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Bright strategies: Hella's independent approach; Here's how an automotive supplier of lighting, electronics, and other advanced technology products is working to gain market share through innovation, competitive pricing, and collaborations. All indications are that it's working.


In a business environment characterized by companies working to get bigger largely through acquisition, this is not an approach that Hella KgaA Hueck & Co. (Lippstadt, Germany) is taking. Rather, according to its CEO, Dr. Rolf Breidenbach, as the company moves forward, it will do so as it has for more than 100 years, which is as an independent company, with the growth expected being the consequence of a strategy that includes improved deployment of internal and external resources. Broken down into constituent parts, this includes:

* Fractal concept. The Hella organization (23,900 employees arrayed in three business divisions--Electronics, Light, Aftermarket & Special OE--working in 18 countries) personnel are units working in an entrepreneurial manner to fulfill customer needs.


* Triple I philosophy. Working on product and service innovations. Achieving synergistic integration with internal and external participants. Being available to customers internationally.

* Network strategy. Working with other companies either in joint ventures or as partners. While there is ownership in a joint venture company (e.g., HBPO GmbH, which is an organization that is jointly owned by Hella, Behr GmbH & Co., KG (Stuttgart), a specialist in air conditioning and engine cooling, and Plastic Omnium Auto Exterior (Paris), a supplier of body components and parts), the partnership approach is one whereby, Breidenbach explains, there is mutual benefit achieved by collaborative work between companies.

* Continuous improvement. Of both product and process.

That said, a question arises. Consider that privately held Hella is competing in the market with major, publicly owned suppliers. In lighting for example, with the likes of Visteon and Valeo. How can it compete with companies that are 10 times bigger or more in developing technology? Breidenbach suggests that the independence has an advantage, as they are not focused on the results that will be obtained during the next three to 12 months. Rather they have a mid- to long-term strategy that is "not attractive" to those who are more driven by short-term financials. "When we can't afford to develop new technology, we bring in partners."

Another thing that they've done is to organize into three divisions--electronics, light, aftermarket & special OE (as in large truck manufacturers)--that are roughly the same size and which tend to be counter-cyclical so that there is balance.

Within the markets that they serve, Breidenbach says that they want to be second to no other company which, he admits, is "a quite challenging goal." So they're building on what he describes as "four pillars": leadership in Technology/Innovation, Service, Quality, and Cost.


Hella operates a 34,250-[m.sup.2] plant in Paderborn, Germany, which it opened at the start of the decade. Inside the factory, there are several tail lamps produced for cars including the Opel Astra, BMW 5 series, Volvo S60, and Mercedes SLK. Output is on the order of 20,000 signal lamps per day. The production process consists primarily of injection molding the lenses (e.g., the two-colored Astra lamps are molded with a polymethylmethacrylate material; in one area of the lens small polymer particles with a different refraction index are injected into the base material so that the area appears to be frosted glass; this is said to be the first such application of the material in a mass produced vehicle); vacuum metalizing the reflectors, and assembling the products. When the plant was opened, there were six production lines. Even though the layout of those lines was based on a lean system that provided a 25 to 30% improvement as compared with the layouts used in older Hella plants, it was deemed necessary to add two additional lines just a year later. Today, there are approximately 635 people who are involved in the production process. (There are also 54 apprentices in the facility, which, although thought to be characteristic of German factories, are becoming comparatively rare.)


But more than serving as a production operation, the Hella Leuchten-Systeme Paderborn operation also houses another 200 people who are dedicated to design, development, and technology. The purpose of the facility, in addition to manufacturing, is to perform product and process developments. It is a competence center. Tail lamps are developed, as are the means by which they are produced. For example, while it is common practice to seal lamps through such means as ultrasonic and laser welding, there is a loop at Paderborn where laser welding is being assessed for full-scale deployment. Breidenbach says, "We will have a production network. We will be steering production and R & D in Germany." At places like Paderborn. But then there is the potential for the proven production processes to go from Paderborn to other Hella facilities. For example, the tail lamp for the Golf Plus, which is an advanced LED-based combination lamp, was developed and initially launched in Paderborn. Once the process was proven, the line was dismantled and shipped to one of Hella Slovakia's operations in Banovce nad Bebravou. The objective is to have more manufacturing done in lower cost locations around the world, not only in eastern Europe, but in Asia, as well.


In speaking of innovative technologies for production of products like lighting, Breidenbach states, "Price is the most important factor. We know how to be more competitive." And the Paderborn facility is a place where addressing the OEM's cost down needs through competitive products and processes is an abiding consideration.


It's called the "L-LAB." It's a research institute that focuses primarily on automotive lighting. That, in itself, isn't particularly unusual. But what is out of the ordinary is that the L-LAB is a public-private partnership created by the University of Paderborn and Hella. This is another example of Hella leveraging resources. Each of the parties pays for 50% of the research lab.

The lab was established in 2000. There are 18 full-time scientific researchers and from 20 to 25 students who are pursuing advanced degrees at the L-LAB; they will typically spend three years in the lab performing research. Presently housed within the Hella Leuchten-Systeme Paderborn facility, the L-LAB will be moving to the university campus by the end of 2006.

