto makers, Nippondenso operates a similar assembly line in the United States.
Nippondenso runs its own two-year college for training engineers. Managers tend to hold four-year degrees from university engineering programs. Practical training in areas such as equipment design takes place almost entirely within the company. During the first five years of employment, engineers each receive about 100 hours per year of formal technical training resulting in the equivalent of a master's degree. In the sixth year, about 10% of the engineers are selected for the management track and receive another 200 hours of technical training. After ten years about 2-3% are selected to become assistant managers and receive additional training. By this point, the assistant managers have earned the equivalent of a Ph.D. within the company. Management and business training is also provided for those technical managers. The fraction in nonengineering fields who become managers is perhaps 10%.
Nippondenso manufactures passive liquid crystal displays (LCDs) for black-and-white instrument displays. It also manufactures a holographic display produced for the Lexus automobile that projects the vehicle's speed two meters in front of the windshield. Nippondenso's R&D labs have very recently developed a color anti-ferroelectric LCD display technology that offers a wide viewing angle and the potential to be very low-cost. A ten-inch diagonal display suitable for personal computer applications has already been demonstrated.
Nippondenso believes that future automobiles will contain highly integrated, but distributed, electronic systems composed of sensor/processor/actuator modules that share data over a vehicle network. When asked about the role of fiber optics in those automobiles, our hosts responded that the company's experience putting optical fiber links in the Toyota Sentry door lock system taught them that optical data links are too expensive for automobile applications; Nippondenso was no longer pursuing them at the time of the JTEC visit.
Nippondenso is already shipping highly integrated communication/navigation/entertainment systems for luxury automobiles. A demonstration at the plant showed a new system being manufactured for the Lexus automobile. A color flat-panel display built into the automobile's console can display television when the car is parked. While driving, it can be used to display map information or travel guides from CD ROM. The system can also display position information obtained from an automotive navigation system that includes both GPS and dead-reckoning. The dead-reckoning system uses wheel rotation information from the ABS sensors in the front wheels of the car. When the car is put in reverse, a CCD camera shows what is behind the car. If the car gets too close to another vehicle or obstacle, a warning is flashed on the screen. An FM-broadcast traffic information system was scheduled to begin pilot operation in Japan in 1994, allowing the car navigation system to also display traffic congestion information. Aftermarket GPS/navigation/entertainment systems are also being produced by a number of other Japanese electronics companies including Sony, Matsushita, and Pioneer, and they are reportedly very popular with young Japanese.
Nippondenso is a best-of-breed automotive electronics manufacturer. It manufactures vehicle electronic systems for sensing, control, communications, and navigation. Perhaps as a result of its close relationship to Toyota, it has embraced a flexible manufacturing approach that enables it to manufacture engine control units with a lot size of one and zero changeover time. This flexibility does not appear to cost the company in-line throughput or manufacturing quality, both of which appear to be world class. Like other large Japanese electronics companies, Nippondenso is vertically integrated, and it designs and manufactures most of its own production equipment. Because of its unique approach to flexible manufacturing, it is possible that in-house development of production equipment such as SMT assembly is actually cheaper than purchasing full-featured machines on the open market. Nippondenso manufactures key components such as semiconductors and micromachined sensors because of the view that doing so gives it a proprietary advantage. The use of MCM technology at Nippondenso will be driven by cost reduction and the desire to integrate sensors, processors, and actuators into compact modules that can be located directly on engine and drive train systems.
Most formal training of engineers takes place in-house, with all engineers receiving 100-200 hours of formal technical training per year. The company's skills as a low-cost producer of very high-quality electronic systems is enabling it to branch out into other markets such as personal communications and mobile point-of-sales terminals.
Nippondenso believes that total manufacturing efficiency can only be achieved by closely coordinating product development with production engineering. To achieve this, Nippondenso has long been developing specialized manufacturing equipment and methods in-house.