value chain in oem coatings - haeusliche-pflege.net phaeton audi a6 bmw 520i bmw 740i benz e200 benz...
TRANSCRIPT
Value Chain in OEM Coatings
Dr. Karl-Friedrich Doessel
November 2013
Agenda
• OEM Coatings as part of total Car Manufacturing Cost
• Participants in OEM Coatings Value Chain
• Roles and Expectations of
• Consumer
• OEM
• Paint Company
• Application Equipment Manufacturer
• Supplier of Raw Materials
• Globalisation
• Regulatory Framework
• Differences in „Time to Market“ along the Value Chain
• Summary
OEM Coatings as Part of total Cost
Source: McKinsey PTW-HAWK-Survey
Value Chain in Car Production
Total Process Cost Paint Shop Cost
(incl. CED)
Distribution
Manufacturing
Process
Material
R & D
25%
15%
55%
5%
70%
30%
Coating
Process
Material
OEM Coatings Value Chain
Supplier of
Raw Materials
Paint
Manufacturer OEM Consumer
Application
Equipment
OEM Coatings Value Chain
Roles and Expectations
Supplier of
Raw Materials
Paint
Manufacturer OEM Consumer
Application
Equipment
Consumer Role
• Purchasing decision to buy new car
Expectations
• Color, choice of color / differention
• Appearance
• Durability
• Cost
• Environmental compliance in car use and manufacturing
Consumer as a Customer
• Lower Cost of car and color options
• Higher Quality
• Appearance, Durability, Color
• Scratch resistance
• easy to clean
• matt surface
• corrosion protection
• multi color car
• high chroma colors
Paint Quality: Areas of Focus
Source: GM, SurCar 2013
PQ: Exterior Appearance Contribution
Source: GM, SurCar 2013
Source: GM, SurCar 2013
Source: GM, SurCar 2013
OEM’s Surcharge Policy on Colors
(in Germany, based on online configuration options)
VW Golf VW Passat GM Astra Ford Focus Toyota Auris
# colors 36 12 11 8 9
no surcharge 1 2 2 2 1
avg. cost/€ 1455 637 452 387 467
max cost/€ 2140 1720 680 555 525
VW Phaeton Audi A6 BMW 520i BMW 740i Benz E200 Benz S
# colors 16 14 (+) 13 (+6) 13 (+4) 12 10
no surcharge 2 2 2 2 2 1
avg. cost/€ 1642 943 829 (2517) 914 (2350) 976 1151
max cost/€ 3900 2750 3600 2350 1963 2059
Color Economics
Today over 85% of car buyers select surcharge color
Customizing / differentiating a mass produced car
Based on 1 mio cars sold per OEM
added margin/profit for OEM color is
€340 mio (Ford, GM)
up to > €1,000 mio (other OEMs)
added revenue for PaintCo is ca. € 80 mio
Putting color on the car is a major part of value creation
for the OEM
Outsourcing this process is hardly considered by the OEM
86 88 90
67 64 53
66 5956
5348
40
10
9
8
0
50
100
150
200
250
300
Standard 3 wet primerless
Total Cost of Paintshop€ / car
Indirect Matls
Energy
Labor
Capital
Paint
€ 282
€ 247 (- €35) € 268 (- €14)
Paint Material Cost is 1/3 of total Cost – Process Cost is 2/3
OEM Coatings Cost Structure
Cost/Car
Cost of Paint € 90
Cost of Paintshop Operation € 150 - 400
range defined by age/design of paintshop
Cost increment for effect colors versus solid colors
Δ cost of Paint €20
Δ cost of Manufacturing €20
Cost increment for effect color is < 10% of added revenue
Color is a real money maker for the OEM
OEM Coatings Value Chain
Roles and Expectations
Supplier of
Raw Materials
Paint
Manufacturer OEM Consumer
Application
Equipment
OEM Role
• Low cost manufacturing of durable, good looking cars
Expectations
• Low cost, reliable, global supply of paint and equipment
• Attractive color design proposals from raw material - and
paint suppliers
• Wide operating window from material and process – high FROK
• Environmental compliance, reduced energy demand
CAGR of global Car Production
2013 - 2017
Regional Shift – Follow your Customers
• China is the biggest market for car production
• China and South Asia have the highest growth rates
• Paint production and raw material production have to follow
• Regulatory compliance becomes increasingly important
• China emissions law requires w/b basecoat
• China GHS, chemical inventories
• REACh etc. make global sourcing more difficult
• Globalisation requires capital, people/Know-how, and
TIME !!
