Welcome to TheCarConnection's Daily Edition, your best source of industry news-delivered FREE right to your e-mail inbox. Stay on top of what’s happening, such as the hiring of Bob Lutz by GM (which TheCarConnection.com reported first). As always, we welcome your comments and suggestions for further refining TCC’s Daily Edition. Write to us at [email protected]. The Editors
GM’S NEW MATH MAY MAKE FUEL CELLS AFFORDABLE
What’s General Motors got up its sleeve? As Daily Edition reported yesterday, the automaker intends to go into the stationary fuel cell business, using the “green” machines to provide power for home or office. The appeal might be strong for California businesses worried about power shortages, but making the case to the average consumer may be another matter entirely if the price isn’t right. Other stationary fuel cell suppliers such as ONSI Corp. and Plug Power are targeting a cost of $3,500-5,000 per kilowatt of generated electricity, a huge premium over conventionally-generated power. GM officials are talking $350-500/kw, which would make fuel cell-generated electricity competitive with what comes out of the plug. That seems a huge leap considering the state of today’s fuel cell technology. How to meet this aggressive target? GM insiders hint some major manufacturing breakthroughs could be on the horizon. If they’re right, it could be a transformation on the order of the invention of the assembly line, which cut vehicle costs by at least an order of magnitude.
TRIM BUSINESS PURCHASE PUTS COLLINS & AIKMAN IN TOP RANKING
The purchase of Textron Inc.’s automotive trim business by Collins & Aikman (for at least $1 billion, including debt) would make the supplier one of the top manufacturers of interior automotive components. The deal, which involves an issue of Collins & Aikman preferred and common shares, would bring Collins annualized 2001 sales of $3.9 billion and over 25,000 employees in 123 plants and facilities. Before the purchase, Collins had $1.9 billion in revenue. The combined company will be headquartered in existing facilities in Troy, Mich.
BEAM ME DOWN, SCOTTY: ARMY TAKES CUE FROM STAR TREK
Forget Star Wars. The U.S. Army’s National Automotive Center is taking its cues from Star Trek in eliminating one of its biggest nightmares--keeping supplies flowing to the front lines. How important is it? For the lack of a horse, the old saying goes, a kingdom was lost. And the same could be true if a few tanks are out of action because they’re short of parts. Enter the Mobile Parts Hospital, which could craft the missing goods using a laser beam to craft parts out of any of 18 different materials, from plastic to titanium. The system, called stereolithography, may be not unlike the Star Trek replicator. “I can replicate your part in four hours and get your vehicle back in action,” says Paul Skalmy, NAC’s associate director, who says the technique may also be used to produce parts for the human body, such as titanium joints, for use in battlefield hospitals.” The Army hopes to have the Mobile Parts Hospital ready for action before decade’s end.
‘VIRTUALLY AUTOMOTIVE’ BIZ WANTS TO REVOLUTIONIZE INDUSTRY
There’s lots of talk about Dell Computer’s lean marketing and manufacturing. But that may be the starting point for Build-To-Order.com, an operation that hopes to shatter rather than tweak the century old way the auto industry does business. “We’re not an Internet company” but a virtual automaker, insists BTO chairman Scott Painter, formerly head of CarsDirect.com—one of the few successful auto retailing Web sites. BTO says it is partnering with an assortment of key suppliers, plus an unnamed automaker and will outsource virtually every aspect of its operations. The cars will be sold only online, a variety of highly customizable models set for introduction sometime in calendar year 2004.
LEAN ANYONE? SUPPLIER SAYS IT’S TIME TO EXTEND CONCEPT
The head of supplier Freudenberg-NOK says there is still a great deal of vendor-influenced waste in the automotive industry. Joseph Day, who spoke at the Management Briefing Seminars in Traverse City, Mich., yesterday, was quoted by Automotive News as saying the potential savings may be in the billions of dollars. Suppliers “are doing little to eliminate that waste,” he was quoted as saying. Lean manufacturing is based on the Toyota Production System and was popularized by James Womack and Daniel Jones as a method of dramatically reducing costs through lower inventory and organization of work methods.
STUDY SUGGESTS LOWERING EXPECTATIONS OF E-BUSINESS
It’s time to downsize the projected savings B2B operations can yield the auto industry, suggests a new study by the University of Michigan’s Office for the Study of Automotive Transportation. Just a year ago, many pundits were predicting online efforts would shave as much as $5,000 off the cost of the typical vehicle. That’s “just outrageous,” cautions Michael Heidingsfelder, of RolandBerger Partners, the consulting firm that co-crafted the new study. Savings are likely to be closer to $1.200 a vehicle, the report estimates. And even that is possible only if suppliers and automakers develop a firm understanding and solid plan for making use of their electronic tools. Getting top management to champion e-business is essential, but companies also need to realize there’ll be opposition from within the ranks. Pushing change through the system is never easy when it directly involves those who “live in fear of (losing) their jobs,” warns Heidingsfelder.
AUTOMAKERS SHOULD SET SOFTWARE STANDARDS, SUPPLIER SAYS
In the rush to improve productivity, automakers shouldn’t . . . rush. That’s the message delivered by Henry Danziger, chief information officer at Collins and Aikman Corp., an interior trim supplier, at the Management Briefing Seminars in Traverse City, Mich., this week. Danziger urged automakers to set the standard for collaborative product development and supply chain management software. He said automakers are capable of cooperating, something they did with electronic data interchange, now a commonplace method of doing business in the industry, with 80 percent of Tier 1 suppliers using the technology.
