In the almost decade since the worst economic recession of the 21st century, several industries have shown resilience. Foremost of these industries is the automotive market. Not only have global sales reached a record high in 2016, but the operating margins are growing quickly as well. According to research presented by Capital IQ, average operating margins for the top 100 automotive market suppliers were able to jump above pre-recession levels by 2010, just a year from their record low.
The problem with this success is that the view from behind the curtain is very different. A report published by PricewaterhouseCoopers on the trends within the automotive industry for 2017 mentions some careful considerations for both investors and manufacturers. Many Tier 1 and Tier 2 suppliers are fighting to earn back the cost of capital. Returns to investors have been noticeably below index standards. The companies that have survived were able to grow by the distribution of market share owned by those companies who were forced to tap out. The PwC report acknowledges these hardships while presenting encouraging solutions for OEMs and suppliers.
Innovation to the Rescue Suppliers for leading automotive brands come in all shapes and sizes, from large mechanical component manufacturing to electronic control systems and digital display production. No matter the specific components, companies must acknowledge the trends and look to new solutions. Innovation has been a saving grace for companies throughout history, applying their core competencies and production capabilities to serve a changing market demand. For example, vehicle electronics are expected to account for nearly 20% of the value of the car, a 7% increase from as recent at 2015. Whether the innovation occurs on the product line side or on the manufacturing process side, an increase in thoughtful R&D spending will help facilitate a competitive edge. A 4% compound annual growth rate (CAGR) in R&D spending over the last decade shows that companies are looking to new solutions for new revenue.
Value Proposition Innovation is not the only solution. Differentiations and value proposition targeting are effective techniques to assert dominance over a particular market. According to a McKinsey trends analysis, value proposition evolution can mean increased product differentiation and should be customer focused. An example for the automotive industry is could be “hardware provider” transitioned to “mobility service provider”.
Finally, those manufacturers who will fare the best throughout this transition period of automotive supplies are those who plan ahead now. MAGNET can be a support system and resource for Tier 1 and Tier 2 manufacturers. The Commercialization Center at MAGNET has all the capabilities to guide you through the journey of expanding markets and industry data analysis.
One remarkable thing about the list is that it rarely changes. The order may change but the top cited standards typically don’t change. Top 10 Sited Safety and Health Violations: 501 - Fall Protection 1200 - Hazard Communication 451 - Scaffolding 134 - Respiratory Protection 147 - Lockout/Tagout 178 - Powered Industrial Trucks 1053 - Ladders 305 - Electrical, Wiring Methods 212 - Machine Guarding 303 - Electrical, General Requirements Three of the 10 sited standards are directed at the construction standard (1926) while other fall within the general industry (1910). It should be noted however that the general industry standard also has fall protection guidelines. Year after year, inspectors see the same on-the-job hazards, any one of which could result in a fatality or severe injury. More than 4,500 workers are killed on the job every year, and approximately 3 million are injured. By understanding these regulations you can improve your safety program and prevent injuries. Give me a call if you have any compliance doubts, or want to review OHSA regulations. Gwido Dlugopolsky at 216-391-7766 or email@example.com
Why does it take a NASCAR pit crew only 15 seconds to change four car tires when it takes people like you and me minutes? The answer is simple SMED. Single Minute Exchange of Dies, or SMED, is a process for reducing the time it takes to do equipment changeovers. Using the principles of SMED you should be able to perform any changeover in your facility in under 10 minutes! The SMED process is simple – convert as many changeover steps as possible to “external”, meaning they are done while your equipment is still RUNNING, while simplifying and streamlining the remaining steps. SMED is broken down into the following 3 Steps: Separate Convert Streamline We found this article to be very helping in explaining the SMED process in more detail: LEAN PRODUCTION - SMED A good first step to achieve this level of SMED efficiency would be to run a kaizen event at your facility to standardize (5S) your tools and supplies. Doing this alone will help you achieve 40% to 50% greater efficiency. Once the “low hanging fruit” is gone, you can still reduce setup times another 20% by practicing more advanced SMED principles.
The secret to closing any sale is to reduce uncertainty in the buyer and replace it with confidence in YOU, your PRODUCT/SERVICE, and your COMPANY. Step 1 – Confidence in YOU Someone buying from you wants to be able to fundamentally connect with you on a human level and feel confident that you’re an expert in what you’re selling If you’re selling paperclips, be an expert in paperclips If you’re selling design and engineering related services, be an expert in design and engineering related services Focus on addressing the problem, not the solution….MEANING you already know you have the solution, connect with the buyer by being an expert with the problem he/she is facing. Prove that you know the problem and all aspects of the problem like the back of your hand. Step 2- Confidence in the PRODUCT/SERVICE you are selling Someone buying from you needs to trust the product/service you are selling will solve their problem. It’s your responsibility to deliver a solution and the benefits associated with it. Basically you need to “Hit a Homerun” communicating this message. Tip – Use Success Stories: Share with the potential buyer examples of your product/service solving problems and delivering value for