Global Chains and the modular design of autoparts: The case of

México Dr. Arturo A. Lara

Universidad Autónoma Metropolitana – X.

México- D.F.

This analysis focuses on the production plant network of Lear Corporation in Mexico, and its aim is to describe and analyze the technological up-grading process, as well as the

strategy of intra-company coordination and cooperation (in the North American market) developed by Lear within

the framework of modular production.

Empresa Mundial Norteamérica Europa

Lear Corporation 25 22 41Johnson Controls 24 23 42Faurencia 9 25 *Magna * * 8Otros 42 25 9Fuente: Elaborado apartir de Aroq Limited (2002).

Nota: * Dicho porcentaje se incluye en el rubro otros.

Cuadro no. 11Distribución del volumen de producción de asientos a

nivel mundial según principales empresas(porcentajes)

I

NUMERO DE PATENTES DE LAS PRINCIPALES EMPRESAS PRODUCTORAS DE ASIENTOSAUTOMOTRICES (1976-2002)

214162

21 11 8

Lear Corporation Johnson Controls

Magna International Delphi

Faurecia

EVOLUCIÓN DE LAS FUNCIONES TECNOLÓGICAS EN LOS ASIENTOS AUTOMOTRICES DE LEAR

CORPORATION (Número de Patentes)

Funciones\ Periodo 1976-80

1981-85

1986-90

1991-95

1996-02

TOTAL

Ajuste y Comodidad Personal

7 5 2 7 42

63

Búsqueda de espacio Interior

1 1 23

25

Proceso 2 5 47

54

Seguridad 1 4 30

35

Otras Funciones 1 1 13 21

36

Total 8 6

6 30 163

213

FUENTE: Elaboración propia en base a la información del USPT.

hypotheses:

Lear-México is an autoparts company that is bringing together an increasingly large amount of automobile

interior sub-systems and components, including seats. This process has been made possible by:

a) the incorporation and intra-firm application of the technological capabilities it has developed on a global

level, b) the use of a modularization and specialization strategy

in a cohesive cluster of technological sub-systems and c) productive and technological coordination processes on

an intra-company level.

How can we explain the evolution of Lear’s technological capabilities, from the production of

seats to entire interior systems?

In order to answer these questions, it is necessary to describe the interdependent nature of seat

design.

Establishing the architecture.

The steps are:

• 1.- Crate a schematic of the product.

• 2.- Cluster a rough geometric layout.

• 3.- Identify the fundamental and incidental interactions.

Integral architecture

An integral architecture has the following properties:

• Functional elements of the product are implemented using more than one components (chunks).(many-components-to-one function)

• A single component implements many functional elements. (one-component-to-many-functions)

• The interactions between components are ill defined and may be incidental to the primary functions of the products.

Modular: one-to.one function/component

• One architectural feature essential for many of the advantages associated with modular product designs requires a one-to-one relationship between function and component.

Deviation from a one-to-one relationship.

• 1.- There can be a one-to-many relationship: Multiples components contribute to a particular function (protection and comfort in automobiles).

• 2.- A function can be provided by a component that simultaneously provides also other functions (the automobile´s body)

Deviation from a one-to-one relationship.

• 3). There can be a many-to-many relationship between functions and components (the power unit of the computer).

Aesthetics

External Communication

Data Storage

Data Output

Data Processing

Data Input

Keyboard MonitorMotherboard w/ CPU, RAM Disc Drive Modem Power Unit Case

Control

Comfort

Aesthetics

Space

Protection

Propulsion & Decelerarion

Engine / Transmission

Chassis / Suspension

Wheels / Tires / Brakes

Body (incl. doors &

windows Seats Cockpit Trunk

Function-Component Map for an Automobile

Function-Component Map for a Computer

Fuente: Fixson & Sako (2001)

Modularity and Outsourcing

• In theory, modularity captures the notion of a clear division of labor between the architect with architectural design knowledge and designers with knowledge of each module.