THE TWO WEEK CAR? JUST TWO YEARS AWAY, NISSAN SAYS
Two weeks. Fans of the movie “The Money Pit” will remember the standard answer by contractors on how long Tom Hanks’ old home renovations would take. Now, Nissan is predicting it will hold true for building its cars—at least in Japan. At the same time, Nissan North American production management is aiming for the same goal. “It may take longer to do it in the United States, but it won’t happen that much later than in Japan,” said Hisayoshi Kojima, executive vice president in charge of manufacturing, engineering and powertrain. The comments were made through a translator at a reporter’s briefing at the Management Briefing Seminars in Traverse City, Mich. Currently, Nissan takes between 25 to 30 days to build a vehicle in Japan, compared with 40 days in North America. Nissan is overhauling its systems to shorten the time. The key may be flexibility, exemplified by plants such as a new $1 billion truck plant in Canton, Miss., which is being built with responsiveness in mind. Nissan also plans to include modular assembly and synchronous delivery systems to achieve the goals.
DOCTOR TO BE FIRST BRIDGESTONE/FIRESTONE CASE IN U.S. COURT
A South Texas physician whose Ford Explorer rolled on a Mexican highway will be first in the U.S. to have his case against Bridgestone/Firestone Inc. heard in court. While lawyers for the doctor failed to have the case heard in state court (they had wanted the federal bench to have jurisdiction), the doctor and his family will have their day in court. The trial is scheduled to begin Monday. The accident, which occurred in March 2000, resulted in injuries to all members of the family including his wife, who must use a wheelchair for the rest of her life. The tires in the case were not among tires recalled by Firestone.
FORD, NAVISTAR LAUNCH NEW TRUCK COMPANY
Ford Motor Co. and Navistar International have finalized plans to form a joint venture—Blue Diamond Truck Company—that will build medium commercial trucks. The company will also furnish truck and diesel engine service parts to both its owner companies as well as explore other advanced diesel engine opportunities. The vehicles will be marketed independently under the Ford and International brands and be produced at Navistar’s Escobedo, Mexico, plant. Jack Allen, the joint venture’s general manager, said a new common chassis would be used, although the cabs, interiors and other brand characteristics would remain distinctive to Ford or International.
AUTO INDUSTRY RATES HIGHER THAN THE AVERAGE IN PRODUCTIVITY
On a basis of value-added per employee, the U.S. auto industry is highly productive ranking third amongst all manufacturers. A study by the Center for Automotive Research in Ann Arbor, MI shows that in 1996 (the latest governmental data) the U.S. auto industry value added (the sum of profit, rent, interest, and labor compensation) was $137,000 per worker – 47 percent higher than the overall value-added ratio for U.S. manufacturing ($93,000). Only tobacco products, petroleum and coal products, chemicals and allied product industries beat the auto industry.
See the Center for Automotive Research Web site:
FROM THE SOURCE:
MICHIGAN SAYS IT WANTS TO BE HOME OF FUEL CELL
The Michigan Economic Development Corporation (MEDC) and the Michigan Automotive Partnership released a study (Tuesday) that identifies tactics to position Michigan as a leading candidate for potential fuel cell manufacturing facility investment. The study, authored by the Center for Automotive Research, was commissioned due to recent technological developments that suggest the internal combustion engine may eventually be replaced by fuel cell technology. This replacement could affect nearly 27,000 Michigan workers employed at 10 engine plants and five powertrain plants. "Alternative powertrain technology has placed our state's auto industry at a crossroads," said Doug Rothwell, president and CEO of the Michigan Economic Development Corporation. "In order to maintain our state's position as the automotive technology center of the world, Michigan must embrace this emerging technology or potentially lose thousands of jobs. This study offers the necessary steps to continue Michigan's manufacturing leadership in the technology driven economy."
CONSUMERS CHOOSING TO LEASE VEHICLES OVER LONGER TERMS
Continuing the trend that began in 1998, the average length of new vehicle leases increased to more than 39 months in the year 2000, according to a new study of the leading leasing industry association. In 1997, the average lease length was just over 32 months, according to the Association of Consumer Vehicle Lessors (ACVL). The association's members write four out of five consumer vehicle leases in the United States each year. "The day of the 24-month lease is virtually gone, and 48-month leases are the most popular term for most leasing companies," said Randall Brown, President of ACVL. Security deposits are also required less frequently than a few years ago, the ACVL survey showed. In 2000, security deposits were required on just over half of new leases written by ACVL members. ACVL has conducted the annual survey of its members since 1993.
Autoliv (ALV), Closed 20.71, down 0.28
ArvinMeritor (ARM), Closed 20.55, down 0.23
American Axle (AXL), Closed 19.86, up 0.28
Dana (DCN), Closed 25.00, down 0.23
DaimlerChrysler (DCX), Closed 47.80, up 0.43
Donnelly (DON), Closed 15.75, up 0.05
Delphi Automotive (DPH), Closed 16.12, up 0.01
Eaton (ETN), Closed 75.18, down 0.52
Ford (F), Closed 24.75, up 0.10
General Motors (GM), Closed 63.29, up 0.14
Gentex (GNTX), Closed 30.70, up 0.09
Goodyear (GT), Closed 28.02, down 0.02
Johnson Controls (JCI), Closed 79.28, down 0.58
Lear (LEA), Closed 41.04, up 0.09
Magna International (MGA), Closed 63.00, up 1.02
SDRC (SDRC), Closed 24.78, unchanged
Toyota (TM), Closed 65.75, up 0.35
TRW (TRW), Closed 43.29, up 0.34
Visteon (VC), Closed 19.95, down 0.64
Volkswagen (VLKAF), Closed 45.88, up 1.13