Auto's top 10 issues for 2005.2005 may end up being a watershed year for the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market, so assessing the key issues is particularly important. The following are not numbered because that would imply priority, and the importance of their impact depends on whether you are a successful OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and , a struggling OEM, a distressed supplier, or one of the top 25% of the supplier industry that will continue to have positive financial performance. Continued upward pressure on oil prices Oil prices will remain a headline issue for the industry. Continued record high oil pricing affects things including consumer confidence, material prices and vehicle segments with low fuel efficiency. Increasing volatility of material prices This may be one of the few issues that affects everyone in the industry. It is also one of the few where the higher you are in the food chain (e.g. a Tier 3 vs. a Tier 1), the worse your position. Given the dramatic increase in steel prices over the last 12 months, many smaller suppliers have demanded (and in many instances gotten) relief from steel surcharges and steel price increases. Unfortunately for most Tier 1's, they have been much less successful getting relief from their OEM customers. This is mainly due to the hypercompetitive nature of the North American market where OEMs do not believe they can pass any material price increases onto the consumer. Absorbing price increases at the Tier 1 level has caused bankruptcy filings (e.g., Intermet) and dramatic declines in profitability for others. While steel will continue to be a major issue, there is a similar pattern emerging in the dramatic rise of plastic resin pricing over the last three months. With oil prices likely to stay at record levels, the plastics situation will probably continue to deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. . Until this is dealt with as an industry rather than as one Tier vs. another, the situation won't improve. Record new vehicle launches While the increase in new vehicle offerings is clearly a positive trend from a consumer perspective, it places enormous financial pressure on both the OEMs and suppliers. Very few OEMs or suppliers have business or program launch processes capable of supporting this level of vehicle diversity. Many analysts believe this degree of new product activity is unsustainable and will further weaken some of the key industry players. The faster suppliers and OEMs can redesign their business models to support shorter lifecycles and smaller production runs, the more likely they are to survive. Increasing dominance of electronics In this instance, I am not talking about traditional automotive electronics (e.g., the trend towards drive-by-wire) but the impact of multi-use electronics such as satellite radio and portable electronic devices (e.g., the iPod). The separation between home, office, and car, and the devices used is becoming increasingly thin. Plug-and-play units are becoming the norm and automotive designers need to factor in the impact of the fast design cycles in consumer electronics. We may be heading toward the era where the traditional suppliers and OEMs are the hardware/commodity suppliers and the differentiation is increasingly found in the electronic devices and software. Distress in the supply base leading to record merger and acquisition activity Merger and acquisition (M & A) activity may hit record levels in 2005. The difference from the late 1990s (the last hot period for automotive M & As) is that most of the activity is for distressed suppliers. Large Tier 1s The top level of something. A Tier 1 city is one of the major metropolitan areas in a country. A Tier 1 vendor is one of the largest and most well-known in its field. However, the term can sometimes refer to the bottom level or first floor. For example, the U.S. are spinning off non-performing and/or non-strategic units and many suppliers that are still primarily dependent on the Big 3 are struggling to stay alive. While this may lead to additional consolidation in some sectors, it will mainly keep a high level of churn churn: see butter. in the automotive supply base. With large players like Delphi and Visteon still weighed down by contractual obligations from their spinouts, some disruption in supply in 2005 is likely. China China will continue to have an enormous influence on the industry. From its huge consumption of materials to its growing domestic industry, China's impact will require all auto industry participants to assess what that will mean to them. Globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation Most companies have not made the transition from being multi-region organizations to truly global operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. . This is particularly true for European parents of North American subsidiaries. They are notorious for being insensitive in·sen·si·tive adj. 1. Not physically sensitive; numb. 2. a. Lacking in sensitivity to the feelings or circumstances of others; unfeeling. b. to differences between the North American and European markets and treating their North American arms North American Arms is a United States company, headquartered in Provo, Utah, that manufactures small pistols and mini-revolvers. The mini-revolvers produced by the company are single action revolvers which have a spur trigger design and are very reminiscent of late 19th Century as merely extensions of the home office. Then they wonder why their North American companies are never as successful as they had envisioned. If you are going to be a successful global company, you must have an authentic global strategy. Determining that strategy and then ensuring that there is an organizational infrastructure to support it needs to be a top priority for every leader. The growing importance of powertrain For years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time North American market was viewed as more of a vehicle market than a powertrain market. Great-looking vehicles with sophisticated interiors were normally enough for the American consumer. Not anymore. Consumers have demonstrated that if the powertrain is not viewed as sufficient to support the vehicle, they will not buy it. A recent example is the Ford Five Hundred/Mercury Montego, which carried over the 3.0L Duratec engine from the Taurus/Sable. This has hurt the new vehicles' sales performance, since they need a larger engine with more horsepower horsepower, unit of power in the English system of units. It is equal to 33,000 foot-pounds per minute or 550 foot-pounds per second or approximately 746 watts. to compete effectively against others in the full-size sedan Sedan (sədäN`), town (1990 pop. 22,407), Ardennes dept., NE France, on the Meuse River. A noted textile center since the 16th cent., Sedan also has metal and brewing industries. The town became part of French crown lands in 1642. segment. There have been some big wins for the domestic players--think Hemi--but North American OEMs have historically been at a powertrain disadvantage relative to their Japanese and German competitors. The need for multiple powertrains to fit the expansion in new vehicle offerings will also put an additional strain on OEMs. Hybrids The popularity and buzz surrounding hybrids takes them out of the powertrain category and into their own. It is no longer possible to deny the growing consumer demand for hybrids. This is particularly true in terms of consumers 40 and under. Both OEMs and suppliers need to factor in the speed with which this is happening and the potential impact, both positive and negative, on their business. Management changing of the guard at suppliers and OEMs At the 2004 Management Briefing Seminar in Traverse City Traverse City, city (1990 pop. 15,155), seat of Grand Traverse co., N Mich., at the head of the West Arm of Grand Traverse Bay, in a resort and cherry-growing region; inc. 1881. , CAR's David Cole David Cole may refer to:
adj. Relating to or characteristic of an adversary; involving antagonistic elements: "the chasm between management and labor in this country, an often needlessly adversarial . . . relationship between the various levels of the value chain (from the dealers to the suppliers) to one of cooperation and focus on the end consumer is one of the great industry challenges of the next five years. Being an eternal optimist, I am hopeful that new blood will lead to a new opportunity to change the nature of the relationships and establish a more collegial col·le·gi·al adj. 1. a. Characterized by or having power and authority vested equally among colleagues: "He . . . environment. It is in everyone's interest if people stop being concerned with getting the upper hand and work toward developing the next generation of vehicles. By Kim Korth, President, IRN IRN n abbr (= Independent Radio News) → servicio de noticias en las cadenas de radio privadas IRN n abbr (= Independent Radio News) → agence de presse radiophonique , Inc. kimk@irn-auto.com |
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