PRODUCTION AND LOGISTICS

The main areas of activity for production and logistics in 2014 were the start of production of the new 2.9 and 3.6 engine models, our productivity enhancement and quality offensive and action to further optimise our logistics chain.

The Cologne plants, Germany

In 2014, the main focus at Cologne-Porz, our largest assembly site for production engines, was ensuring quality and delivery reliability for the start of series production of the 2.9 and 3.6 engine models. Customers had also bought significant numbers of advance production engines of these models and this required us to put special measures into effect throughout the entire supply chain. We introduced a new employee information system for these models so that quality-related matters and the precise details of the work involved could be clearly displayed. We are continuing to work at meeting our objectives through strict cost management.

Audit reports are helping us to improve health and safety at work, tidiness, cleanliness and quality. As planned, we have also extended shop floor management to all assembly lines. This comprehensive, overarching management concept is preparing the way for zero-error production. A range of kaizen measures on the assembly lines concentrated on ergonomics and workstation design.

Component manufacture

As part of the plan for optimising our sites, the Cologne-Deutz plant will be closed by 2016 and engine component production will be relocated to other plants. Together with the works council, we have agreed a plan for the future of the Cologne sites, including job security; this will result in a lasting increase in flexibility and cost benefits. The central feature of the relocation plan will be the construction of a new shaft centre at our Cologne-Porz site which will be responsible for crankshaft and camshaft manufacture from 2016. The land that is freed up at the old Cologne-Deutz site is to be sold in the next few years. The manufacture of crankcases for engine models up to four litres will be relocated to our Spanish plant in Zafra. The production line in Cologne-Kalk for four to eight-litre crankcases will be further optimised and expanded to meet the increased quality requirements for the Tier 4 engines. The Herschbach component plant has continued to develop into a centre of excellence for complex attached parts.

The Ulm plant, Germany

As part of site optimisation, the Ulm plant will be expanded to become the plant for small production runs, focusing on DEUTZ Customised Solutions products, project business, exchange engines and models which are becoming obsolete. Productivity can be increased and fixed costs reduced by relocating the exchange engine work from Übersee to Ulm. Synergies will largely be created from the use of the Ulm plant’s infrastructure and from shared overheads. Kaizen activity over recent years has freed up the space needed for integrating exchange engine production.

The Zafra plant, Spain

In future, our Spanish plant in Zafra is to produce the crankcases for engines of up to four litres in addition to the main cylinder head, conrod and gearwheels components. In addition to the 2011 crankcase, the 2.9 crankcase will also be produced there. Crankcase production will start in the second half of 2015. The space needed for the new components was generated in this plant, too, by kaizen activity.

The Xchange plant in Übersee am Chiemsee, Germany

As part of our site optimisation programme, we have decided to close the Übersee plant by 2017 in two stages and to relocate exchange engine production to Ulm. A reconciliation of interests, as required by German law, and a social plan were drawn up in the fourth quarter of 2014 for the 157 employees affected. They were signed at the start of this year. In addition to offers of compensation and of moving to an interim employment company, the employees were given the alternative option of working in Ulm. For those employees willing to move, working time models tailored to the situation have been worked out and financial compensation for additional costs agreed with the works council.

Plants in Georgia/USA

At our site in Norcross, Georgia, USA, we are producing system solutions in increasing quantities to satisfy specific customer or segment needs. These solutions help our customers when it comes to installing our engines in their equipment. Our plant in Pendergrass, Georgia, USA produces exchange engines for the American market. Local production makes for short delivery times.

Logistics

During 2014, we concentrated on gradually expanding our demand and capacity management system. Additional capacity-critical suppliers were brought within the scope of this management system which, at the end of 2014, covered some 89 per cent of the total purchasing volume. This has improved the early identification of emerging capacity constraints, allowing us to simulate situations and create various scenarios involving capacity limits. In order to be able to produce a clear logistical picture of the continuously increasing volume of exhaust aftertreatment systems, another external service provider helped us to integrate storage, packaging and dispatch into DEUTZ’s IT systems.

Quality is firmly embedded in our corporate principles

The DEUTZ name has always stood for high quality standards in engines. We intend to continue to live up to this reputation.

An international benchmarking project undertaken by St. Gallen University placed DEUTZ AG among the five leading industrial concerns, an achievement which was marked by the Award for Global Quality Excellence presented to us on 4 December 2014 in Zurich. This award proves that DEUTZ AG focuses strongly on quality and employs the correct methods.

In 2014, we again met the ISO 9001 quality management, the ISO 14001 environmental management and the ISO 50001 energy management requirements; our current certificates have been renewed. At present, DEUTZ AG is getting ready to meet the changes to the requirements set out in the ISO updates 9001:2015 and 14001:2015.

Quality management is a continuous process. For example, there was a rise in the number of warranty claims on engines from the DEUTZ Compact Engines segment, primarily relating to engines manufactured in 2011. We ensured that no faulty parts are used in production by changing our processes and implementing quality-assurance measures. Provisions were recognised on the balance sheet to cover all future charges that can be anticipated to arise from this matter.