• The dichotomy between integral and modular architecture is conceptually powerful. But the reality is not pure.

The broad ties and interconnection of interfaces among the different modules that make up the

interior of a vehicle – a process called modularization – have made it possible for Lear to

make a huge leap: from being a supplier of a segment as specific and specialized as seats, to

offering the whole interior system.

Modularity and Outsourcing

• Acquired technological knowledge and the processes involved in the manufacture of these other modules have strengthened Lear’s competitive capacity to extend production to cover the whole interior system

Modularity and Outsourcing

Lear Seating Corporation Plants In Mexico,

(1995) Company State Municipality

Employees

Outputs

Favesa (111) La Cuesta, SA de CV Chih Cd. Juárez 2 474 Seat assemblies, foam paddings, seat covers

Favesa (V) Río Bravo, SA de CV Chih Cd. Juárez 1 825 Seat assemblies, foam paddings, seat covers

Favesa (VI) San Lorenzo, SA de CV Chih Cd. Juarez 2 600 Seat assemblies, foam paddings, seat covers

Cisa Cuautitlan (Lear Seating) Méx Cuautitlán 96 Seat systems

Cisa Hermosillo (Lear Seating) Son Hermosillo 575 Assembly, welding, pressing, bending, foamprocessing

Cisa Naucalpan (Lear Seating Méx Naucalpan 135 Trim covers, seat systems

Cisa Puebla (Lear Seating) Pue Cuatlancingo 169 Trim covers, seat systems

Cisa Ramos Arizpe (Lear Seating) Coah Ramos Arizpe 42 Seat covers

Cisa Saltillo (Lear Seating) Coah Saltillo 608 Seat covers

Cisa Tlahuac (Lear Seating) D.F. Tláhuac 1 722 Metal frames, foam, pads, seat seating

Source: ELM (1995). Directorio empresas automotrices.

Lear Corporation Plants In Mexico, 2000

Seats

Tri

m C

overs

Inte

riors

Harn

esses

Oth

ers

1/

Assem

bly

Inje

ction

Mold

ing

Sta

mpin

g

Weld

ing

Cuttin

g

Sew

ing

Oth

er

Favesa La Cuesta - Manufacturing Operations Div. Lear 6 000 Cd. Juárez Chih X X X X X X X X XFavesa Rio Bravo - Manufacturing Operations Div. Lear 1 825 Cd. Juárez Chih X X X X X X X X XFavesa Sn Lorenzo - Manufacturing Operations Div. Lear 3 000 Cd. Juárez Chih X X X X X X X X XLear Corporation México - Ford Division 400 Silao Gto X X XLear Corporation México - Ford Division 20 Saltillo Coah X X XLear Corporation México - Manufacturing Operations Div 138 Cuautitlan Méx X X X XLear Corporation México - Manufacturing Operations Div 169 Cuautlancingo Pue X X X X X XLear Corporation México - Manufacturing Operations Div 527 Cd. Juárez Chih X X XLear Corporation México - Manufacturing Operations Div 798 Cd. Juárez Chih X X XLear Corporation México - Manufacturing Operations Div 3 960 Cd. Juárez Chih X X XLear Corporation México - Manufacturing Operations Div 190 Hermosillo Son X X X X X X X XLear Corporation México - Manufacturing Operations Div 200 Hermosillo Son X X X XLear Corporation México - Manufacturing Operations Div 575 Hermosillo Son X X X X XLear Corporation México - Manufacturing Operations Div 135 Naucalpan Méx X X X X XLear Corporation México - Manufacturing Operations Div 215 Cuatlalcingo Pue X X X XLear Corporation México - Manufacturing Operations Div 413 Ramos Arizpe Coah X X X X XLear Corporation México - Manufacturing Operations Div 1 100 Saltillo Coah X X X XLear Corporation México - Manufacturing Operations Div 3 000 Tláhuac DF X X X X X X X X X X X X X XLear Corporation México - Manufacturing Operations Div n.d. Monterrey N.L. X X X X X X X X X X XLear Corporation México - Manufacturing Operations Div 80 Toluca Méx X X X X X X X X XLear Mexican Trim Operations, SA de CV 3 176 Cd. Juárez Chih X X X XLear Corporation México, SA de CV 31 Tultitlán Méx X X X XLear Electrical Systems de México, SA de CV 243 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 1 211 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 1 495 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 3 192 Chihuahua Chih X X X XLear Electrical Systems de México, SA de CV 2/ 1 208 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 2/ 1 208 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 2/ 1 208 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 2/ 1 208 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 1 016 Cd. Juárez Chih X X XLear Electrical Systems de México, SA de CV 1 069 Cd. Juárez Chih X X XLear Mexican Trim Operations, SA de CV 1 981 Cd. Juárez Chih X X XLear Mexican Trim Operations, SA de CV 5 413 Cd. Juárez Chih X X X

