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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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slide1

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

slide2

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
slide3

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
slide4

KEY STATISTICS

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

slide5

KEY STATISTICS

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

slide6

KEY STATISTICS

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

uk and the global economy
UK and the global economy

Sources: OECD, Invest.UK

five key changes automotive news europe
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
key change 1 common rail diesel
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
key change 2 the end of the saloon
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 . . .
key change 3 the emergence of tier 0 5 suppliers
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
key change 4 integrated supply chain management
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
key change 5 luxury brand management
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
summary what it means for supplier companies
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.

summary what it means for engineers
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

supplier strategies
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
dti strategy
DTI STRATEGY

Globalisation

Globalisation

Technology

and innovation

World

Class

Company

improvement

Education

and skills

supplier examples
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

aigt priorities
AIGT PRIORITIES
  • Automotive Academy
  • Supply Chain Groups
  • University Centres of Excellence
  • Foresight vehicle – R&D collaboration
  • Mobility projects – in 3 UK cities
customer expectations for the supply of engineering graduates
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