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Notable quotes, takeaways from CAR MBS: Part II

Outlook, insider reveals for auto suppliers in the age of EVs, global competition

Paul Thomas, Bosch; and Wilm Uhlenbecker, Brose North America;  along with Carol Jean Milner, Nissan (not pictured), Bernard Swiecki, CAR at the 2021 CAR MBS.

Paul Thomas, Bosch; and Wilm Uhlenbecker, Brose North America; along with Carol Jean Milner, Nissan (not pictured), discuss with Bernard Swiecki, CAR, (at left) some of the challenges survived and lessons learned as a result of the COVID pandemic at the recent CAR MBS.

Editor's Note: This is the second part of the three-part series, "Notable quotes, takeaways from CAR MBS," at which those in the know exposed cutting-edge developments surrounding the EV evolution discussed during the CAR MBS in early August. Part I focused on the outlook for the global and North American markets and EV production. Part III focused on key points made at the conference related to key materials for lightweighting and battery advancements that are making EVs cost-competitive.

Of notable quotes and industry expert perspectives on North American and global automotive supply chain dynamics and suppliers' futures in the era of electric vehicles (EVs), discussed at the 2021 CAR MBS in August:

Supplier Transition into EVs

Kristin Dziczek, senior vice president, research, CAR: “Looking at the sheer number of auto suppliers today, 70% have fewer than 100 employees. What do you think will happen to these small sub-Tier suppliers?”

Colin Langan, automotive and mobility analyst, Wells Fargo: The number of suppliers has been trickling down; I don’t think this is new. Same with the dealers. I think you’re going to see continued trends for consolidation.

From the automaker side, you see them trying to repurpose their facilities, which makes sense, and they have workers they’re trying to utilize. I think that’s why there’s a big push to insourcing, particularly when, in 10 years, the powertrain may not be a big differentiator.

Market opportunities are shrinking for traditional suppliers. There are only two areas that are growing—the electronics and the e-powertrain.

E-powertrain competition will be very tough. Everyone is running into this space. I see four risks:

One, a lot of automakers are thinking of insourcing this. Two, over a dozen of the largest guys are chasing this market. Third, you’re seeing the need for breadth. Many of those expensive subcomponents are going to be fused together. Today, you have to have an e-motor and an inverter. If you don’t have the breadth to do that, you’re not going to win the sale. And the fourth is that a lot of these components are going to be used across many different-sized vehicles. So the scale opportunity is quite large, and you’ll need to be able to handle that globally.

The story isn’t much better in electronics. You see almost every major global Tier 1 supplier already has a dominant position in this space. It’s also challenging because it’s not the traditional mechanical engineering; you’re looking a mini-computers and it’s more software focused. If you [a supplier] have global scale, that means you can get the economies of scale that automakers are looking for … like the skateboard design. That’s supposed to be the huge benefit of it. You can sell it across so many different vehicles.

It’s going to be challenging for some suppliers. They might have to decide that they don’t have the capital to invest to make this next pivot. But my view is that there still is a pretty long life for the combustion engine and maybe they can just run it for cash and yield the benefits of not having to do a lot of capex.

Craig Renneker, vice president, driveline product engineering, American Axle Manufacturing: We see enormous opportunities by engineering the gearbox, the motor, and the inverter all together; there are huge synergy opportunities there.

The pressure to improve never goes away.

Our teams are limited only by Issac Newton. We’re always fighting Issac Newton.

Paul Thomas, executive vice president, mobility solutions, Americas, Bosch: Electrification will go beyond the powertrain of the [passenger] vehicle. We’re involved in the electrification of a bicycle up to a Class A truck.

An EV is way more than a conventional vehicle—different dynamics, handling—so you have to develop a different braking system, a different steering system.

Through all of these changes regarding electrification, connectivity, and software, we found that doing it on your own costs a lot of money and doesn’t allow you to fail as fast as you can with partners. So we’re happy to say that we need partners in the industry to help us drive better solutions. At the end of the day, I believe partnerships and collaboration will be the key to developing solutions for the challenges of the future. You have to know what your strengths are.

You have to be flexible and you have to understand what everyone is bringing to the party—from the chassis side, to the powertrain, and even the exterior styling.

Automaker/Supplier Relationships During Pandemic

Carol Jean Milner, director, nonproduction purchasing, purchasing strategy and cost control, and supplier diversity, Nissan: In terms of what changes have we made or what lessons have we learned from the pandemic and semiconductor shortages, our purchasing and supply chain teams are working very closely—sometimes on a daily basis—with our supplier partners now to assess what the impacts are on the supply chain and how to minimize the disruptions together.

We found some very good benefits from having open and transparent communications, and we’ll continue doing this.

Paul Thomas, executive vice president, mobility solutions, Americas, Bosch: From a Tier 1 standpoint, we needed the transparency we received from the OEMs about the orders they really need to build. And a lot of our OEMs tailored their production schedules related to demand. So that has been very welcome.

You never would have thought you’d have to be as transparent in your supply chain as you do now. And that you need to have a fallback for a fallback plan.

One thing I’ve learned is the whole health and safety aspect. We had to increase our focus on ensuring our associates are safe, along with the virtualization of work.

If you look at how the consumer electronics industry runs their semiconductor business, versus the automotive industry in the past, we have a lot to learn as far as how to manage long-lead, high-demand items.

Wilm Uhlenbecker, president, Brose North America:

I personally believe that our industry has evolved in the last several years from a transactional mode to a more collaborative one.

That also applies to crisis management. A crisis can bring out the best and the worst—in individuals, in companies, and in relationships. After the crisis we went through over the last 18 months, it helped us to focus on the essentials and our entrepreneur spirit.

It seems unreal now, when you look back 18 months when COVID really started, and in our case, from one day to another we sent some people home to work from home. We learned virtual tools. We had customers invited to virtually walk the lines to do PPAPs [production part approval processes]. And it worked. It saved time. It saved money. It saved travel. We still use some of the virtual tools now.

Transparency, and we all said it, is the key. Flexibility, agility. We had customer orders change, and we fully understand. They changed from Thursday to Friday. We are down; we are not down. We’re working two shifts; we’re working one shift. And this flexibility in our plants, as in our customers, and our suppliers have to have it, this is something we will keep.

For critical parts, most customers put in firm commitments for a year, 18 months—to us, to critical suppliers—in order to lock in the volume. I believe we will see this more and more.

Still, we ask: When is this over? When will this volatility be gone?

On China, Global Supply Chain

Michael Dunne, CEO, ZoZo Go: In 2019 Henry Kissinger said, "The U.S. and China are in the foothills of a cold war." Now, he says, "We’ve moved up to the mountain passes."

On the Western side, we’ve been willing to give access to technology in exchange for access to the China market. That changed about five years ago when President Xi Jinping and his lieutenants crafted Made in China 2025, an ambition to be the global leader in next-generation technologies. It’s EVs, AVs [autonomous vehicles], robotics, 5G, AI [artificial intelligence] … China no longer saw a future in which they would need to rely on the West for technology and to give away market access.

As a result, we’re seeing a once-in-50-years reordering of global supply chains. Between 2000 and 2020 everyone piled into China with tens of billions of dollars of investments both to serve the China market and to export from China globally. That’s not the case anymore.

About the Author

Kate Bachman

Contributing editor

815-381-1302

Kate Bachman is a contributing editor for The FABRICATOR editor. Bachman has more than 20 years of experience as a writer and editor in the manufacturing and other industries.