MANUFACTURING Building on World-Class Productivity and Efficiency  TADAO TAKAHASHI Executive Vice President unfortunate, since it affected our ratings in the J. D. Power and Associates Initial Quality Study. We’ve since taken effective measures to resolve these problems. More importantly, we learned from them. We created new systems and new approaches to quality, which we then applied in Japan and to the new factories in China. Incidentally, the factories in China opened with no significant quality issues. This highlights one of our ‘never- ending’ quests at Nissan, which is to identify problems and rapidly get solutions for them in place. “By following the Nissan Production Way and the principle of  doukiseisan —meaning synchronization with the customer—manufacturing at Nissan remains flexible and integrated, and keeps lead times short. The Nissan Production Way incorporates integration at the supplier, global and logistic levels. That is why we remain the most productive manufacturer in the world.  We’ve also become much more efficient, as our utilization rates show. In Japan, we were operating at 54 percent of capacity in 1999. In fiscal 2004 that figure increased to 86 percent, which is just about the maximum possible. During NISSAN Value-Up, we will increase our global utilization rate from approximately 74 percent to over 80 percent. We will not achieve that target by closing facilities, either. In fact, we’ve opened new plants in the U.S. and China, and increased capacity at our other facilities. We do not rely solely on external quality evaluations.  In cooperation with Renault, we created AVES, the Alliance Vehicle Evaluation System. AVES is a sophisticated process involving two people taking four to five hours to evaluate a vehicle. Because it is time-intensive, we also devised a short version of AVES that only takes an hour and can be done at the factory.  The second major area of focus is logistics, which is becoming more complicated. We send engine parts to the U.S., and soon we will be shipping more parts from leading competitive countries, or LCCs. During 2004, we encountered cargo-handling problems on the U.S. West Coast, which highlighted the need for a more sophisticated tracking system. If we had had such a system in place, we could have anticipated those problems and made the necessary adjustments.  Manufacturing achieved a series of milestones during NISSAN 180. One of the biggest was opening the Canton plant in the U.S., which got up to speed quickly, launching five new vehicles in a period of just eight months. We built two plants in China, and restarted operations in Egypt. We dramatically expanded the Decherd, Tennessee engine plant in the U.S., and all engines for North America are now built at Decherd or at our plant in Mexico.  While Nissan’s productivity leads the world, we have not stopped working to improve the process. One system we have implemented is the Design Standard Time Ratio, which allows us to calculate the ideal standard time for every operation. By applying this globally, we have brought all our branches around the world to nearly the same level. This in turn illustrated that we can produce vehicles more cheaply and with good productivity in the LCCs. Another opportunity discovered for the LCCs was in low-cost jig and die making. As a result, we have doubled the capacity of our die-making plant in Thailand and are looking into doing the same in China.  We also commenced cross-production with Renault: Nissan began building Renault’s Platina in Mexico and its Traffic in Spain, while Renault began building our Pickup and Xterra at its factory in Brazil. We also started production of common engines with Renault, with our subsidiary Aichi Kikai and the Yokohama plant producing the four-cylinder engines used in our new Tiida, Note and Lafesta models. In Japan, we launched six new models in just six months—the Murano, Fuga, Lafesta, Tiida, Tiida Latio and Note. We also launched three vehicles—the Tiida, Teana and Tiida Latio—in China.  While we were successful in Japan and China, we did have quality issues at the Canton facility. This was Nissan Annual Report 2004 50 OUR WORK