ROYAL OAK, MICH. — Several large automotive interior producers are serving notice to their supply base: Step up your business or step out of our way.
``It's important to us down the road for our suppliers to pick up their [level of] sophistication,'' said Kenneth Way, chief executive officer of Lear Corp., based in Southfield, Mich. ``Become integrated yourselves in smaller systems. We need partners globally, whether by working with our current [suppliers] or by finding new ones.''
That dose of hard reality was administered by executives of six leading Tier 1 interior suppliers during a sometimes-fractious round-table discussion sponsored by the American Society of Body Engineers Inc. on Sept. 29 in Royal Oak.
While the megasuppliers played a gentle game of one-upmanship on a number of issues — such as the drive to build interior cockpit systems and working with original equipment manufacturers — they were unanimous on one point:
The train is leaving the station, with or without the companies' current stable of Tier 2 and Tier 3 suppliers.
Jeffrey Timar, general manager of Troy, Mich.-based Textron Automotive Co., said Textron is evaluating its suppliers to see which ones can keep pace globally with the company.
``We're picking out our global partners,'' Timar said. ``We want all our tiered suppliers to support our systems worldwide and work with us as a team. We don't know yet who will be on board, and we're only interested in those companies that will help us grow.''
The alternative, Timar said, is to grow through acquisition, joint ventures or green-field plants — moves that would excise more suppliers from Textron's rolls.
The participants also shared their visions of where the $45 billion global auto interior market might be headed in the future. That included adopting more of a systems approach, especially in the production of interior cockpit modules. Such work can involve the integration of an interchangeable mix of door panels, seating systems, instrument panels and overhead systems.
According to Way, production of complete cockpit systems on a large scale is five to eight years away. He added that Lear would leverage the capabilities of its existing plants to make the cockpits, leaving open the possibility that the parts maker would add instrument panel production to its facilities.
Currently, Lear does not make instrument panels in large volume in North America but owns panel maker Borealis Industrier AB of Goteborg, Sweden.
Way's projections elicited debate from Rodney O'Neal, general manager of Delphi Interior Systems of Warren, Mich. Delphi already is making cockpit systems for both Fiat SpA and Mercedes-Benz of North America Inc., he said.
The Mercedes cockpit is used on the new M-class sports-utility vehicle built in Vance, Ala.
Jeffrey Steiner, worldwide marketing communications director for Johnson Controls Inc. in Plymouth, Mich., said JCI also was involved in cockpits for the M-class.
Timar said Textron probably would never be a complete cockpit supplier because the company has no plans to make seats.
Before systems work can snowball at Delphi, O'Neal said OEMs need to give the company more responsibility. Delphi is a free-standing supplier owned by General Motors Corp.
``If quality systems work is needed, OEMs must be willing to let us take control of design, delivery and sourcing,'' O'Neal said. ``When we get to source our own products at the Tier 1 level, we can make the most of the opportunities.''
Other panelists were William Frederiksen, executive vice president for panels and trim with Markham, Ontario-based Magna International Inc., and Edward Northern, general manager of interior systems with United Technologies Automotive in Dearborn, Mich. The group offered these observations on the future of automotive suppliers:
Tier 1 companies will manage entire projects and offer a single price to an OEM, instead of breaking it down by function, Frederiksen said. That will mean more partnerships with Tier 2 and Tier 3 suppliers on each project.
Suppliers will have the option to create highly customized interiors of the same vehicle for different customers, said Steiner at JCI. ``We're shifting from servicing demand to creating demand,'' he said.
Delphi plans to join with its suppliers in an alliance on a project-by-project basis, O'Neal said. The players would change depending on the vehicle platform, he said.
To succeed, the entire supply base must continue to cut waste from production, said UTA's Northern. "It's an evolution, but for success, I see the need for more changes in the [production] process," he said.
Combined, the six companies at the round table recorded more than $25 billion in 1996 sales to North American automakers, according to estimated figures from both Plastics News and Automotive News, a sister publication.