Saturday, August 25, 2007
Reducing the number
of platforms ultimately saves money, officials say.
By JEWEL GOPWANI
DETROIT FREE PRESS
DETROIT — There’s a little bit of Toyota inside the Chevrolet HHR.
The HHR’s seat frame was designed by the General Motors rival and produced by one of Toyota Motor’s suppliers.
This kind of sharing takes to a new level a trend the auto industry has been moving toward for decades. More recently, the Detroit automakers have been picking up speed with it.
These companies are trying to buy fewer types of parts to use across their vehicle models and on models sold around the world, aiming to remove some complexity from the development process and ultimately save money.
Ford Motor and Chrysler are on their way, having both set goals to reduce the number of vehicle platforms they use.
GM is pushing even further, now sharing parts with other companies.
“I think that’s what all of us want to see more of,” said Bo Andersson, GM’s group vice president of global purchasing and supply chain.
The heads of purchasing at five of the world’s largest automakers are in agreement: It sometimes makes sense for an automaker to buy identical parts from the same supplier a competitor uses.
The strategy saves money for automakers in engineering and testing, and it cushions the effect of volume cuts on suppliers, the purchasing chiefs from GM and Ford said after a panel discussion Thursday in Novi, Mich., at the AutoTech conference, presented by the Automotive Industry Action Group.
Using a Toyota-designed seat frame costs GM more per part, Andersson said, adding: “But that’s OK because I can avoid the investment.”
GM has made huge strides in using common parts within the company. Starting next year, the automaker will reduce by nearly 50 percent the number of architectures, or vehicle underpinnings, it uses to build its models.
The plan, which has been in the works for 31⁄2 years, is expected to save about $1 billion a year by reducing development and purchasing costs.
At Ford, CEO Alan Mulally has made it a goal to use more common parts and architectures in its operations around the world.
Derrick Kuzak, Ford’s group vice president for global product development, said that over the next five years Ford will reduce its number of platforms by 40 percent, and that 70 percent of its volume of platforms will come from a core of 10 platforms.
As for engines, Ford is already on its way to reducing complexity. Small, four-cylinder engines already have been cut to three from 10. And the number of 6-cylinder engines will go from eight to two over the next five years, Kuzak said. Seat structures, meanwhile, will be reduced from 28 to two, he said.
Chrysler plans to reduce the number of platforms it uses from 12 to seven by 2012.
It has been able to share parts across vehicle models, including brake calipers on the minivans, Dodge Nitro, Jeep Liberty and Wrangler.
When commonizing parts, which is complex, works, it means bigger volumes for the suppliers that win those contracts, and in return for those higher volumes, lower prices for automakers and eventually consumers.
As some suppliers win business, however, others will lose business — a reality that exacerbates shrinking in a domestic auto-parts industry that is already suffering from lower volumes in North America and over-capacity.
But as suppliers spread their wares across platforms and even across automakers, the purchasing chiefs say, they’re shielded from the effect that one automaker’s production cuts have on their bottom line.
“We’re trying to stabilize the business equation for our suppliers and de-risk it as much as we can,” said Tony Brown, Ford’s senior vice president of global purchasing.
To make it work across companies, automakers need suppliers to identify the chances where competitors can share, GM’s Andersson said.
He added: “Fuel economy and alternative fuels may be the best opportunity. It’s something we all need to do.”