Articles from 2008:
We’re All Penn State Fans Now
MiBiz / December 8, 2008 / Melissa Anderson
Every year from late December to early January, things get confusing around my house. Die-hard Michigan fans are heard making favorable noises on behalf of Ohio State, Illinois, and other teams that have been berated as pond scum all fall. When I asked once what was going on, my son explained that this team was representing the Big Ten in the Rose Bowl, and that was why we had suddenly become their Number 1 fan. •
Full Article Text
New Model Launch Interruptions – Or Not
Automotive Design & Production / December 2008 / Melissa Anderson
Research has shown that the number of new model launches in the U.S. has been trending upward over the past twenty years. Between 1988 and 1998, the average was 33 launches per year, according to a study by Merrill Lynch (“Car Wars 2009-2012,” 5/14/08). From 1998 to 2008, the comparable figure was 41 launches. This is seen as a positive development for the industry since, according to Merrill Lynch’s thesis, “an OEM’s product replacement rate drives showroom age, which drives market share, which drives capacity utilization, which in turn drives profitability and stock and bond prices.” •
Full Article Text
High Stakes Development
MiBiz / November 24, 2008 / Melissa Anderson
Just as consumers are on tight budgets and cutting expenses where possible, automakers are also making tough spending decisions. New product development, generally speaking, is an essential investment. Vehicle introductions spark consumer interest, create traffic in dealer showrooms, and - if the company has divined the sweet spot of design, features, and price - drive higher sales than existing models. But when vehicle sales are low, there is less profit being generated to fund development plans. The choices become critical, the stakes are higher, and more must be accomplished with less. •
Full Article Text
Implications of the Economic Melt Down
Automotive Design & Production / November 2008 / Kim Korth
By the time the ink is dry on this article, let alone by the time it is published, it is likely that there will be several more seismic shocks to the economic system and to the automotive industry. It is hard to believe anyone in the automotive industry could look at six months ago as "the good old days," but that is the world we are living in at the moment. Here is a brief recap of the key issues. •
Full Article Text
Forecasting in a Fragile Economic Climate
MiBiz / October 27, 2008 / Julie Cridler
Forecasting is never an easy job, but the difficulties of this science / art are compounded when the economic sands are continually shifting as is the case right now. This applies equally to all companies – whether they are companies like IRN that forecast for a living or companies that use forecast information from an outside source to validate their releases and scheduling. •
Full Article Text
Plastics – Key to the Future or Dying?
Automotive Design & Production / October 2008 / Melissa Anderson
We were struck recently by the juxtaposition of an interesting set of circumstances that illustrate the fun (and by ‘fun’ we mean ‘challenge’) of being in the auto industry: - At the end of 2007, Congress passed an energy bill that includes a 40% increase in light vehicle fuel economy standards by 2020, to a 35 mpg fleet-wide average. The National Highway Traffic Safety Administration is in the process of writing rules that describe how the new CAFE standards will be rolled out and enforced for the 2011-2020 model years. One of the areas that NHTSA has identified as being instrumental in meeting the new standards is vehicle weight reduction. •
Full Article Text
Methodical Problem-Solving Achieves Results
MiBiz / September 4, 2008 / Melissa Anderson
My colleague Jud McKinley and his team at IRN have been working with clients on adoption of a problem-solving and communication method called a ‘reflection.’ The reflection process is employed widely at Toyota for a number of purposes – to make a proposal, to give a status report on an initiative, etc., but problem-solving is probably the most common. •
Full Article Text
Opportunities Abound –But In New Places
MiBiz / September 2, 2008 / Melissa Anderson
The other day I discovered a quote that had been published in Scientific American (January 2nd edition) back in 1909. It read: "That the automobile has practically reached the limit of its development is suggested by the fact that during the past year no improvements of a radical nature have been introduced." For obvious reasons, this quote is quite humorous. At the same time, if suppliers are not careful, they risk falling into a similar mode of thinking today. It is easy to get discouraged when considering all the negative forces currently at play in the auto industry (ubiquitous enough that they need no specific mention). Suppliers could easily lose hope and not be cognizant of the opportunities that are still waiting out there. •
Full Article Text
A Problem-Solving Tool for Problematic Times
Automotive Design & Production / September 2008 / Jud McKinley
The Japanese have demonstrated that there are simple things that companies can do to improve their performance that do not cost a lot of money to implement. What it does require is the investment of some time, patience, and a willingness to keep challenging assumptions. We have been helping US suppliers with one of these practices. The reflection process is a technique that is used for problem-solving but it is also much more. It is a way of thinking through communication by breaking any topic into smaller, clear steps. It is a way of interacting as a group around a common issue, and it is a testament to the value of drawing on the company’s human assets. •
Full Article Text
Who is Making Money?
