OESA Digest A Review of Industry Issues

Transcription

1 Detroit Washington D. C. OESA Digest A Review of Industry Issues December 2, 2014 Webinar Supporting Partner Webinar begins at 9:00

2 Introduction Welcome and Welcome Back Digest objectives: Inform members regarding OESA initiatives Direct attendees to relevant materials Note: Some content is members-only You may submit any questions via webinar interface 2

3 OESA Digest Partner 3

4 Antitrust Guidelines Approved agenda for each meeting. Stick to agenda Business conducted at formal meetings. No rump sessions No agreements, discussions or understandings concerning: -- prices, discounts, terms or conditions of sale -- profits, margins, cost data -- market shares, sales territories, markets -- allocation of customers or markets -- selection, rejection, termination of customers or suppliers -- restricting territories or markets -- restricting customers -- any matter inconsistent with the exercise of independent business judgment in pricing of services & products, dealing with customers and suppliers and choosing markets in which to compete. 4

5 Agenda Welcome Mike Shapiro, OESA Forecast Outlook Mike Jackson, IHS Automotive Q & A OESA Automotive Supplier Barometer Dave Andrea, OESA Quarterly Hot Topics Margaret Baxter, OESA Generation Auto Video Contest Direct Buy Conflict Minerals Tooling Q & A Mike Shapiro, OESA Wrap Up Mike Shapiro, OESA Save the Date Events Publications Annual Member Survey Member Invoicing 5

6 Forecast Outlook Mike Jackson Senior Manager, North American Light Vehicle Production Forecasting, IHS Automotive 6

7 Information Analytics Expertise Shifting Gears: From Expansion to Peak 2014 IHS

8 US Auto Sales 88% recovery Millions US Sales 2014 IHS

9 Inventory External factors 100% 50% Millions 2.5 0% % % Inventory/Sales Index US Inventory Source: Autodata, IHS Automotive 2014 IHS

10 Production Outlook 17 vehicles Millions % 80% 60% 40% 4 20% % NA Production Underutilized Capacity % Utilization 2014 IHS

11 Apples & Oranges 2.8M onshoring Millions NA Production Onshoring Underutilized Capacity 2014 IHS

12 Variable Capacity 2.6M variable Millions Shift 2-Shift 3-Crew/Shift NA Production 2014 IHS

13 Where s Your Business? 2016 peak 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% US 3 Asian 4 German IHS

14 US 3 Manufacturers Plateau Thousands 4,000 3,000 2,000 Positives Consolidation Broader Portfolio Retail Focus Full-size Profits 1, IHS GM Ford Fiat Chrysler Negatives Launches, Delays Global Luxury Portfolio Expansion Offshoring

15 Asian 4 Manufacturers Thousands 2,500 2,000 1,500 1, Toyota Honda Nissan Hyundai Positives Localization Capacity expansion Portfolio expansion Exports Negatives Competition Cost cutting 2014 IHS

16 German 3 Manufacturers Thousands 1,200 1, IHS Volkswagen BMW Daimler Positives Localization Capacity Expansion Portfolio Expansion Image Exports Negatives Aggressive Targets Over Proliferation Distractions

17 Other Manufacturers Thousands Fuji Heavy Mazda Tesla Mitsubishi Positives Localization Capacity Expansion More Reviewing Negatives Financial Hurdles Need Partners Size and Scale Technology Risk 2014 IHS

18 Contact us Thank You For any further questions, please contact: Joe Langley Principal Analyst, North America Vehicle Production Forecasting & Analysis December 2, IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS. Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more information, please contact IHS at IHS CARE (from North American locations), or +44 (0) (from outside North America). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners.

19 Forecast Outlook Forecast Outlook Q&A 19

20 OESA Automotive Supplier Barometer Dave Andrea Senior Vice President, Industry Analysis and Economics OESA 20

21 OESA Automotive Supplier Sentiment Index Compared to two months ago, how has your 12 month outlook changed? Positive Negative No. of Responses = 79 OESA Automotive Supplier Barometer- November Published with the support of

22 What is the most significant short-term (12 months) and long-term challenge or issue that your company faces internally and externally in reaching its overall 2014/2015 business plan? Internal Short-term Challenges: Human Resources (29 responses) Production Capacity (10 responses) Managing Growth (9 responses) Operations/Processes (8 responses) Launch Capabilities (6 responses) Capital Planning (6 responses) Margin Protection (4 responses) External Short-term Challenges: Forecasting/Capacity Planning (16 responses) Customer Management (14 responses) Global Markets (10 responses) Pricing/Competition (10 responses) Business/Growth (8 responses) Raw Material Markets (5 responses) Economy (4 responses) Internal Long-term Challenges: Human Resources (20 responses) Capacity/Footprint/Capital Planning (20 responses) Maintaining Profit Margins/Growth (19 responses) Cost Containment/Productivity (6 responses) External Long-term Challenges: Globalization/Competition (20 responses) Market Demand (14 responses) Sales/Profitability (11 responses) Economy (9 responses) Customer Management (5 responses) 22 OESA Automotive Supplier Barometer- September 2014 Published with the support of

