OEM-Supplier Collaboration Key to Auto Industry's Survival

Penda Corp. started applying continuous-improvement tools long before CEO Ulf Buergel joined the company seven years ago.

Out of 450 employees, three are dedicated full-time to coordinating lean events for the Portage, Wis.-based truck-bedliner manufacturer. Over the past several years, Penda has invested heavily in robotic technology to make the process of trimming plastic more repeatable, precise and efficient. It also has been upgrading its extrusion, thermoforming and assembly equipment, while continuing to seek efficiencies through initiatives such as workforce-training programs and inventory-control optimization.

Buergel: In the wake of the recession, the automotive OEMs and suppliers are more interdependent than ever.Like many other Tier 1 automotive suppliers, Penda has been driving cost reductions for years "in all our products," Buergel says. However, "there are limits" to those efforts for Penda, which specializes in thermoforming large plastic parts. "After 15 years of optimizing that process, there is not a lot you can do anymore," Buergel asserts. That's why Buergel bristles when he hears that suppliers need to cut costs -- especially when that directive is coming from an OEM. "I believe those clauses are price-down and not cost-down, because the OEMs don't really care if you get your costs down or not," Buergel asserts. "All they want is a 3% price decrease." Buergel believes that the best way for the auto industry to cut costs is for OEMs and suppliers to form the kind of partnership that both sides have been talking about for years. In the wake of the recession, which weeded out the weaker players -- shrinking the supplier base -- Buergel says the OEMs and suppliers are more interdependent than ever. "And we really have to figure out together with the OEMs how that partnership is going to work and help both sides give and take," he says. "You cannot just go in one direction." OEMs and Suppliers Must Identify Cost Savings Together The biggest cost savings, Buergel adds, will be achieved when OEMs and suppliers collaborate to come up with new materials, technologies, processes and product applications. As an example, Buergel points to Penda's strategic partnership with the Oslo, Norway-based electric-vehicle manufacturer Think. Penda leveraged its expertise in thermoforming plastic parts to help develop paint-free plastic body panels, which are being incorporated into the Think City electric car being produced at Think's manufacturing facility in Elkhart, Ind. The panels are lightweight, VOC-free and more resistant to chips and scratches than traditional body panels, according to Penda. More importantly, Buergel asserts, the technology shows what happens when "somebody steps back and rethinks completely the hundred-years-old technology." "If the OEMs and suppliers were to start from scratch, you probably would not have come up with metal body panels that are chemically treated in order to be painted in a huge painting line and then assembled to the vehicle," Buergel says. " ... This is from my point of view a very good example where instead of trying to squeeze cost out of a hundred-years-old technology -- stamping steel-you step back and say, 'How can we do that differently?'" For more of Buergel's thoughts on the future of the auto industry, read "Survival of the Fittest" in the upcoming May issue of IndustryWeek. See Also:

• "Ford Optimistic After 'Remarkable' Turnaround"