MiBiz / August 4, 2008 / Melissa Anderson
Every spring, the trade journal Automotive News publishes a list of the top 150 component suppliers ranked by sales to the North American auto industry, providing an interesting look at the composition of the top of the supply base and a record of how these giants have fared. •
Full Article Text
The Raw Materials Roller Coaster
Automotive Design & Production / August 2008 / Melissa Anderson
“Executives Buoyed By Raw Material Price Stability” ran the headline in an automotive magazine at the beginning of the year. Auto execs interviewed at the North American Auto Show in January were pleased by signs of moderation in the prices of important inputs such as steel, aluminum, and others. As it turns out, the key sentence was the one where Bo Andersson, GM’s group vice president-global purchasing and supply chain, acknowledged that the volatile nature of raw material prices can reverse that trend quickly. In the months since then, steel prices, in particular, have shot through the roof. •
Full Article Text
The Wright Formula for Success
MiBiz / July 7, 2008 / Julie Cridler
The environment for suppliers in the automotive industry is often described in negative terms, and this can lead to the perception that all suppliers are struggling to survive. While this is true for many of them, there are also companies out there that have found their own formula for success and are thriving as a result. Some of these companies are smaller organizations that stay under the radar screen of the mainstream automotive press and rarely make the headlines (often, a conscious decision on their part). •
Full Article Text
What’s Your “Engineering Intensity”
Automotive Design & Production / July 2008 / Melissa Anderson
As we work with automotive suppliers on improving their operational excellence and on their medium to long-term strategies, we have noticed that a characteristic of the more successful companies is the simple property of what could be called ‘high self-awareness.’ Companies usually have multiple viable options in terms of positioning, product line expansion, R&D projects, etc. The difference between top performers and stagnant or declining ones is, in part, a function of their ability to be deliberate in their choices and actions, whatever the strategy. The reason that this matters is that by being deliberate and self-aware, you can achieve greater consistency and alignment, and that is when a company really starts clicking on all cylinders. •
Full Article Text
Auto Outlook at Mid-Year – Even Tougher Than Expected
MiBiz / June 9, 2008 / Melissa Anderson
Now that we are approaching the mid-point of the year, my colleague Erich Merkle and I took a look at how the auto industry is faring relative to our projections in the MiBiz Crystal Ball 2008 Special Year-End Edition (12/24/07). As it turns out, even though IRN is consistently at the conservative end of the spectrum of automotive prognosticators, things are a little worse than even IRN feared they would be. •
Full Article Text
India Rising
Automotive Design & Production / June 2008 / Phil Biggs
It doesn’t take much examination of our global competitive landscape to see that India is emerging as a formidable competitor to the United States. Over the next decade, India’s growing economy and burgeoning automotive sector will present perhaps more of a threat to the U.S. than China. With over $11 billion investment in foreign automotive business, India has already become a very competitive market with low-cost sourcing, and its automotive industry will oversee 60 new launches in 2008 alone. India portrays itself not as a “low-cost” country but as a “lower-cost” country with the additional benefits of a highly educated workforce and emphasis on advanced technology and R&D expertise. •
Full Article Text
Lengthy Loans: Good for the Auto Industry?