n.d. Not available Information

1/ Other = devices, accesories and interiors parts

2/ Without information. The number is an estimated.

Sources: SECOFI-SIEM (2000); ELM (2001) and, interviews in Lear Corporation plants.

Em

plo

yees

Munic

ipality

Sta

te

Manufa

ctu

re

MaquilaPlant

Products Processes

Interior system task structure Matrix MODULES Seats

Instrument panel

Doors/ Interior finishes

Roof Other

accessories

X X X X

X X X X X

X Seats

X X X X

X X X

X X X Instrument panel

X

X X

X

X X X X

Doors/ Interior finishes

X X X

X X

X X X X

X X X Roof

X X X X

X X X X X Electric controls and other accessories

X X X X X

Source: Modified from Baldwin and Clark (2000): 50.

Flujo de suministro y fabricación de asientos e interiores en Lear Tláhuac

Fabricantes de autos

Plantas de Lear

Competencia Sentido de la cadena de

suministro

Fuente: Elaborado con información de entrevistas a plantas de Lear Corporation.

Planta de Lear “proveedor exclusivo”

LearCuautitl

án

LearSilao

LearPuebla

Lear Tláhuac

JohnsonControls

A

B

C

D

E

MEXICO ESTADOS UNIDOS

A

B

D

E

Lear U S A

LearCd.Juárez

Ensambladoras

Ensambladoras

Contraste de los diseños integral y modular en Lear Corporation

Estados UnidosMéxico

Cd. Juárez

Tláhuac

A

B

C

D

A

B

C

D

Plantas Lear

Clientes

Nodos de fabricación

Lear

Diseño ModularDiseño Integral

A

B

Clientes

Proveedores

A

B

Plantas de LearPlantas de la competencia

Clientes

Bastidor/Espuma

Costura/ Espuma

Conclusions

1.- During the 1990s, Lear-México underwent an impressive process of expansion. This company

opened numerous plants in different parts of Mexico, increasing the number of people it employed and

diversifying its productive processes.

2.- Lear offers a successful case of a world class supplier that went from being a specialist in the

manufacture of seats to a producer and assembler of different components (upholstery, harnesses and

interiors) which are then distributed to the terminal industry.

3.- This company has managed to orchestrate the broadening of the range of products it offers with a

growth strategy, not only through geographical expansion but also by improving its technological

capabilities and organizational strategy.

Conclusions

Conclusions

4.- The case study of Mexico reveals that the policy of expansion and the location of Lear’s plants is part

of the process of economic and commercial integration of this country resulting from the North

American Free Trade Agreement.

Lear’s decisions with regard to location are in response to the search for lower salaries, the

reduction of transport costs and the needs of its main customers (Chrysler, General Motors, Volkswagen,

etc.).

Conclusions

5.- A company that increases its size, the number of plants it has, its technological capabilities, its human resources and the range of products it offers is facing up to the challenge of dealing with complexity and uncertainty. Lear has managed to overcome these obstacles by acting on three basic levels: 1) intra-company coordination, 2) its strategy of capability

expansion, and 3) modular design.