Tesla facilities expansion, 2016

We read about the Tesla facilities plans, for the electric car sales growth, the introduction of their self-driving auto, the giga-factory for batteries. Because of my facility planning experience, I find it fascinating, but at heart the Tesla actions apply many of the same facility planning steps that any company can use, just on a larger scale. Maybe your company can pick up a few tips from Tesla.

Tesla’s actual and expected growth sets the company apart from most of the rest of the world. The electric car volume grows rapidly, while battery production starts from zero, and self-driving cars are still in development but well on the way. But for most of us who grown and consolidate facilities, the size of the Tesla challenge is unprecedented.

 

Objectives for Tesla or anyone else.

Challenge # ! is probably “don’t run out of capacity”; booming sales forgive many sins. From press reports, Tesla understands this principle and is locking up space before it is needed.

Facility rearrangements are expensive and time consuming, but not necessarily permanent. Layouts are after all just a checker game. What you can do however is to plan sequential stages of development, to minimize lost motion and shorten the calendar.

Classic factors to justify new facilities start with the need for operations space, but they don’t end there. Location sensitive costs are paramount in a new location; real estate, utilities, unskilled labor, minimum shipping for incoming, outgoing, and in-process.

Take advantage of a short term opening, or “window of opportunity”. ( That was the title of some project folders, in my own experience, before a concept even had a name.)

To create good layouts, for short or long term use, zero in on the proven techniques:

Create smooth, direct, and short flow between departments, especially for heavy or bulky parts. Optimize relationships between functions, especially those that need to be close by for movement or cooperation reasons. Utilize space well. Leave a clear path for expansion.

 

There will be costs, there may be benefits to a facility change.

This part of facility planning needs the human touch, although later tasks of detailed layouts are much easier with computers. There may well be cost trade-offs in the options possible, short term windows of opportunity; good real estate buys but not in quite the right location. From press and blog accounts, Tesla has actively managed their opportunities.

Start with some basic corporate objectives such as make or buy. If the corporate objective is to manufacture vertically, then the facility planner has to provide space for components, whether batteries of engineers or machine centers for parts and subassemblies or storage and their movement. And facilities must be in available before the grand scheme can take place.

Throw in property complications of build or buy, and of own or lease. Buy is almost always faster in permit and construction time, and Tesla quickly obtained very suitable, and empty, facilities. Layout can usually be adapted to a building without much negative impact, so it isn’t necessary to find a perfect building. But get your hands on the square feet.

Permits take a significant part of the time to make a facility plan happen, so ease that path in advance; avoid contentious sites or conditions of ecological concern.

 

Option A or option B?

The value of location options can be measured in different ways. Tesla’s property choices were at some distance from each other so movement between locations can be expected to be slower and more costly, but they were away from the very expensive environment that is Silicon Valley. And they now have more facilities, more room.

Where are prospective employees available? Probably nowhere, in the quantities that Tesla needed; but putting plants in desirable locations attracts potential employees.

Other options can come into play in this day and age. State incentives and tax structure are significant. Can the company cash a corporate chit? Encourage a state to see an issue a company’s way? You may decide to include some “might as well” items too, in the new facility scope. And, the classic consideration, just where does management want to be?

This big picture planning is fun, but somewhere along here you will need to put in hard and less interesting work to come up with values. Just what will we put in the new facilities, now and in the future? (A layout has to include every desk and work station and CNC machine and assembly line and pallet.) What technology and equipment? What is the inventory plan? How many engineers, support, manufacturing people do we house? By the way, what is the capital budget?

Far as I know the vision for facilities and equipping them is not available on machines and computers Later steps are greatly aided by electronic programs, but start off with bright people in the conference room.

 

Good luck, to Tesla and all others who would expand..

Jack Greene

843-422-1298,  jack@jacksonproductivity.com

http://jacksonproductivity.com

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About productivityisourmiddlename

Productivity, in the business sense, is what my consulting company is all about, Jackson Productivity Research Inc., productivity is our middle name. Author of nine books so far, on Amazon. In both print and Kindle editions. Plant layout, time study, cost reduction, facility relocation and consolidation.
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