Brexit was in the news – as usual – this week and this comment piece by our in-house analyst Calum Macrae (he runs our QUBE and PLDB databases, BTW) attracted a lot of eyeballs, suggesting sub-contracted complete vehicle assembly is enjoying something of a renaissance – not quite in the number of firms carrying out odd jobs but in the number and variety of models being built. Magna’s adding BMW’s next generation Z4 to its roster alongside the 5-series, Jaguar E-Pace and I-Pace, Mercedes G-Wagen it already builds. Valmet Automotive in Finland continues to be entrusted as flexible capacity for Mercedes-Benz. Similarly, The Nedcar plant in Born, Netherlands has been repurposed as a sub-assembler and builds BMW and Mini models. The market’s not as competitive as it once was – Magna and Valmet dominate, with the repurposed VDL Nedcar coming hard.
“Back in the 1990s, Daewoo expanded its manufacturing footprint rapidly, and circumvented tariffs, by setting up a series of ‘screwdriver’ operations in special economic zones throughout Europe (mainly in the East). Couldn’t this be a way for the automotive industry to navigate around tariffs that could be re-imposed on UK-EU bilateral trade in a post-Brexit world?” Food for thought.
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We had a report a top BMW executive had threatened the automaker would have to close its Mini and Rolls-Royce factories in Britain if Brexit seriously disrupts the supply chain. “We always said we can do our best and prepare everything but, if at the end of the day the supply chain will have a stop at the border, then we cannot produce our products in the UK,” BMW customs manager Stephan Freismuth was quoted as saying by the Financial Times. The company wanted to keep its British plants open and was working on contingency plans but that any disruption to imports of components would increase costs and damage its ‘just in time’ manufacturing model. About 90% of the parts used in BMW’s British factories come from mainland Europe. “If you have a stop for one day, it costs a lot of money but at the end if there are more stops our management have to decide how this can be sorted,” Freismuth told the FT.
That, however, was very quickly contradicted by Ian Robertson, the former head of sales and marketing now BMW Group’s special representative in the UK, who stressed BMW’s commitment to manufacturing in the UK and criticised ‘polarising headlines’ as the UK government’s EU exit negotiations entered a critical phase. Though media reports had suggested BMW had warned it could move production bases out of the UK if Brexit seriously disrupted the supply chain, Robertson told a media briefing at the SMMT’s International Automotive Summit “stories have been taken somewhat out of context”. “What we don’t need is headlines that are polarising either way. What we need is truth and facts and clarity,” he said. “Investment requires certainty and all of us [in the industry] are seeking clarity.” Robertson noted that BMW’s Oxford Mini plant brings in around 5m components a day and accounts for 250 trucks passing through the English Channel in a seamless operation that utilises a pan-European supply base. Delays or impediments would require solutions and add cost, he said. However, he also stressed that BMW was not considering moving manufacturing out of the UK. And the FT, we were told, is sticking by its story.
Volkswagen has been publishing a series of articles on people who work in its IT section and this one, on Big Data, attracted a lot of interest this week. Engineers are working on the predictive capabilities stemming from analysis of large data volumes. At the automaker’s IT Data Lab, a team is using human reasoning to analyse big data with the support of artificial intelligence. Their predictive analysis helps make many procedures and corporate processes even more efficient and sustainable, it was claimed. In their work, they are not concerned with personal data but with the data generated by the group with its complex corporate processes every day. This includes, for example, logistics and the flow of goods, key financial figures, demand figures and consumptions right down to the smallest level.
We also heard from a Jaguar Land Rover executive who stressed the need for the company to rise above commoditisation and continue to adapt to changing market needs with vehicle designs that customers can be passionate about. Sebastion Peck, MD of InMotion Ventures, JLR’s venture capital firm that invests in new start-ups, told Frost & Sullivan’s Intelligent Mobility Conference in London that good design was key to the future success of the premium car company.
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By GlobalData“We are a car company and we are also a design company,” he told delegates. “Design is about emotion, about bringing together, empathy, understanding what customers really want. It is creativity, not doing the obvious but doing something extraordinary, but also with rationality and sound, solid foundation. Branding is also a key aspect.” Peck cited as an example “Farrow and Ball turned paint, a commodity par excellence, into a luxury item,” he said. “Farrow and Ball leans heavily on the craftsmanship and heritage of its product. What they have done is exactly what Jaguar Land Rover needs to do,” he added. He also said there was a need to move the discussion on from mobility just being a commodity, to providing customers with choices and the “choices should be offering fantastic design solutions that give customers what they want, that appeal to customers on a deeply emotional level”.
Finally, we heard how Honda’s vast campus in Torrance, south of Los Angeles, is now generating a third of the electricity it needs with a vast new solar array, one of the largest on a commercial building in Southern California. At 2.0 megawatts (MW) direct current, it is one of Honda’s largest on-site renewable energy installations anywhere in the world. It has over 6,000 panels and is expected to generate approximately 3,000 megawatt hours (MWh) annually. Honda said it would offset roughly 30% of the purchased electricity for the entire American Honda Torrance campus. Solar energy also will provide 100% of the electric vehicle charging energy in the parking area to the south of the solar rooftop system. A Honda-developed cloud-based energy management system can control electric vehicle charging to match solar generation at the 60 EV charging stations to maximise the amount of solar energy used to charge the vehicles.
Of course, it helps if you have sunshine most days of the year (and slightly longer winter days), as California does, though, right now, Olde England, usually shrouded in cloud, is enjoying a rare run of at least a couple of weeks of unexpected but welcome clear skies and (for us) high temperatures (which should please the various operators of the local solar ‘farms’). No need to fly south for Spanish weather if Spanish weather has come to us…
Have a nice weekend.
Graeme Roberts, Deputy Editor, just-auto.com