23 For next year, is your company planning to add or cut staff in each of the following job areas? For those areas where your company is planning to add staff, indicate if you are having trouble finding qualified, available candidates. 0% 20% 40% 60% 80% 100% Engineering - hiring Will be adding staff - filling % of companies hiring engineers are also having trouble finding candidates Will be cutting staff Technicians - hiring filling Hourly Skilled Trades - hiring - filling Hourly Production - hiring - filling % of companies hiring technicians are also having trouble finding candidates % of companies hiring hourly skilled trades are also having trouble finding candidates 22 8 No change planned Yes, we are having trouble finding qualified available candidates No, we are not having trouble finding qualified avalable candidates Note: Data labels show number of respondents 2013 comparative results are shown in the appendix No. of Responses = OESA Automotive Supplier Barometer- November 2014 Published with the support of

24 Rate each of the following reasons that you believe prevent you from filling the majority of your open requisitions. 0% 20% Lack of qualified candidates Salary expectations Position location 5% Advancement opportunities 8% 13% Company awareness/reputation Perceived long-term employment stability Most Prevalent = 1 Rating = 6 3% 7% 5% Rating = 2 Rating = 7 17% 12% 11% 1% 14% 9% 7% 7% 8% 8% 7% 8% 25% 15% 9% 7% Rating = 3 Rating = 8 13% 12% 11% 13% 16% 11% 8% 12% 5% 22% 9% 15% 3%7% 9% 19% 3% 3% 11% 3%5% 7% 4% 7% 24% 14% 11% Industry reputation 3% 9% 9% 100% 12% 5% 9% 15% 13% 9% 9% 5% 24% 24% 8% 80% 28% 20% 3% 7% Benefit offerings 60% 38% Perceived work/life balance Job responsibilities 40% 9% 15% 20% Rating = 4 Rating = 9 13% 19% 15% 5.7 4% % % % 6.9 Rating = 5 Least Prevalent = 10 OESA Automotive Supplier Barometer- November 2014 Published with the support of % 2013 comparative results are shown in the appendix % 5% Comments: None provided. No. of Responses = % 8% 2.7 7% 15% 12% 13% 11% 4% Weighted rating

25 Rate the following training initiatives that your company is instituting or continuing for next year. Operational and process training Leadership and management training 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 37% 37% 21% 3% 3% 26% 41% 23% 5% 5% Weighted rating Professional skills training 14% 40% 32% 14% 2.5 Team training 10% 34% 36% 14% 5% 2.7 Personal skills training 4% 22% 42% 23% 9% 3.1 Highest Priority = 1 Rating = 2 Rating = 3 Rating = 4 Lowest Priority = 5 Leadership and management training (e.g. supervision, succession, etc.) Operational and process training (e.g. health/safety, lean, core, cross, etc.) Professional skills training (e.g. product, quality, R&D, design, engineering, FMEA, skilled trades, etc.) Personal skills training (e.g. computer, problem solving, time management, etc.) Team training (e.g. organizational, continuous improvement, teamwork, etc.) Comments: Focus on fundamentals at the shop floor! We invest heavily in leadership and organizational development. The ROI is very high comparative results are shown in the appendix No. of Responses = OESA Automotive Supplier Barometer- November 2014 Published with the support of

26 Considering everything else equal, what sustained NA vehicle production level is needed before your company needs to add (in millions of units)? In the May 2014 OESA Automotive Supplier Barometer, respondents noted that, on average, they are operating at an 80 percent capacity utilization level (the upper quartile of companies are running at 90% utilization) with NA vehicle production volumes at 16.8 million units. In the September 2011 OESA Automotive Supplier Barometer, respondents noted that, on average, they anticipate operating at an 80 percent capacity utilization level in 2012 with NA vehicle production volumes at 12.9 million units. Lower Quartile Value Median Value Upper Quartile Value Equipment beyond normal replacement 16.8 million 14 million 17.0 million 14 million 17.9 million 16 million Plant square footage to existing facilities 17.0 million NA* 18.0 million NA* 18.8 million NA* Plant square footage through new facilities 17.5 million NA* 19.0 million NA* 20.0 million NA* *NA: Did not ask this sub-question in No. of Responses = No. of Responses = OESA Automotive Supplier Barometer- September 2014 Published with the support of

