GM General Motors Company

By Mike Colias 

General Motors Co. is betting its future on electric cars. By mid-decade it plans to spend $27 billion on manufacturing 30 electric models and developing driverless cars. By 2035, it expects to have phased out gasoline-engine options completely and to be selling only electric vehicles, a technology that currently generates about 2% of sales and no profit for the company.

Planning for this transformation at the factory level is the responsibility of Gerald Johnson, a GM lifer who took over global manufacturing operations in 2019, and who is spearheading a $2.2 billion gut rehab of a factory in Detroit, recently renamed Factory Zero, to serve as GM's electric-vehicle hub. Two more conversions of North American factories for production of electric vehicles, or EVs, are in the works.

Mr. Johnson, 58 years old, calls it the most far-reaching strategic shift he has seen in his career at GM, which he began 40 years ago as an intern.

"There has always been incremental change," he says. "This is transformative."

GM factories around the world employ more than 100,000 workers. Some plants exist solely to assemble gas-powered engines and transmissions that won't be needed if the company successfully reaches its 2035 target, portending big changes for both workers and GM's factory footprint.

Addressing disruption is nothing new to Mr. Johnson, whose duties have included managing labor relations through a bitter 40-day strike at GM's U.S. factories in 2019 that drained $3.5 billion in profit. Last spring, his team led GM's effort to make ventilators after Covid-19 hit the U.S., closing car factories for nearly two months. Now, continuing supply-chain disruptions are hampering efforts to make up for lost output.

The Wall Street Journal talked to Mr. Johnson recently. Here are edited excerpts.

WSJ: Electric cars are breaking down some of the barriers to entry that have protected big car companies. How can GM maintain its edge?

MR. JOHNSON: From an engineering standpoint, electric vehicles of course require a lot of technology and innovation. The holy grail is finding that cost balance between electric range and the cost of a battery.

But the integration [of GM's own electric powertrain into its own car models, in effect producing everything in house] is the piece that I think is going to enable us to run further and faster. Integrating this technology into a vehicle platform in such a way that allows all the functionality that we currently offer, but the added capability of an EV -- that's where I think GM is going to show out based on our track record.

WSJ: You're saying even though it has become easier for others to put together battery systems and offer electric cars, there's more to it than that?

MR. JOHNSON: Yes. There are the specific elements of figuring out the technology cost curve, and we're doing that. But I think where we will leapfrog others is on everything else that goes into the vehicle. We think we have an advantage with our supply base, with our ability to integrate our software capabilities. We also have an established dealer network that can help us.

WSJ: GM is spending more than $2 billion to convert Factory Zero to make EVs. What has to happen to make that conversion?

MR. JOHNSON: Other than the outside walls, everything in Factory Zero is new. We're putting in a new body shop because we have to tool for the new vehicles. There's a new paint shop, which is a significant portion of the investment. And all-new conveyance systems and automation. We're also doing things like putting in solar panels to provide power to the grid. Factory Zero will not just produce vehicles that are emissions-free; we're going to be based on renewable energy in the factory as well.

WSJ: It has been a few decades since GM last built a new plant in the U.S. What advantages come from starting with a clean sheet?

MR. JOHNSON: First, the plant will build solely EVs, so we get to optimize it for that. We don't have to carry what we would call "scar tissue" of having a large engine-buildup area. And, because the weight of an EV is greater, we'll need a more robust conveyance system.

WSJ: Electric cars are less complex than gas cars and require far fewer parts. How does that change the factory and what exactly workers do?

MR. JOHNSON: Probably the biggest piece will be in an area that would have been dedicated to engine buildup, when we bring an engine in from one of our powertrain facilities and add all the additional components. There's a whole line and area dedicated to that, along with marrying it up to the transmission and subsequently to the body of the vehicle.

Well, in the EV world, it's a battery pack. It's our Ultium platform that rolls in and all marries up to the vehicle and makes it even easier to integrate versus earlier versions of our EVs.