MiBiz / May 12, 2008 / Julie Cridler
As always, when sales start to slow in the automotive industry, the OEMs look for ways to entice buyers. In the past, buyers were offered hefty cash-back incentives and low to non-existent interest rates. Obviously, incentives such as these are unsustainable long-term for the automotive industry. A new form of “incentive” is now emerging outside the industry in the form of loans that extend for periods of longer than the typical four or five years. •
Full Article Text
Interesting Times
Automotive Design & Production / May 2008 / Kim Korth
Given the impact of China on the global automotive industry, it makes sense to use one of their more famous sayings to illustrate the current state of the auto industry. There is a well known Chinese curse; “May you be blessed to live in interesting times”. You would be hard pressed to find more interesting times in automotive than what is happening now. While the last few years have been challenging for OEM’s and suppliers, 2008 appears to be the year when many of the macro trends are converging coupled with the worst economic environment in the United States in over twenty years. •
Full Article Text
CAFE Beefs Up Menu
MiBiz / April 14, 2008 / Melissa Anderson
Recent changes to the federal program that requires improvement in vehicle fuel economy show that the government has applied the principle of a Plan-Do-Check-Act cycle for continuous improvement, albeit at a much slower pace than what business practitioners are used to, with about 25 years of ‘doing’ before getting on with the ‘checking.’ •
Full Article Text
Price Reduction Requests Down – For Now
Automotive Design & Production / April 2008 / Melissa Anderson
Every two years, IRN conducts a survey of the supply base on The Dynamics of Price Reduction Requests. The purpose of the survey is to provide suppliers with some context for deciding how to respond to requests from customers for price reductions and givebacks on current, new, or past work performed. We recently completed the sixth biennial survey, and the results suggest that the slight moderating trend that we observed in 2005 has continued. •
Full Article Text
Automotive Plastics: Bright Future, Bumpy Journey
MiBiz / March 17, 2008 / Julie Cridler
It is interesting how the span of several years in the automotive industry can see the almost complete reversal of fortunes for various participants. This has been going on for a long time with the OEMs, as each of the Big Three jockey for the position of the most likely to succeed. Another area where a similar story has been playing out is the materials sector. •
Full Article Text
Supplying the New Domestics
Automotive Design & Production / March 2008 / Jud McKinley
In the July 2007 issue of this publication, we wrote about the expectations that the New Domestics have when they consider new suppliers, what they expect to see when they visit your company, and how important it is to be aware of and prepared to meet those expectations. One of the subjects that is of critical concern to them is the state of your supply chain and how you relate to it. Our experience has shown that even companies that rate well in other areas of assessment often fall short of expectations in the supply chain area. •
Full Article Text
Better Environment for Price Negotiations
MiBiz / February 18, 2008 / Melissa Anderson
Back in 1997, IRN Inc. determined that it would be valuable to survey the automotive supplier population on the increasing tendency of the automakers to request price reductions. In addition to more rigorous negotiations on new contracts, suppliers were finding that they were being asked for concessions in the prices of the parts they were currently making. Confronted with this new request, they were debating, “Should we or shouldn’t we comply? What are other suppliers doing?” •
Full Article Text
Accuracy Matters
Automotive Design & Production / February 2008 / Phil Biggs
With 2007 behind us and our budgeting processes long completed, now the hard work begins as we kick off 2008. In what may prove to be among the most challenging economic conditions we’ve seen in recent times, now we must all go out and forge new business and retain existing work with little or no help from falling leading indicators such as housing and durable goods, or the continued spiking cost of raw materials. •
Full Article Text
Chrysler Product Outlook – Near-Term Positive, Long-Term Uncertain
MiBiz / January 21, 2008 / Melissa Anderson
Earlier this year, we looked at GM and Ford from a product development standpoint. Now it is Chrysler’s turn. Chrysler has had some great examples of products hitting the sweet spot in the recent past – the 300C, the Dodge Charger – but can they sustain that going forward? •
Full Article Text
The Economic Crisis – and Beyond
Automotive Design & Production / January 2008 / Melissa Anderson
The housing correction that is underway is beginning to spill over into other areas of the economy, as evidenced by the weaker industrial production numbers reported in late 2007 by the Census Bureau. High inventories of durable goods, such as appliances, electronic equipment, and home furnishings, have caused a pullback in industrial production, since the housing market is not expected to be able to rally and absorb those inventories. In the aftermath of the sub-prime mortgage losses, banks have become more risk-averse and are tightening their lending standards. •
Full Article Text