UK-based Stadco is a Tier 1 supplier of Body-in-White products and services to vehicle manufacturers. It is best known for supplying aluminium and steel pressings to vehicle manufacturers including Ford (and especially members of its PAG prestige brands division) and was a significant supplier to now defunct MG Rover. But the company is growing its business and has a strategy for emerging markets, according to Group Managing Director, Andrew Morriss. just-auto editor Dave Leggett asked the questions.
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How’s business at the moment? Is 2006 a good year for Stadco?
As reported at the time of Acertec Plc interim results on the 1st September [Stadco is part of the publicly listed Acertec Plc], trading has been in line with expectations. This is pleasing in the first full year after MG Rover’s collapse. Energy and raw material pricing have put added stress on the business, so we are pleased with the hard work carried out by our team.
Did you lose much business with the demise of MG Rover last year?
We lost about 19% of our business in the UK, but we had seen it coming and had taken as many measures to limit our exposure as possible. We also had a recovery plan on the shelf, which we had hoped we wouldn’t have had to enact so quickly. Nevertheless, having it there meant that no time was wasted – we just rolled up our sleeves and got on with it. It has made for a very busy year of consolidation, which is now in its very final stages. Stadco is now slightly smaller in the UK, with four plants, but a lot fitter. We are now working with Nanjing on the restart of MGTF production at Longbridge, which is exciting and a bonus from the ashes of MGR.
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By GlobalDataIn terms of revenue, who are your main customers at the moment?
Ford, BMW, Land Rover, Jaguar, X-Part and Aston Martin. We have other very important customers, and our ability to cater for the complete spectrum of body products and engineering services make us a valued partner. These include Toyota, Bentley, AGCO, LDV and JCB.
You recently announced the addition of Toyota to your customer list with two major parts for the Corolla model. Are you actively pursuing new business with other OEMs in Europe?
The hard facts are that most OEMs are reducing their supply base, so this makes us focus on other routes to gain significant share from a major new customer. We are looking to extend our geographic footprint into new areas and are continuing to pursue opportunities in Russia.
What’s the breakdown in terms of types of activity (panel stampings, assemblies up to complete BIW, coating, product and design engineering, facility design)?
Different Stadco sites tend to specialise in a different activity. In Saarlouis [Germany] for example, we do not have any stamping facilities, but supply almost one third of the Ford Focus and C-Max Body-in-White, as built-up sub-assemblies from a JIT facility adjacent to Ford. Stampings do, however, remain the biggest activity – we currently supply over seventy million such parts per year. Our stamping plant at Castle Bromwich is amongst the largest facility of its type in Europe and specialises in very large skin panels.
Sites such as Powys and Coventry focus on the lower volume and aftermarket needs of our customers, as well as housing our paint plants. Customers of these sites appreciate the ‘one-stop-shop’ approach of press-assemble-paint-pack and this is a small but growing sector of our business. Coventry is also the centre of our product engineering expertise, i.e. the team which recently designed the body system of the Ford GT supercar and who are currently working on projects as far a field as Brazil and India.
The final part of our offering is facility design where we help our customers by planning, installing and running very flexible assembly facilities, something which is becoming increasingly important with the proliferation of model variants off a single platform.
What emerging technologies and business trends are particularly significant for your business?
There are several which are gaining in importance, two of which are probably most important currently.
The drive to more fuel-efficient vehicles usually makes the headlines as powertrain stories, whether that be the use of alternative fuels or hybrid technology. In fact, good old-fashioned weight reduction has just as important a part to play and so we see the trend to aluminium architecture continuing. Stadco has vast experience in designing and manufacturing aluminium bodies, assemblies and panels and so we should be well placed to benefit from this trend. Currently our aluminium products are most commonly seen on a Jaguar or an Aston Martin, and we believe that this trend will move up the volume scale.
Secondly, the model variant proliferation of a single platform will accelerate. This will put pressure on OEMs in terms of space, investment, technology and human resource. This will inevitably lead to more outsourcing and so the JIT model we have established at Saarlouis is likely to be repeated at several other OEMs
Stadco’s parent company, Acertec, recently floated on London’s junior stock market, AIM. How do you think that move will impact Stadco in the future?
The impact of the recent successful IPO on Stadco will be significant. As well as raising our corporate profile and securing a more diversified shareholder base, it will make it much easier to invest in new projects and selective acquisition targets. It is an exciting time.
In terms of corporate strategy, how important are emerging markets around the world for Stadco?
We see Russia as being very important. We continue to pursue opportunities on a number of projects in Russia, which we expect to bear fruit in due course. India is also of great interest to us and we are talking to several customers about opportunities there.
We have recently taken our first order in India. Brazil was very important to Stadco and is becoming so again. In a JV with Polynorm, we previously designed, installed and operated a major stamping and assembly facility with Ford. Now we are about to announce a new product design project in the region so it looks like once again Brazil will be high on our agenda.
Finally, there is China; opportunities may be slightly further downstream than in Russia, but our new partnership with Nanjing has led to us having a closer look at that region and it certainly has the potential to be a future Stadco market.
The OEMs are outsourcing not only manufacturing to low-cost countries, but also engineering – how has this impacted Stadco?
We have reacted to this trend by establishing a presence in India where we believe the skills can be developed and costs are attractive. We are currently talking to a number of potential partners about expanding this operation. The model we prefer is a very small Stadco team co-located with a customer in say Germany or the UK, with a larger team based in India to complete the projects in much lower cost and time-compressed way than was previously possible.
Do you envisage a similar facilities for Stadco in other parts of the world and where might be next?
Stadco will be wherever our customers want us to be, but as already mentioned, Brazil is of increasing interest to us.
Joint Ventures also? Are JVs preferable?
We have operated successfully in several JVs in the past and would happily do so again. However, there are other alternatives to JVs. For example a JIT assembly plant for a major OEM in Russia or India is more likely to be a 100% Stadco venture, whereas establishing a stamping plant serving several OEMs could well be done by partnering with a local firm. Each individual business case and risk assessment will drive us to the right answer.
Turning to more general trends in the global auto industry, do you think the big vehicle manufacturers will become less or more vertically integrated in the future? There have been suggestions that some firms are worried about contracting out too much and losing control.
A few years ago there was indeed a lot of talk about OEMs losing control, but our perception is that these murmurings have subsided somewhat. Customer demands for lower costs, more variants, more often and at higher quality are putting enormous stresses on the OEMs. I believe that they will continue to seek the help of experts in the supply base. This is more likely to lead to less vertical integration.
And finally, what gives you the most satisfaction in your job?
Growing Stadco in a challenging market.
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Andrew Morriss
- Born – 1947, Reigate, Surrey, England
- Education – Reigate Grammar School
- Loughborough University – Industrial Engineering and Management
- Married, two adult children
- Career in Production Engineering, Production Management and General Management with RHP Bearings, Armstrong Patents, GEC, Dexion Handling Systems and Stadco
- Hobbies – anything in the outdoors especially hill walking.
See also:
UK: MG body supplier moves tooling to Nanjing plant