27 What is the biggest barrier you see to OEM requests for increased capacity? Commercial: (21 responses) Scheduling/Forecasts: (18 responses) Material/Supplier Availability: (6 responses) Resources/Footprint: (5 responses) Customer/Relationships: (4 responses) 27 OESA Automotive Supplier Barometer- September 2014 Published with the support of

28 How confident are you that your company will move ahead and implement the needed capital investment to meet your 2015/2016 demand requirements? The July OESA Automotive Barometer showed 74 percent of suppliers are planning for significant or somewhat increased levels of capital expenditure investment in Somewhat confident (50-75%) 22 28% Slightly confident (<50%) 6 8% Not applicable, we are not planning for increased capital expenditure investments 3 4% 2013 for 2014/ % 5% Very confident (>75%) 46 60% 36% 48% No. of Responses = OESA Automotive Supplier Barometer- September 2014 Published with the support of

29 If you had a dollar of R&D investment, how would you allocate it across the following technology areas? Average Value including responses = 0 # of responses with >0 value Engine: ICE Technologies Engine: Hybrid, Electric, Alternate Fuels, Fuel Cell Technologies Transmission Technologies Telematics/Connectivity Technologies Safety Technologies Advanced Materials (composites, lightweight materials, etc.) Technologies Sustainable Manufacturing Technologies Comments: Our product line and strategic direction does not support all of your categories. Not sure how to answer question as we are not in most of these product arenas, are you asking how I perceive the importance of each within the industry? I looked at this as the percent of the dollar investment. The several of those items for our industry overlap. No mention of vehicle dynamics, that's where we spend our money No. of Responses = No. of Responses = OESA Automotive Supplier Barometer- September 2014 Published with the support of

30 OESA Automotive Supplier Barometer - Resources OESA Automotive Supplier Barometer Studies Knowledge Center Resources For more information: dandrea@oesa.org 30

31 Quarterly Hot Topics Margaret Baxter Senior Vice President, Operations and International Affairs OESA 31

32 Quarterly Hot Topics Generation Auto Video Contest Directed Buy Conflict Minerals Tooling 32

33 Generation Auto Video Contest The winners of the 2014 contest are: First place ($4,000): An Industry with Infinite Possibilities-California State University Formula SAE Second place ($3,000): It s A Way of Life-Team Jaabaz, VIT University, India Third place ($1,000): GFR for Generation Auto Formula SAE Oregon State University 2014 Gen Auto Press Release 33

34 Quarterly Hot Topics Generation Auto Video Contest (video showcase) Directed Buy Conflict Minerals Tooling 34

35 Directed Buy The OESA Directed Buy Committee recently met with a cross-functional team from GM to discuss directed buy and the work of the committee. GM is reviewing its practices and process around directed buy, and was interested to better understand ways that the company can streamline its overall directed spend. OESA is encouraged by GM s interest in the committee work and the overall interest among OESA members to address this important and complicated issue. 35

36 Directed Buy At this time OESA is approaching other OEMs to invite them to participate in a similar dialogue on directed buy. To this end the OESA Directed Buy Committee is seeking new committee members to participate in this phase of the committee work. If your company has a strong interest in directed buy, and you would be willing to participate in upcoming meetings to explore directed buy issues, let us know. 36

37 Directed Buy Background: The OESA Directed Buy Committee examined three-party arrangement issues in procurement, program management and down-stream contract administration, and how they affect suppliers and the supply chain. It was clear that improvements can be made in directed buy arrangement to address the risk, complexity and cost that these three-party relationships can cause within the supply chain. The Committee has made its detailed analysis of directed buy available to industry. The committee is purposeful in raising the awareness of these issues in the industry. Clearly the cost, risk and complexity of directed buys can create problems that may become amplified in the supply chain. Addressing the issues upfront by clarifying responsibilities, roles, expectations and relationships will serve to minimize downstream risk to the OEM and tier suppliers. 37

38 Directed Buy - Resources A model three-party agreement that sets forth roles and responsibilities, along with a RASIC chart that can be used to clearly define the roles of the OEM, Tier 1 and Tier 2. Final presentation from the Directed Buy Committee report in August,

39 Quarterly Hot Topics Generation Auto Video Contest (video showcase) Directed Buy Conflict Minerals Tooling 39

40 Detroit Washington D. C. Conflict Minerals Survey Results Survey Administered for: Original Equipment Suppliers Association EHS, LIC, CPO Councils and CM Committee November 7-17, responses