Average Time to Market in Automotive Coatings OEM R & D
Troubleshooting
hours days weeks months 2 years +2 years Project
Management
minor paint adjustments
Product upgrades (some new raw materials)
Strategic R&D, new raw materials, chemistries
Toxicologic testing, registrations required
Application Technology
Raw material Co.s typically work on a different time scale than paint Co.s
OEM Coatings Value Chain
Roles and Expectations
Supplier of
Raw Materials
Paint
Manufacturer OEM Consumer
Application
Equipment
Paint Manufacturer Role
• Low cost, reliable, global supply of paint meeting OEM spec.
• Create improvements in performance, color, cost
• Environmental compliance of paint and safe use
Expectations
• Low cost, reliable, global supply of raw materials
• Environmental compliance of raw materials
• Innovation offered with new raw materials and processes
Paint Company as a Customer
• Lower Cost of raw materials
• Consistent Delivery & consistent Quality
• global availability (at competitive cost)
• pretested raw materials
• proven durability in formulations
• broad application field covering all OEM specifications
• Higher Quality
• Appearance, Durability, Color
• Environmentally Compliant Products
• Differentiation to competitors
500 – 800
@ € 3000
per color
200 colors,
1000 products
incl.
pairs, triples
for s/b, w/b, 3-wet
low bake,
bell-bell,
bell-spraymate
100
Annual Basecoat Development Task PaintCo Europe
PaintCo Styling OEM selection PaintCo Development new Product
sales
Cost pa: € 2 Mio € 10 Mio € 1 Mio
150 DAS
colors
150
competitor
colors
150 PaintCo
colors
OEM Color Development
Cost Implications
• In OEM component business the OEM (normally) fully
pays the upfront development cost and necessary
investments (tooling) while the supplier agrees to a
fixed pricing curve
• In OEM coatings the supplier (normally) bears all the
development cost
• Depending on the product lifetime volume
development cost is a major cost contributor
• 70% of the product developments never go
commercial
• 50% of the commercial products never travel the
“experience curve” (less than 3 batches per year)
Value Creation - Subtotal
• Average consumers pay € 1000 to get special color
• OEMs have average € 90 cost/car for paint and
additional cost of € 40 to produce special color vehicle
• (still average OEM profitability is only 5 – 10%)
• Average OEM paint co. has profitability of 10% with
substantial business risk in R&D and capital investment
OEM Coatings Value Chain
Roles and Expectations
Supplier of
Raw Materials
Paint
Manufacturer OEM Consumer
Application
Equipment
Application Equipment Manufacturer Role
• Low cost, reliable, global supply of OEM paint shops
• Paintshops with safe and compliant operation
• Create process improvements for lower cost, higher FROK
Expectations
• Paint materials meet new process requirements
• Wide operating window from paint materials
OEM Application Equipment Manufacturer
• Business Model different to other participants of
value chain
• (one time) investment versus variable cost
• Investment cycle for OEM paint shops: 25 years
• New business mostly based on
• Regional growth / new plants in China
• Environmental regulations – change to waterborne
• Cost reduction by process changes with payback < 2a
OEM Application Equipment Manufacturer
Source: Dürr SurCar 2013
Reduced
Market Size for
Coatings
OEM Coatings Value Chain
Roles and Expectations
Supplier of
Raw Materials
Paint
Manufacturer OEM Consumer
Application
Equipment
Supplier of Raw Materials Role
• Low cost, reliable, global supply of raw materials
• Environmental compliance of raw materials
• Innovation offered with new raw materials and processes
Expectations
• Receive clear signals and longer term commitment from
customers / partners in the value chain
- Painting / curing equipment
- OEM pilot series
- Investment and SOP
From Chemicals to Painted Car Body
….. 3 years + ….
- R&D new monomers
- New resources
- Polymer synthesis / testing
- Industrialization
- Paint formulation / testing
- OEM tests and approval
….. 4 years + ….
….. 5 years + ….
….. 4 years + ….
§ §
§
TSCA
KECI
IECSC
…….
OEM Coatings Value Creation Summary
• OEM Coatings today offer long durability, attractive
appearance and color choices
• Average consumers pay € 1000 to get special colors
• OEMs earn more than 1 bio Euro by color choices
• Paint Companies can only capture 5-10% of this
• Raw Material suppliers capture 2-5% of the total
• Globalisation is a major factor for growth
• Regulations have to be observed when going global
• „Time to Market“ varies between days and 10 years
along the value chain