JATCO Best in France Case Study ES2 Group F Y.Fukui, K. Datchimoorthy A. Fremy, T. Wainwright
1. The JATCO Company • Core business: • Development, production and sales of Automatic Transmission (AT) systems to automotive manufacturers • Sales: Yen 401,109 million (FY 2002) • Employees: 7,831 (Sept. 2003) • When it started French operations? • April 1, 2002 • To date activities have been limited to gathering information • Currently opening European Marketing HQ in Paris
JAPAN EUROPE USA 99% 51.1% G M V W Audi Toyota Daihatsu 33.4% Hino 100% Rolls Royce 49% Isuzu 100% 21% Seat Fuji Jyuko 51.1% 100% BMW Honda Suzuki Opel 33.3% Peugeot Mazda Volvo Ford 100% 22.5% Jaguar 22.5% 36.8% Nissan D Nissan Renault 34% Mitsubishi Daimler Chrysler JATCO 80% of JATCO shares haved been purchased by Nissan 2. The Global Automotive Market
2. Global Automotive Market - Consolidation Production Volume in ‘000’s Cars 2002 • Consolidation on a massive scale has produced “Super League” • 6 groups now provide > 85% of worldwide sales • Consequently, Automotive Suppliers have had to respond
3. Why France (i)? • The merger of Renault and Nissan • 1998 Renault gained 36% of Nissan • JATCO forced to respond • Global change of business structure • Automobile Industry consolidation • Six major groups emerging • Global manufacturers need global suppliers • JATCO need to globalize fast to serve this new “Super League”
3. Why France (ii)? • Growth in outsourced AT Market • Until recently, automobile manufacturers produced transmissions in-house • However: • (i) new requirements to develop ever more advanced technologies (fuel efficiency, exhaust emissions and new intelligent transport systems), and • (ii) globalization and new types of transmissions being rapidly developed • Result: No longer viable for automobile manufacturers to produce transmissions by themselves • AT Penetration in Europe • AT is not major in France or Europe • However, AT sales are growing fast …
3. Why France (iii)? • Potential growth in the future • Potential growth in Europe • JATCO plan to sell AT in France & Europe to ‘French’ manufacturers • JATCO do not intend to produce here Source: www.jatco.co.jp
4. Company’s Clients (i) • European clients? • Renault • Peugeot (potentially) • In addition, in Europe JATCO also supply: • Nissan Motor Co Ltd • BMW AG • Land Rover Group Ltd • MG Rover Group Ltd • Jaguar Cars Ltd • London Taxis International • Ford-Werke AG • Ford Motor Company Ltd • And, in reality, dealerships and end users are also clients.
4. Company’s Clients (ii) “Intelligent Powertrain System,responding to the diverse needs of our customers worldwide” • Clients expectations • Excellent quality • Excellent service • Plus: • New technology such as Continuously Variable Transmission (CVT) or Step AT that deal with environmental issues • Timely development and provision of products; development, production and distribution knowledge
4. Company’s Clients (iii) • Obstacles to serving clients • Language: • Key obstacle for JATCO to satisfy clients demands • French is a hurdle for a Japanese • Communication • Communicating with dealerships providing technical services.
5. Objectives & Values (i) Source: www.jatco.co.jp
5. Objectives & Values (ii) “Provide the highest satisfaction to customers, contribution to shareholders, and good relationships with society (global environment and communities) and materializing growth and prosperity with our clients” Technology • JATCO will develop advanced technologies to comply with potential customer demands and create and propose new values. Quality • JATCO will pursue the highest quality to the satisfaction of customers. Cost • JATCO will offer competitive and appealing prices. Trust • JATCO will provide customers with products to meet their potential demands and attentive service to gain customers' confidence Source: www.jatco.co.jp
6. Constraints in France • French government • Treats foreign countries fairly, but provides no additional support to Japanese companies • In Asian countries, governments welcome investment, but not in France • Visa issues • It takes more time to get working visa in France than in other countries(e.g. England, Germany, USA, and other Asian countries)
7. Adaptation to France (i) • Expatriate system • According to the merger of Renault and Nissan, the expatriate system has been standardized. • JATCO intends to cut expatriate incentives for Japanese because transfer to foreign countries are becoming ‘normal’, and it seeks to align the incentive system with that of Renault.
7. Adaptation to France (ii) • Human Resource Development • Working globally as an expatriate is a necessary condition for further promotion to top management • JATCO provides exchange programme with younger employees identified as excellent
8. Key Constraint Costs • Language • Language is a key constraint because few Japanese command French • Language training will cost much and could be a key constraint in France • Development of French managers • Developing managers locally is a key issue for their future growth • Technical Training costs would be a burden to JATCO
9. Key benefits of being in France • Market potential • AT is not currently popular in France • Expected future growth is opportunity particularly in small / compact segments where there is increasing popularity of AT • French Automotive Manufacturers
10. Essential Advice (i) • Country or Region? • JATCO does not see market by country but by region • Paris and other French regions are totally different in terms of attractiveness to Japanese expatriates • Standards of living from expatriate’s point of view is very important • Education, culture, and local Japanese community are typical requirements
10. Essential Advice (ii) • Local recruitment • Locality strongly affects recruitment of French employees • Paris is the best place for recruiting excellent employees, but labour costs are very high • Production cannot occur locally due to cost constraint. • Even sales office in Paris is high cost
10. Essential Advice (iii) • French Government or Ministry • From experience in England and Germany, there is no strong difference between France and other countries. • However, French bureaucracy takes more time…
We thank Name: Ryota Charlie Arai Title: Director, Sales & Marketing Company: JATCO France SAS Address: 57, Esplanade du General de Gaulle 92081 Paris la Defence cedex Tel: +33 (0) 1 46 96 56 34 Email: email@example.com
Other • Appendix - Questionnarries
Our Team Yasumitsu Fukui Tim Wainwright Alain Fremy Kamal Datchinamoorthy HEC class of September 2003