global competitiveness naacam

8/14/2019 Global Competitiveness NAACAM

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Globalisation and theAutomotive Component Industry

Asia Pacific and Central

European focusDave Coffey

Bel-Essex Engineering

1 December 2005


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2005 Global Purchasing Policy ofToyota Motor Corporation

March 2005 Nagoya Japan

Cost Strengthen global cost competitiveness

Quality Achieve and maintain an unrivalled

quality globally

Technology Create an overwhelming advantage

Production/Supply Establish a global supply system with

stable supply


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Key Industry Issues In 2004Key Industry Issues In 2004

45%47%56%58%

72%77%84%

91%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

P ro duc t Qualit y New P ro du ct s Eco no my Ne wTechno lo gie s Env iro nm ent al

Concerns

Regulatory

Environment

Consumer Tastes Labor Relations

Please tell me how important each of the following issues is toPlease tell me how important each of the following issues is tothe auto industry right now.the auto industry right now.

Importance (4-5 on a 5 pt. scale)

Product quality and new products were rated the most important industryissues in 2004.


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New Models And Technologies Are Top

Areas Of Manufacturer Investment

New Models And Technologies Are Top

Areas Of Manufacturer Investment

63%59%

37%

29%

17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

New technologies

New models

Marketing

New plantsHuman resources

In which of the following areas do you expect manufacturers to increase their investment over thenext five years? (Multiple answers accepted.)

In which of the following areas do you expect manufacturers to increase their investment over thenext five years? (Multiple answers accepted.)

New models and new technologies are reported to be the largest areas of

investment.

New models and new technologies are reported to be the largest areas of

investment.


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Competitive analysis of South Africa relative

to Central Europe & Asia PacificFinancial performance

Turnover

EmploymentCapital expenditure levelsStock

Key customer measuresQuality (external, internal and rework)Delivery ReliabilityFlexibility

Human resource developmentBasic educationInvestment in training


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Background Information

Based on data from:South African Automotive Benchmarking Club (SAABC)

Global Best Practice Benchmarking Programme courtesy of Justin Barnes

Participants in the Benchmarking Programme:

- SA auto component manufacturers (n=71)- Central Europe auto component manufacturers (n=35)

Slovenia: 17.6%, Romania: 8.8%, Czech: 8.8%, Poland: 2.9%,

Hungary: 61.8%

- Asia Pacific auto component manufacturers (n=21)India: 52.4%, Malaysia/ Thailand/China: 28.6%, Australia: 19.0%


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Turnover

Inflation adjusted turnover trend, indexed in domestic currency to 2001 figures

100

120

140

160

180

200

220

240

260

280

300

Year

Turnoverindex

SA 114.65 122.97 121.27

Central Europe 128.81 149.21 156.23

Asia Pacific 187.39 194.70 233.16

2002 2003 2004


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EmploymentTotal employment trend (including contractees on payroll),

using an index based on 2001 figures

100

120

140

160

180

200

220

240

260

280

300

Year

E

mploymentindex

SA 108.17 115.05 119.77

Central Europe 168.18 215.28 248.32

Asia Pacific 210.18 212.73 238.92

2002 2003 2004


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Capital Expenditure

New capital equipment expenditure (CAPEX) as a proportion of total sales

0

1

2

3

4

5

6

7

8

9

10

11

Year

Percent

SA 4.02 5.22 5.22 4.08

Central Europe 7.47

Asia Pacific 10.79

2001 2002 2003 2004


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Cost Performance

545.160.312.00Finished goods

42.001.001.42Work in Progress

317.782.259.40Raw Material

398.524.0620.24Total Inventory

COST

Difference(%)

Asia PacificU.Q

SA U.QUpper Quartile

112.884.8910.41Finished goods111.623.276.92Work in Progress

49.9613.6720.50Raw Material

73.2921.8337.83Total Inventory

COST

Difference(%)

Asia Pacificavg.