41 Do you have a clear understanding of reporting requirements and deadlines for your customers? OEM % Yes Responses Toyota 93% Chrysler 90% Honda 89% GM 88% Nissan 86% Ford 84% Other OEMs CAT, Cummins, John Deere, AGCO, Navistar 83% Tier Suppliers 85% 41

42 Is your company actively collecting data for purposes of conflict minerals reporting, either to your OEM or tier customers or to the SEC? Yes % What if anything would you suggest to your OEM customers as a group as a possible next step that would improve the reporting process? Responses summarized: Utilize a common reporting tool and maintain common requirements consistent with legislation and SEC rules. 42

43 If yes, as you have made reporting requests to your lower tier suppliers, what has been your response rate? % 8 24% 1-25% 3 9% 51-75% 11 32% 26-50% 12 35% May % 4% 11% 23% 31% 43

44 How would you characterize the quality of the responses? Responses summarized: Varied from very poor with examples to good How has your company conducted follow-up for responses where you felt more information or a deeper understanding was needed? Responses summarized: s, letters, phone calls. We really don't have the resources for this activity. 44

45 At this time, has your company narrowed the number of lower tier suppliers from which you seek reporting data (e.g. high probability for 3TG)? No 13 38% Yes 21 62% If yes, what means did you use to narrow the scope? (e.g. IMDS, survey to suppliers, internal technical experts etc.) Responses summarized: IMDS, commodity experts, surveys Yes comments: Unfortunately many off-shore OEMs and Tier customers are requiring all suppliers to be surveyed. Yes, we are trying to just focus on any supplier that only supplies us a metal type component and or a finish that might contain 3TGs in it. Somewhat, mainly segregating by spend, but take commodity group into account. 45

46 Has your company deployed additional resources specifically for managing conflict minerals obligations? No 25 74% 20% Yes 9 26% Yes comments: Two full time equivalents. Tons and tons of man hours. One person nearly full-time. No comments: We have allocated the tasks to existing resources. We are not getting a higher price from our customers either. 80% May

47 Share any other comments on this issue. Response summary: Total confusion throughout the worldwide OEM/Tier customer organizations. Too many conflicting expectations by customers - multiple changes to ipoint, too many unique portals or extra reporting tools in use by or mandated by customers. 47

48 Conflict Minerals - Resources Conflict Minerals survey results Conflict Minerals presentation from Catherine Boland 48

49 Quarterly Hot Topics Generation Auto Video Contest (video showcase) Directed Buy Conflict Minerals Tooling 49

50 Tooling Building on momentum from the OESA Tooling Forum and the 2013 OESA and HRI Automotive Vendor Tooling Study, OESA and Harbour Results, Inc. (HRI) shared market intelligence and insight for the automotive tooling industry on Oct. 30, 2014 Discussion focused on key areas including: The current tooling capacity gap including updated launch information Skilled workforce shortage and the effect on future capacity OEM lead time expectations OEM product and tool complexity Cause and effect of OEM launch delays Best practices in operational leadership 50

51 Tooling - Resources Tooling Barometer Results Regular Members may request a copy of the HRI Vendor Tooling Presentation Contact Laurie Harbour, President & CEO, Harbour Results, Inc. 51

52 Wrap up Mike Shapiro Executive Director, Business Development OESA 52

53 Q&A Please submit your questions through the webinar tool 53

54 Wrap up Upcoming Events: Ford Town Hall: Monday, Ford World HQ Canada/US Automotive Dinner: Thursday, The Dearborn Inn (featuring: Simon Nagata, president & CEO, Toyota Motor Engineering & Manufacturing North America, Inc.) Washington Legislative Summit: April OESA Events List: 54

55 Wrap up Publications: Terms and Conditions Comparative Analysis - September 2014 Member Information: Annual Member Feedback Survey launches January 12 th Member Invoicing pay OESA annual dues by 01/31/15, receive one council membership for free: CFO, CIO, CPO, Communication Executives, EH&S, HR, Legal Issues, Product & Technology Development, Small and Medium Enterprise Presidents, Warranty Management * CEO, Sales & Marketing & Young Leadership Councils are NOT eligible * OESA Councils are exclusively for the highest ranking executive responsible for the specific functional area, and are for REGULAR members only. Contact Brenna McCann for more info: bmccann@oesa.org 55

56 Wrap up - Resources Quarterly OESA Digest presentations and recording are posted in Knowledge Center/ Hot Topics Other OESA Resources include: Events Presentations OESA News OESA antitrust compliance policy and FTC Guide to Antitrust 56

57 Wrap up Thank you Thank you 1Q OESA Digest: March 10,