Global engineering is discussed today in the same way that, in the 1990s, suppliers talked about “think global, act local” as they chased the vehicle manufacturers to the expanding and low-cost markets of the world. This feature, written by Anthony Lewis and Chris Wright, is extracted from the bi-monthly Lotus Engineering newsletter, proActive.
But does engineering have to follow the same route? Does it make sense to have pool of engineering excellence dotted around the globe, or is it better to have centres of excellence in different disciplines able to support each other?
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Recent evidence is that one size does not fit all – there are as many solutions to the potential problems caused by globalizing engineering, as there are companies who feel the urge to do it, either because
their clients want their presence or the engineering consultancies feel they will win more business by expanding their global footprint.
Demetris Agrotis, director of Delphi’s Mexico Technical Center in Cd. Juarez, which exports its technology around the world, believes the role of such technical centres is slowly changing.
“Five years ago we had groups of engineers with expertise training Mexican colleagues – knowledge was held in different pockets for different products.” Now that knowledge is far less compartmentalized and the aim is to expand technology globally. “We have four Chinese engineers here now so that as we localise products around the world, the knowledge will go with them,” said Demetris.
A part developed at MTC may be engineered in Tokyo, assembled in Spain for delivery to a car plant in the UK – and the sub-suppliers may be spread around other parts of the globe. This creates pressure of managing what is at times a fairly thin supply chain.
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By GlobalDataJerry Haller, site manager Delphi Steering Systems at MTC, points out that development time for new products was once 18 months but the norm now is more likely to be four or five months. And while Delphi has technical centres all around the world, the engineering cycle of technologies or products has not yet reached a point where responsibility can be handed over to “the next shift” so, for example, when Japan and the Eastern hemisphere closes for the day, the Western hemisphere opens to give 24- hour development. “This is something that may come one day,” said Haller. “Right now the areas of responsibility are still quite narrow.”
Despite this, research and development centres like MTC have a global role. “Technology allows us to work globally,” said Haller, “even if we have to come in at 5 a.m. for a meeting with China or stay
until 8 p.m. for a meeting elsewhere.”
The Far East is quite a well-trodden path for European engineering houses, many of which have been serving the South Korean auto industry for years. While China is the obvious location at the moment, it’s not the only one. India is fast developing a reputation as a good place to do business, with considerable advantages over China for Western-based companies.
India, thanks to its imperial history, has a more familiar legal framework. It has better management resources than China and a large pool of well-trained engineers and technical graduates, evidenced in the country’s globally competitive software and IT sector. India also doesn’t have the language barriers that exist in China, especially when dealing with suppliers based outside China’s major cities.
There is also a worry that costs in China could get out of hand unless they are carefully controlled. “When you first look at China, you think it’s going to be a low cost base. As we look at it more, it is not that cheap,” according to the European manager of one engineering consultancy which has just opened ship in China. “The salaries of experienced and Skilled Chinese engineers are in short supply already with the huge boom in the country, and the worry is that they will only get more expensive if the phenomenal growth seen in the last two years continues.
Confidence in India remains high. One indicator is a recent forecast that exports of automotive components from India could rise to around $10bn by 2010, up from around $1bn. While carmakers and suppliers are moving into new territories, they stress that it is important not to forget the developed markets – after all that is where the money is right now.
Latest to spread their wings to the United States and Europe in terms of technical capability are the South Koreans – largely to support new factories but also to study the markets in those regions more closely and to engineer their cars accordingly.
Hyundai opened its new technical centre in Frankfurt, Germany, last year to help capture some European influences. Hyundai Motor Group is developing an all-new model specifically for the European market which will go into production at the company’s new 300,000-unit assembly plant to be built in Slovakia.
The Ford Focus-size model, somewhere between Hyundai’s Accent and Elantra models was also seen as the E3 concept at the Geneva Auto show. The car is being developed in response to European distributors and dealers who say they could boost sales with one model rather than the current two in the mid-size segment. Sales of Elantra struggle in many European markets.
The new car will also form the platform for the company’s re-entry into the World Rally Championship. The South Korean automaker plans its return to the WRC in 2005 running its own team out of Frankfurt through the newly formed Hyundai Motorsport.
The E3 concept could also form the basis for the new model to be built at the new Kia plant at Zilina, Slovakia, due to start producing cars from 2006.
Toyota’s European Design Centre is close to Nice in the South of France. It has had considerable input into the new Yaris, built at Valenciennes in the northern part of the country. Yaris has built up a strong reputation in Europe and Toyota said it is keen to maintain this by keeping strong influences from the region in terms of design as well as performance.
The key now is how to manage this technical capability around the world. It would seem to be a case of horses for courses. Different time zones mean that engineers around the world can work on project for 24 hours a day – as one centre closes another opens.
Whether this is practical or not remains to be seen. In some quarters it is believed that engineers should be focused on a specific project which means technical facilities would be more likely to become ‘Centres of Excellence’ for projects which ultimately have a global reach.
This article was first published in the Lotus Engineering newsletter, proActive. Current and back issues of proActive are available for free download in pdf format here.