SA avg.Market Drivers & operational performancemeasures


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Customer returns (ppm)

Average automotive customer return rate (0km failures returned by customers)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Year

P

artspermillion

SA 8,064 3,431 1,739 613

Central Europe 1,261

Asia Pacific 293

2001 2002 2003 2004


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Internal reject rate (goods rejected as a percentage of output)

0

1

2

3

4

5

Year

Percent

Inter. avg. 1.54

SA avg. 3.68 3.87 3.48 2.98

SA upper quartile 0.70 0.69 0.39 0.50

SA lower quartile 5.00 5.00 5.00 4.00

2001 2002 2003 2004

* Asia Pacific = 1.29% : latest SA = 3.26%


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Internal rework rate (goods reworked as a percentage of output)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Year

Percent

Inter. avg. 0.93

SA avg. 3.07 3.68 3.71 3.13


SA lower quartile 1.47 1.97 1.85 1.40

2001 2002 2003 2004

* Asia Pacific = 1.78% : latest SA = 2.79%


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Delivery ReliabilityAverage delivery reliability record to all customers

(deliveries made on time and in full)

70

75

80

85

90

95

100

Year

Percent

SA 91.25 90.44 92.45 93.21

Central Europe 91.96

Asia Pacific 97.92

2001 2002 2003 2004


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Flexibility - Lead Times out of Production

Average lead time out of production to domestic & international customers: 2004

12.1

8.0

14.2

4.1

40.6

45.1

0

5

10

15

20

25

30

35

40

45

50

Days

SA firms 12.1 45.1

Central Europe firms 8.0 14.2

Asia Pacific firms 4.1 40.6

Domestic International


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Basic Education Levels

99.24%Asia Pacific firms

99.24%Central Europefirms

80.17%SA firms

Numeracy & literacy levels*

* Workers presently at ABET level 3 (equivalent to Grade 4-6) or higher


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Investment in Training

Training investment as a percentage of the total

remuneration bill (wages & salaries)

0

1

2

3

4

5

6

7

8

Year

Percent

SA 2.06 2.02 1.73 1.95

Central Europe 2.78

Asia Pacific 7.76

2001 2002 2003 2004


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Investment in Training

Number of days spent on formal off-line training: Total & by employment category

0

2

4

6

8

10

Employment categories

Days

SA 2.89 3.20 2.36 2.47

Central Europe 8.14 7.65 3.64 3.45

Asia Pacific 5.26 3.84 2.72 3.56

Man Super Prod Avg


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Output per employee

Inflation adjusted output per employee levels,

using an index based on 2001 figures

40

60

80

100

120

140

Year

Ou

tputperEmployeeIndexed

SA 100.00 109.00 113.62 109.82


SA lower quartile100.00 97.61 95.29 96.42

Asia Pacific 100.00 67.68 87.70 98.39

Asia Pacific upper quartile 100.00 94.07 116.72 102.33

Asia Pacific lower quartile 100.00 47.31 56.64 64.89

2001 2002 2003 2004


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Remarks

Asia Pacific and Central Europe are clearly advancing in:- Technology (capex, knowledge base/training)- Manufacturing Excellence (flexibility, quality, reliability)- Cost (raw material, growth and economies of scale,

labour rates)

Long gone are the days where our real competitor is thedeveloped economy of the globe we must becomecompetitive against Central Europe and Asia Pacific

I believe there is a national understanding for the strategic

necessities of:- Competitive raw material pricing vs IPP- MIDP or equivalent- Investment incentives


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Remarks - Human Resources

Leadership at all levels Key to success Need the right fit for the position

Identify weakness and build capability Use the strengths to develop others Good leaders:

will ensure effective teamwork and communication(need a formal forum in which to communicate) will demand performance will ensure good leadership at all levels

will understand and accept accountability require the right organisational culture


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Remarks - Human Resources

Workplace competence/knowledge base We are not spending enough on training of personnel

we are even well beaten by the developed

economies There is so much complaining about the lack of skills

so what are you going to do about it; consider when

we get to 6% economic growth? Strict adherence to standardised work instructions isfundamental - discipline

Culture of doing it right the first time process,

process, process


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We have made significant progress to get where weare today with a very much stronger Rand

Negative views on the future need to be washed aside the future requires the right attitude and we have it wehave done it before

We need to lift our game again we must react to whatour competitors are doing and change our behaviour

Invest in people; select the right leaders

Conclusion

global competitiveness naacam

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