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Francis Evans DTI Automotive Directorate “Helping the UK-based vehicle and components industry compete and win in world markets” THE UK AUTOMOTIVE SUPPLY CHAIN: A GOVERNMENT PERSPECTIVE Presentation for University of Birmingham Automotive Engineering course 17 th October 2003

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Francis Evans

DTI Automotive Directorate

“Helping the UK-based vehicle and components industry compete and win in world markets”

THE UK AUTOMOTIVE SUPPLY CHAIN:A GOVERNMENT PERSPECTIVE

Presentation for University of Birmingham Automotive Engineering course

17th October 2003


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A GLOBAL INDUSTRY IN THE UK

  • 8 global vehicle manufacturers:

  • Honda Renault/Nissan

  • BMW VW Group

  • Toyota Ford PAG

  • GM Peugeot

  • One UK-owned volume manufacturer

  • 40+ low-volume manufacturers

  • Motorsport - the world leader

  • 17 of the world’s top 20 Tier 1 companies

  • operate in the UK


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THE UK AUTOMOTIVE SECTOR

  • Turnover is 5.5% of GDP (£40bn)

  • Passenger car production 1.6 million in 2002 (2003 growth at Honda, Toyota, BMW)

  • 11% of UK exports (£19bn) - greater than any other manufacturing sector

  • 700,000 jobs in the UK industry of which 150,000 are in the components sector

  • 7,000 components firms of which over 90% are SMEs – many do not identify with automotive

  • Tax yield from the sector (VAT, VED and fuel duties) is 11% of total Government revenue


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KEY STATISTICS

See http://www.autoindustry.co.uk/statistics/key


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KEY STATISTICS

See http://www.autoindustry.co.uk/statistics/key


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KEY STATISTICS

See http://www.autoindustry.co.uk/statistics/key



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UK and the global economy

Sources: OECD, Invest.UK


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FIVE KEY CHANGES(Automotive News Europe)

  • Common-rail diesel

  • The end of the saloon (Vectra, Mondeo)

  • The emergence of Tier 0.5 suppliers

  • Integrated supply chain management

  • Luxury brand management


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KEY CHANGE 1(Common-rail diesel)

  • Suppliers can grow technologies that VMs cannot supply themselves.

  • Examples:

    • Bosch common-rail diesel

    • ZF 6-speed auto ‘box

    • Torotrak IVT

  • Suppliers choose preferred customers


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KEY CHANGE 2(The end of the saloon)

  • Suppliers can enable VMs to fill market niches more quickly

  • Examples:

    • Constructors – Valmet, Magna, Bertone

    • Design engineers – Ricardo, Prodrive

    • Joint development – MVS and MG

  • VMs still need to see the trend . . .


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KEY CHANGE 3(The emergence of Tier 0.5 suppliers)

  • Tier 0.5 Suppliers offer global presence and new skills: component integration, modular supply, sequenced supply

  • Examples:

    • Magna, Lear: interior modules

    • Delphi: SILS centres for GM in the UK

    • Continental: Tyre/wheel/brake module


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KEY CHANGE 4(Integrated supply chain management)

  • OEMs want visibility, speed and reduced complexity of interfaces

  • Examples:

    • Systems integrators – Dana, Delphi

    • Trading platforms and exchanges

    • Elimination of multiple MRP systems

    • Global purchasing – Nissan/Renault


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KEY CHANGE 5(Luxury brand management)

  • In a mature market, brands add value when all products perform adequately

  • Examples:

    • BMW, Porsche – the most profitable OEMs

    • Brand portfolios – Ford PAG

    • Building a brand – Prodrive/Subaru

    • How far will it stretch – X-type, Passat W8


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SUMMARY(what it means for supplier companies)

Global sourcing means commodity products can and will be sourced anywhere – this is an opportunity for suppliers too. But VMs do value access to new developments and added-value services such as late configuration and supply in line sequence (SILS). Suppliers need to choose their customer with care.


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SUMMARY(what it means for engineers)

OEMs want Quality, Cost, Delivery . . . but also development capability, flexibility of response, integration with other suppliers, technology that enhances their brand. They value people with whom it is easy to work. Key qualities: communications, project management, team working, innovation


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SUPPLIER STRATEGIES

there is no ‘correct’ strategy

  • high-volume, high added-value per person

  • rapid-response prototypes or one-offs

  • offer own brand value to customers

  • product innovation

  • process innovation

  • aftermarket supply: low volume/high variety

  • niche products/services

  • change the customer base


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DTI STRATEGY

Globalisation

Globalisation

Technology

and innovation

World

Class

Company

improvement

Education

and skills


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SUPPLIER EXAMPLES

Wagon – specialist in lightweight materials

GKN – global expertise in drivetrain

Bosch, tyre makers – own IPR

Momo, Recaro – recognised brands

Mayflower – design product and process

Unipart – excellence in distribution

Castings plc – high-investment & quality

Prodrive – leveraging motorsport advantage


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AIGT PRIORITIES

  • Automotive Academy

  • Supply Chain Groups

  • University Centres of Excellence

  • Foresight vehicle – R&D collaboration

  • Mobility projects – in 3 UK cities


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CUSTOMER EXPECTATIONS FOR THE SUPPLY OF ENGINEERING GRADUATES

  • Up-to-date technical knowledge

  • Practical application of theory

  • Problem-solving approach

  • Team working ability

  • Written and oral communication

  • Project management

  • Managing one’s own time

  • Business instinct


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