There are five research areas encompassed by the L-LAB:

* Active light and mechatronics. This includes such things as pixel headlamps, which can do such things as project images onto the road ahead (think of a navigation system with the turn arrows appearing on the pavement rather than a screen), and collision avoidance.

* Mesopic vision. This refers to the ambient lighting conditions that occur between daylight and darkness. The work here looks at such issues as glare and its effects on perception (e.g., is it discomforting or disabling?).

* Measuring technology and simulation. To examine quantitative aspects of lighting (including thermodynamics) and related systems.

* Human-machine interaction. Cognitive studies of systems. (Dr. Jurgen Locher, an L-LAB co-director, is a psychologist, so it is not all about technology per se.)

* Material science and surface technology. Examinations of such things as composites and nanotechnology.

For the most part, basic research--not applied--is being performed. Although much of what is being done manifests itself in physical systems that resemble currently available (or near-term) product, the developments are said to be two generations ahead of the current series of products.

Although the L-LAB is described as being "an open platform for research," and while it is open for projects from companies other than Hella, direct competitors of Hella need not apply.



HBPO GmbH (Lippstadt, Germany), a strategic joint venture between Hella, Behr, and Plastic Omnium that's focused on front-end modules, is, according to Tomas Hedenborg, president and CEO, "the only company worldwide specializing in front-end modules." The company has plants in Europe, Asia, and North America. In North America it has programs with VW in Puebla, Mexico; Ford (the Ford Fusion, Mercury Milan, and Lincoln Zephyr) in Hermosillo; and forthcoming ('06) programs for Chrysler in St. Louis and Windsor, Canada. Hedenborg says that in 2004 HBPO had 23% of the global market share for outsourced front end modules, which made it the biggest in the field. Looking forward, he thinks there will be a doubling of the market volume for outsourced modules in the NAFTA region and a doubling in Asia, with slight increases in Europe, where there is already extensive outsourcing (Hedenborg says about 70% of the cars built in Europe have front end modules, of which 60% are outsourced.)

Given this projected increase in outsourced modules, the question is why an OEM would turn to HBPO. Hedenborg proffers the following reasons:

* Reduced labor costs. For one reason, there are lower overhead costs.

* Reduced DEM plant space and capital requirements.

* Improved quality. Suppliers are focused by their customers on low PPMs.

* Reduced complexity.

* Available capacity. HBPO not only has numerous plants, but they operate with standard processes.

* Reduced development costs.


Although many people in the industry associate the name "Hella" with radiation in the visible spectrum (i.e., headlights and signal lamps), the Hella Electronics business is actively pursuing developments and programs based on different frequencies, such as LIDAR (light detection and ranging) and radar. For example, it has a program that will begin production in December 2005 in Europe for a 24-GHz radar-sensor-based lane-change assist system. This system has two radar sensors that are fitted at the rear corners of the car beneath the rear fascia. The radar, which has a range in excess of 50 m, is capable of detecting vehicles that are in the blind spot or that are closing. By looking at LEDs that are fitted into the housings of the side-view mirrors (red and green lights are used), the driver is able to determine when it is safe to change lanes.

In June 2006, according to Dr. Martin Stark, CEO of Hella Electronics, an adaptive cruise-control (ACC) system using a LIDAR system will go into production in the U.S. Stark says that the LIDAR system is comparable with 77-GHz radar systems, yet costs about half (e.g., 300 Euro for radar, 150 for LIDAR). What's more, he maintains that whereas radar can have sensing difficulties when it is raining or snowing. LIDAR is capable of determining whether those conditions exist and adjust parameters accordingly.

Dr. Tilmann Seubert, director, Advanced Development Electronics, Hella, anticipates that although radar systems are currently dominant for ACC systems, he expects that by 2010 LIDAR systems will have a greater installed base.


Although there is slow penetration of xenon head lamps as compared with halogen, according to Dr. Roland Lachmayer, vice president, Advanced Development, Hella, as work is done on advanced front lighting systems (AFS)--as in headlamps that not only turn in the direction of the steering wheel, but which can be adjusted so as to adapt to driving conditions (e.g., spreading for low-speed, in-town driving; narrowing for highway driving)--this penetration should increase. However, hard on xenon's heels is coming LED lighting.

Among the advantages cited for LEDs for front lighting are:

* Long life: Longer than the vehicle life

* Different colors: The chip can produce red, yellow or white light

* Low infrared emissions: This permits the use of plastic optics, which means that shapes can be produced that can't otherwise be attained

* Low power consumption: On the order of 15 to 20 W when used as daytime running lights, for example

* Electronic compatibility: Compatible with the increasing number of on-board electronics, and capable of doing things (e.g., switching from low beam to high or vice versa) faster than conventional bulbs.

Although LEDs are being deployed for tail lamps and for center high-mounted stop lights (CHMSLs), there are still technical issues that need to be resolved, as well as legislative, so it may be a few years before LED arrays are shinning the way.

By Gary S. Vasilash, Editor-In-Chief
COPYRIGHT 2005 Gardner Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Title Annotation:The INDUSTRY
Author:Vasilash, Gary S.
Publication:Automotive Design & Production
Geographic Code:4EUGE
Date:May 1, 2005
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