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Automotive Industry

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

Automotive Design & Production, May, 2005 by Gary S. Vasilash

A BUSINESS APPROACH

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:

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* 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.

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* 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.

A DEVELOPMENT-MANUFACTURING STRATEGY

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.)

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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.

Automotive Industry

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

Automotive Design & Production, May, 2005 by Gary S. Vasilash

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