Two new deals involving Dana, Getrag and Volvo Car show that Ford has not fully rejected the idea of out-sourcing fast evolving technologies.
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Ford’s top purchasing executives have made much of the need to reclaim some in-house engineering capabilities from suppliers but the carmaker is facing facts in some key component areas.
Dana and Getrag have formed a three-way joint venture with Volvo for the development and production of all-wheel drive and chassis systems, called Getrag All Wheel Drive AB.
Getrag-Ford transmissions has taken over responsibility for the development of manual transmissions for Volvo.
Dana and Getrag will hold 60% of the new joint venture, and Volvo 40%. Dana owns 30% of Getrag in Europe and 49% of its North American operation.
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By GlobalDataThe joint venture, which has sales of about €200 million and about 1,000 employees, will take over existing Volvo operations in Köping, Sweden. The main products are power take-off units, rear drive units, front-drive units, and chassis systems and components.
Dana already supplies Ford’s Jaguar and Land Rover operations in the UK with axles from a plant in Birmingham.
The aim of the partners is to develop the business into a competitive supplier of AWD systems to third parties as well as to Volvo.
It’s a growth business that is seeing new opportunities as the technology used for AWD changes says Dana’s acting CEO, Bill Carroll.
“We see more and more light duty vehicles, crossover vehicles that have all wheel drive,” with passenger car feel and handling, says Carroll. “That’s where the technology is coming in.”
He says that AWD is growing all round the world, and the technology developed for the joint venture could be deployed elsewhere.
“As we can get the costs of these systems down with time, you will start to see them migrate to the lower cost vehicles,” says Carroll.
“We see this growing substantially as Volvo grows,” says Carroll, “and we already have right now a non-Ford customer signed up for this business.”
Meanwhile, the new Getrag Ford Transmissions Sweden AB operation will maintain a product development team of 30 in Gothenburg and transfer production of Volvo’s 120,000 manual transmissions a year to Getrag Ford’s main operation in Cologne.
Getrag Ford is a 50-50 joint venture between the German gearbox specialist and Ford. It was established in May 2000 to run Ford’s manual gearbox operations in Europe.
Getrag is a major independent supplier of manual transmissions and has been working on technologies for automated manual transmissions and double clutch transmissions. Both look set to eat into the strong manual transmission market in Europe in the next few years.
Ford seems happy with out-sourcing
Volvo’s outsourcing level is around 75% – one of the highest in the European industry. Outsourced operations include some stampings and engines, although brand critical functions such as body structures remain in-house.
But the out-sourcing at Volvo at least suggests that Ford is happy with the consequences of putting its manual gearbox operation in Cologne in the hands of Getrag.
Dana’s Carroll expects more out-sourcing in the chassis area in the next few years.
It’s about “resources, and resource allocation,” he says.
The over-ambitious out-sourcing programme under former Ford CEO Jac Nasser denuded Ford in Europe of expertise in several critical areas. But though the company has rebuilt its in-house capability in some key areas – such as chassis – it seems clear it will continue to look at out-sourcing opportunities.
Suppliers such as Dana and Getrag can contribute a lot of expertise and technology, and Ford – however strong the short term turnaround – cannot afford the major investments needed to keep pace with technological developments and develop a broader portfolio of new vehicles.
SupplierBusiness.com
