Posted by TRACY SCHNEITER
on
7/1/2009
I have to admit that I’m drawn to TV ads that feature animals - - they tend not to be too offensive and generally are pretty funny. When Kia started to air their “New Way to Roll” commercial featuring the Soul, I couldn’t stop replaying the YouTube version of the commercial. Those rodents totally captured my attention. But more importantly, the vehicle itself is what matters....don’t take my word for it. Click on the link to The Detroit Free Press article by Mark Phelan that highlights the excitement for this new noteworthy car aimed at the next generation. If you’ve missed the ad….here it is…it puts me in a better mood every time I see it!
Posted by MELISSA ANDERSON
on
6/30/2009
India’s automotive suppliers will leapfrog both US and Chinese suppliers. That’s the word from one of the top lean gurus in North America, who has been spending all his time in India over the past six months. He told my colleague that the senior leadership in India, like Japanese management, is embracing the principles of lean, investing in training, empowering people, and holding them accountable for results.
This is in contrast to his experience in the US, where he says that a majority of American business leaders want to talk the lean talk, while their companies are backsliding rather than making progress. Just a couple examples: 1) they are not holding to their established ‘best standards’ and proven methodologies; and 2) they are allowing untrained personnel to adopt change without testing and verifying first. It may seem expedient to take these short cuts, but US suppliers are likely to pay a price in the long term. The Indian component base is capitalizing on the country’s current strength among emerging markets by pursuing a world-class level of lean operation.
Posted by MELISSA ANDERSON
on
6/30/2009
One of the lessons that we think suppliers might be missing, based on some recent conversations, is that “take-over” opportunities require even greater application of the principles of team consensus than do new opportunities. Some suppliers believe instant business via a competitor’s demise will bring them health. Unfortunately, some have found the opportunity actually becomes their newest burden.
You should be looking this gift horse in the mouth – giving it a full dental exam, in fact. Too often, the details provided with the takeover RFQ are inadequate, and the temptation is to just go for it anyway. Suppliers haven’t challenged themselves to seek details such as tooling preventive maintenance records, actual cycle times, scrap data/corrective action results, mapping of process layouts, etc. They need to go through the same process of getting the whole team together to analyze and develop a consensus plan on handling the takeover business. Without the consensus approach, someone’s valuable input will be missed, and the results may come back to bite you.
Posted by IRN DEPARTMENT OF LIGHTER SIDES
on
6/24/2009
One of the real differences with this recession vs. previous ones is that every level of society has been impacted by this economic downturn. From CEOs to workers in a manufacturing cell to the service staff at your local restaurant, no level of society has been immune to job loss. So… in keeping with our great American tradition of finding something funny in even the direst situation, we offer the following video. It also is in keeping with most business people’s favorite joke target: the finance department! 
Posted by KIM KORTH
on
6/22/2009
As many of our clients know, one of my least favorite phrases is the term “the new reality.” I hate it because it is normally used to describe a future world of diminished expectations for both consumers and for most automotive suppliers. There is one area, however, where the term is valid. That is in the significant improvement most suppliers have made in their fixed cost structure. In order to survive, most suppliers have gone through a series of downsizings, plant consolidations, and layoffs to cope with the dramatic drop-off in production over the last six months. The result is that in conversations with dozens of suppliers in the last month, we are hearing claims of permanent reductions in cost structure of 25-40%.
This anecdotal information was reinforced by a recent supplier survey by the Original Equipment Supplier Association (OESA). As the following table indicates, over 60% of the survey respondents stated that they can now break even at annual production volumes of 10 million units or less.
| Annual Production
(million units)
| Breakeven Point of
Respondents
| | 8
| 7%
| | 8.5
| 15%
| | 9
| 11%
| | 9.5
| 10%
| | 10
| 20%
| | 10.5
| 13%
| | 11
| 8%
| | 11.5
| 0%
| | 12
| 11%
|
That is a phenomenal improvement given the fact that most suppliers needed 14-15 million units to break even less than two years ago. So what does this mean for the industry? Once we get back to any level of normal sales (e.g. 12-13 million annualized units), the supplier industry will start to be highly profitable for the first time in over 15 years. This dramatic improvement in supplier cost structure is one of the “new realities” the media seems to have missed.
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HOT TOPICS: THE BAILOUT BLUES
Posted by MELISSA ANDERSON
on
6/25/2009
US Bankruptcy Judge Robert Gerber appears to share his colleague Arthur Gonzalez’ philosophy of making quick work of automaker Chapter 11 proceedings, with his approval today of access for GM to the proposed $33.3 billion in financing from the US and Canadian governments. Alas, poor Delphi – it can only look on in awe.
We hear a lot about “too big to fail,” but Delphi has been caught in the middle of the tennis court – too big to fail, too big to completely bail. Lingering in bankruptcy since October 2005, almost emerging before getting caught in the economic downturn, Delphi is on the cusp of resolution once again thanks in part to the hand of the US Treasury’s auto task force. Current lenders say that there hasn’t been a fair opportunity to see if they can get a better offer. Will the presiding Judge Robert Drain agree or will the Delphi deal keep its momentum going? The odds for the big mo' are looking pretty good. The next hearing is set for July 23. Stay tuned.
AUTOMOTIVE INTELLIGENCE: SNAPSHOTS
AUTOFUTURES® SUBSCRIBER ALERTS:
Posted by THE AIP TEAM
on
6/26/2009
IRN's North American monthly forecast update is now available for June. The North American Industry Results for May 2009 are also available. As always, if you have any questions or concerns, give us a call!
IRN Automotive Intelligence Products Team
616-785-5175
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