Carmakers in Europe have shifted the majority of seat business to seating specialists in the past three years, but the outsourcing trend apparently has peaked. In 1995, 74 percent of the seat sets used in Europe were made by four independent component companies. Sold business and changing product mix during the next two years might add a point or two, but from then on the picture looks murky.
Some participants in the market see union pressure in Germany returning some seating business in-house. Others believe car companies will get more confident and outsource the business they have held onto. Ford Motor Co. said it will outsource the last of its remaining seat business, amounting to 4-5 percent of the market.
Seats are considered the third-most expensive system in the car, after engines and transmissions. Seats in a typical $40,000 luxury car cost $670-$1,000, according to one industry source.
Seating involves diverse technologies, a wide-ranging mix of materials and high labor content.
In 1984, only 1 percent of the Western Europe seat market was outsourced. That grew to 40 percent in 1993, industry sources estimated. For 1996, more than 70 percent of the seats for the 13.1 million vehicles in western Europe will be outsourced.
Fiat has moved all of its seat manufacturing to outside suppliers.
``We haven't made seats for five years now, with the exception of assembling seats for the Panda,'' said Roberto Di Stephano, manager of seat purchasing at Fiat.
Fiat's principal seat supplier is Lear Seating GmbH & Co. Lear also supplies all components for Panda seats.
``One of the main benefits of outsourcing is that you get the best performance in engineering, in production and in price,'' Di Stephano said. ``But it's also a people issue. We are keen to keep in-house labor to a minimum.
``This does not mean we are almost 100 percent dependent on Lear, but the risk is purely theoretical, because Lear in Italy is 100 percent dependent on us. They have set up plants dedicated to our needs, and employ personnel who work only for Fiat.''
Ford Motor Co. also is opting out of seat manufacture.
``We do not consider that seat manufacturing is a core activity,'' said manufacturing spokesman Peter Watt. ``We already outsource much of our seat manufacture, and in the medium- to long-term future, all in-house production will be moved out.''
That action will add about 600,000 units to the seating market. Ford now outsources 65 percent of its seats in Europe, all with Johnson Controls Inc.
General Motors gives most of its seating business to Lear, but its subsidiary Delphi Interiors & Lighting does supply one GM project. From Epila, Spain, Delphi makes 1,900 seats a day for the Corsa, manufactured in Zaragoza.
Rover and its parent BMW have decided to retain some seat making for strategic reasons.
``Rover outsources about 32 percent of its current volume of seats,'' said John Hale, Rover's purchasing manager for seats. ``It has been a gradual development over the last five years.
``Marque value is the key reason why Rover has tended to stay behind the general trend. Interior trim has quite a strong marque value and the question is, could a large seat supplier really reflect the Rover marque value?''
BMW does the seats for one out of the three model series being built at any one time.
``Car companies are still making seats themselves because they want to maintain an expertise and capability in-house, in order to be able to judge the quality of their
seat supplier,'' said Frank Hildebrandt, marketing manager at Johnson Controls Automotive Europe. ``Our estimate is that the rapid growth in outsourcing has stopped.''
In Germany, the pressure of trade unions could change the outsourcing picture in the long term, warned Tilman Schafer, marketing manager at German seat manufacturer Keiper Recaro GmbH & Co.
``We have a problem with unemployment in Germany, and the trade unions are fighting against outsourcing. Car manufacturers might not be able to resist the pressure and could be forced to bring their seat assembly capacity back in-house. It has not happened yet, but it could.''
Gaston Jacques, director of research and development at French seat maker Bertrand Faure, predicts continued growth in outsourcing. Within 10 years, he said, the percentage of seats made by automakers will fall to 10 percent.
The next development in the seating world is the packaging of complete interior systems.
Views are divided about the benefits of such a strategy, but all the seating companies are moving in that direction. It seems just a matter of time before someone contracts for an entire interior with a single company.
Fiat welcomes such proposals.
``We understand that Lear is trying to develop as a single-source supplier of seats and interiors,'' said Peter Davis, a spokesman for Fiat's design department. ``They already offer the service in the United States, and it's only a matter of time before they offer it in Europe. We would be ready for it right away.''
Lear Seating Corp. led the advance toward combined interior seating supply by purchasing interior supplier Automotive Industries. It then changed its name to Lear Corp. and began describing itself as ``the largest independent global Tier 1 supplier capable of delivering products for a vehicle's complete interior.'' It lacks carpet and instrument panel subsidiaries.
Arch-competitor Johnson Con-trols Inc. acquired 75 percent of Roth Freres and now is in a position to supply seats and headliners. JCI does not supply carpets or instrument panels either.
Keiper Recaro claims to lack only the foam components.
And Bertrand Faure, which has been acquiring companies such as plastics molder PMC in England, believes it is ready to provide everything.
Keiper Recaro's Tilman Schafer said he is unsure about the practicality of supplying the interior and seating in a single unit because of the range of expertise a company would need.
``No one company is able to do everything in seats today,'' he said. ``It is already difficult enough for car builders to identify a seat supplier with just-in-time expertise and with the capability for complete product development.''
Bertrand Faure is more confident. A company spokesman indicated that many seat/interior trim contracts are in discussion, though none has been signed.
Ford sees advantages in having a single source for its interiors.
When you have a single company involved, ``you gain economy of scale and an improved quality level that is consistent with your company's own standards,'' Watt said.
At Rover Group, the advantages are not so clear.
``The trouble with a single source is whether you could find one who had the leading-edge technology for all the components concerned. It may be really difficult to find a cockpit solution from one company,'' Hale said.
However, he added, it might be beneficial for niche products.
Seats are getting ever-more complex.
Two safety features have been introduced recently on seats: side airbags and passenger detection sensors. Both are likely to gain wider acceptance. The side airbag, built into the seat to protect the driver from side impacts, already is an option on the Audi A8 (Keiper Recaro) and it is scheduled to be offered on the new Volvo S40 (Johnson Con-trols).
Passenger detection is necessary to prevent front airbags from being deployed if the seat is not occupied, or if it is occupied by a child or baby. Most makers agree that the solution is to insert a sensing system in the seat, between the cushion and the cover.
Safety also is the reason why Saab, in association with Delphi Automotive Systems, has developed Pro-tech, an interactive head restraint designed to prevent whiplash injuries. To be fitted to both front seats on Saab's next generation of cars, the Pro-tech head restraint snaps forward during a collision, minimizing head movement and reducing stress on the neck and spine.
Recyclability is a key issue for seating, because seats traditionally are made of many materials.
``Environmental features will become as important to automakers as quality and safety are today,'' said Alok Kuma, director of advanced development at JCI, based in Milwaukee.
JCI's seat pads manufactured using recycled PET should find their way into U.S. vehicles by the end of the century, Hildebrandt said. In Europe, the idea is still at the concept stage.
Bertrand Faure's approach to promoting environmentally friendly products is to design seats so they can be disassembled more easily. For example, the company is getting rid of metal inserts molded into the foam and reducing the amount of foam-in-place technology.
In the future, seats will only get more complex.
At Bertrand Faure, ideas include an anti-fatigue massage mechanism and a voice control system for seat adjustment. Both are at the laboratory stage.
Lear also is working on a massage seat. Lear has licensed technology for a system to reduce fatigue, and the company expects to win contracts for it shortly, said Jim Masters, director of advanced product development for the Southfield, Mich., firm.
Tests with anti-fatigue massage integrated into seats on Volvo cars have been carried out, though no decision has been made on whether to adopt them.