Changing Dynamics for Tier I Suppliers
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Eaton’s Vehicle Group
Global reach, local depth
Key facts and figures
•
•
•
•
2012 Revenue: $3.9 Billion USD
49 facilities on 6 continents
10 Vehicle Group R&D Centers
Approximately 15,000 employees worldwide
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2
Production Outlook
North American Short-Term Environment
Industry hasn’t surpassed 16M production in 10 years
20.0
• Rebuild Inventory
18.0
• Exports
16.0
14.0
-8.6M
+7.2M
• Capacity Expansion
12.0
• Production localization
10.0
8.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2019
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Expansion
0.0
Exports
17.8
16.1
15.3
13.1
11.9
8.6
12.6
15.1
15.3
15.8
15.8
15.9
16.4
15.5
2.0
17.2
4.0
Localization
6.0
Source: IHS AutoInsight
3
Market forecast vs. OEM projections
OEM F
OEM E
OEM D
OEM C
OEM B
OEM A
Market Forecast
OEM Projections
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4
This Really Happens
OEM Volume Change
Volume (1000s)
200
Delay
150
100
Revised Volume
Excess
Initial Volume
Capacity
50
0
Jan-13
Jul-13
Jan-14
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Jul-14
5
Market dynamics – global launch activity
Global Launch Events
151
Number of Launch Events
160
140
122
120
134
130
117
101
100
80
2012-19 Global
Avg = 126.5/year
136
125
107
112
85
77
Accelerated number of events
driven by global platform
consolidation, expansion to
emerging markets and 2009-10
capital conservation rebound
60
40
20
0
2000
2006
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Launch Event = Vehicle launch @ a facility with sustainable volume >50K/Year
© 2013 Eaton. All Rights Reserved..
Source: IHS AutoInsight
6
Negative
Positive
What the suppliers are saying
100
90
80
71697370
71
66
6664
70
62
6260
61
60
50
55
55
55
60
50 52
5051 52
51
46
50
38
37
34
40 3534
25
30
212323
20
10
0
Source: OESA Automotive Supplier Barometer-July 2013
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7
What keeps a supplier awake at night
Most Significant
Rating 2
Rating 3
0%
Manufacturing
18%
Design and Engineering
Prototype and Validation
8%
26%
6% 6% 6% 8%
17%
14%
13%
13%
8% 4%
14%
17%
19%
26%
7% 7% 3%7%
100%
1%
10% 4%
17%
15%
29%
18%
Least Significant
80%
17%
24%
18%
12%
Rating 6
60%
21%
25%
Sales and Marketing 3% 7%
Other
Rating 5
40%
29%
24%
Sourcing and Procurement 3% 8%
Software Development
Neutral
20%
15%
28%
10% 3%
10%
12%
36%
45%
Source: OESA Automotive Supplier Barometer-May 2013
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8
Action being taken
0
5
10 15 20 25 30 35 40 45 50 55 60 65
58
Hiring technical staff
50
Increasing manufacturing capacity-Internal processes/efficiencies
28
Hiring skilled trades
25
Hiring production employees
15
Increasing collaboration with suppliers-Outsourcing technical
14
Increasing collaboration with suppliers-Outsourcing manufacturing
Increasing manufacturing capacity-Acquisitions
Other
6
12
Source: OESA Automotive Supplier Barometer-May 2013
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9
Managing the supply chain risk downstream
• Proactive metric management
system
• 5 categories
•
•
•
•
•
Financial
Business Focus
SIOP
Personnel
Quality
• Sourcing council requirements
• Financial risk assessment
• Component risk assessment
• Rightsizing activities by
commodity / product line
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10
Updating our Supplier Assessment
Quality System Assessment
Comprehensive Business System Assessment
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11
Working with suppliers to support our needs
PRODUCT LAUNCH EXECUTION
TECHNOLOGIES
CAPACITY MANAGEMENT
TOTAL MATERIAL COST OUT
(TMCO)
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12
Global megatrends impacting the automotive
industry
Industry cost pressures
Regulatory influences and impacts
Technology shifts
Globalization
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13
Audi Supercharged 3.0L TFSI V6 engine
continues to see new vehicle applications
VW/Audi Group leveraged the benefits from AMS approach with rationalized engine family
1 supercharger design + 1 engine assembly = 12 differentiated vehicle applications
• AMS TVS® Supercharger reduces part proliferation, simplifies engine/vehicle assembly and
saves OEM’s significant re-tooling costs
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14
Innovation to Commercialization
Collaborating with OEMs
Meeting their Global Needs
Relationships
Solutions
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Expertise
15
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16