Volkswagen ought to consider DaimlerChrysler’s recent outsourcing moves if it is looking for ways to reduce investment and raise productivity.
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Last month, DaimlerChrysler sold its Huntsville, Alabama, electronics operations to Siemens VDO. Now there is evidence of a turnaround at the Dayton Thermal operations in Dayton, Ohio, it sold to German supplier Behr in March 2002. The plant officially opened as a Behr operation on March 23.
The deal made sense from the beginning. DCX had a technologically sophisticated competitor in the North American air conditioning heat exchange market. Meanwhile, Behr had been stymied in its attempts to get into North America.
American customers demanded that Behr have a technical centre and plant in the United States. A tech centre was opened in Michigan in February 2002. But the supplier still needed a plant on North American soil.
Dayton solved the chicken and egg dilemma typically facing European suppliers by trying to build up share in North America – and buying the DaimlerChrysler plant.
In turn, DaimlerChrysler got a supplier familiar with its demands and targets in Europe. Behr develops and produces systems for DaimlerChrysler in Europe and was well placed to help DCX share technologies within the group.
During the 18 months of joint ownership, productivity at the Dayton Thermal plant has increased sharply. The workforce at Behr America has been reduced by over 360 to just over 1,600 including the 200 employees in Behr’s tech centre in Troy, Michigan. Dayton Thermal itself had 2,000 employees when Behr took control.
Behr invested tens of millions of euros in a new production facility at Dayton in 2003, including new semi-automated processes, and plans to invest a further $US100 million over the next three years.
“It used to be just a plant and it has now become self-standing,” said Behr CEO Markus Flik.
Although the plant does not shift fully into the ownership of Behr until May this year, the parent group announced some of the early results of the improvement at a press conference in Stuttgart.
With the plant generating annual sales of around $600 million, the acquisition was a big one for Behr, which had sales of only €2.2 billion in 2001. But Behr sales in America were up 22% in dollar terms in 2003, with the contribution of Dayton rising 15%.
The integration of Dayton gives Behr greater economies of scale, said Flik. It allows the supplier to standardise purchased parts and bundle them together.
Meanwhile, Behr has won contracts with another big three customer and with an Asian transplant to secure the future of the plant.
SupplierBusiness.com