WSJ: How will workers' skills need to change?

MR. JOHNSON: There are two pieces. One is the ongoing innovation that happens through automation and other work. Every year, with every new vehicle program, we upgrade the technology it takes to process a vehicle. That requires additional skilled trades and a digital understanding.

The most impressive piece is the data analytics that are now being embedded in the diagnostics that we use in our equipment. That allows our operators to have a much richer understanding of what's going on, what actions we need to take to keep the equipment running.

WSJ: What about as you transition to making electrics and eventually autonomous vehicles?

MR. JOHNSON: At a place like Factory Zero, we're going to have multiple product programs that will take a higher level of adaptability -- both in the tooling and in the kind of work that they're going to have to be able to do, with longer cycles and more variation.

WSJ: So workers on an assembly line may be performing more complex tasks that take them longer per job than they might today?

MR. JOHNSON: Exactly. The cycles will require more complexity of execution per station and per operation. Versatility and adaptability will be important because work flows will be different in this environment.

WSJ: Given that EVs require less manpower, should workers be worried about there being fewer auto factory jobs in that future?

MR. JOHNSON: I think every GM employee should be excited about what we're doing. Because we see our EV strategy in total as a full-on growth strategy. We will expand. Yes, some job assignments will change, but we will have opportunities for everyone to come along with us as we make this transformation. There will be more work available in that future than what we have today.

WSJ: The company sees electric vehicles as a growth play, rather than simply replacing its gas-powered business?

MR. JOHNSON: This is all about growth for us. One reason is that it allows us an opportunity in the markets where EVs are popular and where we have the greatest opportunity to gain market share, like on the West Coast, the East Coast and some portions of the South.

WSJ: What have your discussions been like with the United Auto Workers about the future workforce and how it's changing in this transition?

MR. JOHNSON: Work at Factory Zero is going to start to produce vehicles this year. We are always in conversation with our union partners about what it's going to take and how we're going to work together to bring this investment to life. We're going to allow ourselves enough time to communicate effectively and plan for this 2035 future that we just committed to.

WSJ: GM is bullish on EVs. But what if the sales volumes fall short? How do you manage that if you've set aside all this factory capacity?

MR. JOHNSON: We've got a 15-year horizon. We think we've left enough adaptability in our footprint to be able to meter that transformation, where there's a good overlay between internal-combustion vehicles and EVs. How it plays out between 2024 and 2030, for example, we've left ourselves some flexibility based on market demand. We're confident in that end point. We're just not sure how the mix will evolve to get to that.

WSJ: You led GM's effort to pivot to ventilator production last spring when the plants shut down from the pandemic. What did you learn about the organization from that?

MR. JOHNSON: We've coined the phrase "ventilator speed." That means pulling together a team and breaking through barriers to get something done. We see it now with the accelerated pace of executing our EV strategy. Many of the programs that we've announced of late, we've already pulled those dates ahead. That's ventilator speed -- integrating the team in one location so they can solve problems, and making sure all the resources are there, to help them not to follow the process, but to follow the speed and pace to deliver the outcome.

WSJ: Since you've come into this role, you have handled a strike, the Covid shutdown and restart, and supply-chain disruption that has affected production. What have you learned about leading during times of upheaval?

MR. JOHNSON: What I've learned is that our teams are able to handle it when you support them and focus them on the challenge of the moment.

We launched a new SUV in Arlington, Texas, in the midst of the pandemic hitting at the same time. We have accelerated our EV programs.

My first plant-manager assignment, I pulled up to the plant, and there were firetrucks all blocking the driveway. My first day and the plant is burning, smoke billowing through it.

You learn how to problem-solve in the midst of crisis, and communicate and protect people and focus on what must be done so everyone can return safely. It's just manufacturing, it's just what we do.

Mr. Colias is a reporter in The Wall Street Journal's Detroit bureau. He can be reached at mike.colias@wsj.com.

(END) Dow Jones Newswires

February 20, 2021 11:14 ET (16:14 GMT)

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