In the emerging tier structure of the new millennium, an intense focus on technology, innovation and core competency may be the only key to success for many automotive suppliers, said Joseph C. Day, chairman and CEO of Freudenberg-NOK.

In a keynote speech — “Tiers and Technology: A Supplier’s View” — given at the Automobile Parts Manufacturers Association (APMA) Annual Conference and Exhibition here, Day urged automotive supplier executives to re-evaluate their companies’ positions and strategies, in light of automakers placing more responsibilities on their suppliers, which has created a new hierarchy and tier structure.

“Automakers are looking for suppliers to take the lead … and to push the envelope in developing technology that will manifest itself in product or cost differentiation — or both,” Day said. “But as the systems integrators and systems suppliers broaden their responsibilities across a wider range of products, their concentration on any single technology is greatly diluted.”

That dilution creates significant opportunity for a whole new category of supplier, the Technology Specialist, who — like Freudenberg-NOK — has a narrow product focus, great technical depth and the ability to provide innovative products to all levels of the supply chain, he said. That technical depth will be rewarded with appropriate profit margins, Day indicated.

“The next round of auto industry innovations — such a new convenience and info-tainment electronics, steer-by-wire and brake-by-wire systems, new ride control and vibration control concepts — will likely come from this new Technology Specialist tier,” Day said. “We (Technology Specialists) are obligated — and expected — to invest more in research and development to drive such innovations … we should be able to achieve somewhat higher margins because of the unique performance, cost enhancement through warranty avoidance and product differentiation we can deliver to our customers.”

Laser-sharp technology focus is so important, Day said, that his company is separating its vibration control operations from its sealing business to create an entirely separate global entity, Vibracoustic, which will concentrate on solving automotive NVH problems with new technology.

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A pioneer in the application of lean systems in the North American auto industry and the current chairman of the U.S.-based Original Equipment Suppliers Association, Day has presented more than 75 industry speeches, including presentations at the University of Michigan Automotive Management Briefing, Harvard University’s Manufacturing Leadership Summit, the MIT Graduate School and DaimlerChrysler Corp. events. For his leadership efforts, he has been inducted into the Shingo Prize Academy and the Francis Academy of Distinguished Engineers at the University of Massachusetts-Lowell.

In addition to being chairman of the board for Freudenberg-NOK, Day is a director and former chairman of the board for the Wiremold Co. of West Hartford, Conn.; a director of A.G. Simpson, Ltd. of Toronto, Canada; and a director of ASC, Inc. of Southgate, Mich.

Plymouth, Mich.-based Freudenberg-NOK is part of the Freudenberg and NOK Group Companies, which have total annual sales around $7 billion. With global automotive sales of approximately $4 billion, the Freudenberg and NOK Group ranks among the world’s top 20 automotive suppliers and is one of only eight in the top 100 that has global balance in each of the three major automotive markets — Asia, Europe and North America.

Through a global network of facilities spanning 27 countries with some 23,000 automotive employees worldwide, the supplier group offers its automotive customers globally integrated products, including sealing packages for transmissions, engines, brakes, axles and steering, NVH (noise, vibration and harshness) components and packages, and all rubber, plastic and PTFE components for suspension, electrical and fuel systems.

The Freudenberg and NOK Group also offers an extensive portfolio of precision-molded products for the aerospace, appliance, business machine, fluid power, marine, medical, off-highway equipment and recreational vehicle markets.