Tomas Hedenborg, president and CEO of leading front-end module supplier HBPO, expects the company’s sales to jump from €351 million in 2004 to “close to €450 million” in 2005.
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HBPO is basically a module integrator and its own level of vertical integration is only around 10%.
The group was founded as a joint venture between lighting specialist Hella and the heat exchanger company Behr in 1999 and has been growing at 30 or 40% a year since then on average.
In 2002 the company had sales of €141 million.
Sales grew in 2003 with the creation of a joint-venture in Korea with Samlip to develop the Korean front-end module market.
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By GlobalDataThe integration of Plastic Omnium, the bumper and exterior supplier, as a third, equal partner in the company accounted for much of the jump in sales in 2004.
HBPO expects to raise its share of the global outsourced front-end module market from 23% in 2004 to close to 30% by 2008.
Europe, the most mature outsourced front-end module market, is expected to see a 30% increase in market volume between 2004 and 2008. “Basically we are keeping a market share” said Hedenborg.
In Europe around 70% of light vehicles are designed with front-end modules. Out of that volume currently 60% are outsourced – just over 40% of total light vehicle production.
Hedenborg says “we see more and more vehicles getting this architecture because it makes sense in the OEM plant”.
HBPO has won a contract for a future front-end module assembly in Banbury, for BMW [the Mini plant] in Oxford.
The fastest growing areas will be NAFTA and Asia, says Hedenborg. Both areas are expected to see a doubling of the market for front-end modules in the next four years – from a very low base.
HBPO expects to increase its share within the NAFTA market.
“North America is at the very beginning of the trend” says Hedenborg “Chrysler seems very determined to go down this path”.
In 2006 HBPO will open three plants in North America: one in Windsor, Ontario, and one St Louis Missouri, both for DaimlerChrysler; the group also has a new project for Ford in Hermosillo, Mexico.
In Asia, Hedenborg expects HBPO’s market share fall from 30% in 2004 to just 25% in 2008, but HBPO will still see growth because the market is “exploding”.
Hedenborg expects the first front-end module in China in 2007.
The issue is not labour costs but getting the complexity out of their plants says Hedenborg. “They are increasing capacity very rapidly in their plants so they need the space” he said.
By 2009 Hedenborg expects the group to double in size to €1 billion.
The contracts for front- end modules are becoming technically more demanding.
Ralf Schmidt, director of research and development at HBPO says that there are large demands on all major front-end module components, from the structural carrier through the cooling system, lighting/signalling system, vehicle protection/styling issues, new sensors and driver assistance systems, and pedestrian protection demands. Weight and cost reduction are two major issues.
Schmidt says that through the integration of functionality and careful choice of major module components from a very wide range of possible technologies it was possible to reduce the weight of the front-end from the old Mercedes-Benz Vito to its successor, the Viano by 10.5 kg. Almost half of that weight reduction came from a reduction in weight of the cooling system.
But Schmidt says that some of the big benefits of the front-end modules are improved performance – better fit and finish with the virtual elimination of gaps between components, better crash performance, shorter overhangs and greater styling freedom.
HBPO is having to develop increasingly complex concepts to meet new European legislation for pedestrian protection which came into force in 2005.
By the end of 2012 all new cars in Europe will have to meet the phase 1 pedestrian protection standard, and even before that, in 2010, the new, tougher phase 2 standards will start to be introduced – and attract two stars for safety on the widely cited Euro NCAP tests.
HBPO has presented a new concept in the “SFuse” front-end module concept of the lower stiffener and additional fascia armature to increase pedestrian protection in the lower and upper leg impact area affected by the front-end.
HBPO spent €6.3 million on R&D in 2004 – a small amount relative to sales, but high considering the company’s relatively low level of vertical integration.
Forty employees – or more than 10% of the workforce – are engaged in research and development work, increasingly for advanced engineering.
The group made 20 patent applications in 2004.
Hedenborg expects light vehicles manufactured in North America in both the domestic market and export to share the same front end and says that one of the reasons why North American vehicle makers are so interested in working with HBPO is its familiarity with European pedestrian regulations.
“We’re looking at highly integrated solution so that we can add a lot of functionality without increasing the cost much” said Hedenborg. “The end consumer is not really willing to pay more for his car just because it is more friendly to pedestrians”.
Hedenborg says the OEMs are increasingly interested in suppliers taking on responsibility for the module.
“For pedestrian protection you have to have a systems approach that gives the best technical response, the best efficiency” said Hedenborg.
“We still have a lot of directed sourcing” he said. “but the trend is definitely towards more system sourcing”.
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