Network of Automotive Regions 2007Network of Automotive Regions 2007

Regional governments as shaping actors of automotive industry performance: a search after good practices

Torino, 9th of November 2007

Dr. Bart Kamp

bka@resource.be

Contents

Introduction Survey of automotive support initiatives Good practice examples Final reflections

Introduction

European regions and the automotive industry:– City region of Stuttgart: 50% of economic turnover is

automotive-related, comparable share of the sector in employment creation

– Alsace-Franche Comté: 30% of industrial labour is (in)directly related to automotive industry

– Piemonte: +/- 95,000 direct automotive FTEs; Torino: +/- 60,000 direct automotive FTEs: > 20% of DIL

» Importance of sector on level of specific regions is striking

» Regions have a stake in keeping automotive industry sane

Mixed growth outlooks for resp. countries and continents

A case for internationalization of local businesses

Passenger Car Market - Western Europe

11,25

11,90 12,03

12,80

13,41

14,36 14,40 14,2114,52 14,50

13,4913,4113,51

15,0714,8214,74

8,00

9,00

10,00

11,00

12,00

13,00

14,00

15,00

16,00

Mio

Growing importance of outsourcing Also with regard to R&D: a case for providing localized

innovation support structures

Production and added value of light vehicles (worldwide): 2015 forecast

203 (23%)228 (35%)

700 (77%)

417 (65%)

0100200300400500600700800900

1000

2002 (57 million production units) 2015 (76 million production units)

Adde

d va

lue i

n bi

llion

euro

s

OEMs Suppliers including service providers

Increasing importance of logistics

Outsourcing Global supply coverage Shorter time-to-market & build-to-order concepts Modularization JIT / SILS Share in total cost structure outpaces labour cost

In order to: – Learn from each other– Weather delocalization storms– Improve the competitiveness

of regional automotive complexes– Attribute “flypaper features” to participating regions

» NAR commissioned Benchmarking exercise on initiatives aiming to strengthen the automotive industry at regional level

• Objectives of Benchmarking exercise: Identification of good business and policy practices to sustain

automotive competitiveness Drawing lessons from good practices

Survey of automotive support initiatives

Survey of automotive support initiatives

Inventory resulted in 60 promising initiatives from around Europe …– In highly diverse thematic areas:

» R&D

» Logistics

» Education and training

» Knowledge transfer

» Internationalization

» Diversification

» Quality management

» Supplier development programmes

» …

Good practice examples

Internationalization:– From Concept to Car (Province of Turin)

R&D:– Centro Tecnologico de Automocion de Galicia (E)

Logistics:– Ford Genk supplier park & conveyor bridge (Flanders,

B)

From Concept to Car

Background:– FIAT crisis

» Need to diversify client base:

» Attract attention of outside buyers to the region’s companies

‘Dall'idea all'auto’ (From Concept to Car) programme– Objectives:

» Market Piemontese automotive potential abroad

» Open up commercial channels to prime customers

» Link local companies to demanding clients Commercial growth Divert mono-client / market dependencies Learning effects

From Concept to Car

Services– Organization of 1to1 meetings / trade makets– Dedicated trade missions to buyer company HQ– Inviting purchasing managers to acquaint potential

suppliers– Support set-up of purchasing offices in – Installation of a permanent contact office

From Concept to Car Achievements – Recognitions - Milestones

– First round 2003-2006 » 150 suppliers selected based on their capabilities

Receiving assistance to market themselves as well as visits from potential new clients

Large number of OEMs & OESs has been successfully targeted

 438 meeting between Piedmont and foreign companies

 125 industrial visits

 11 workshops with international buyers

 7 trade missions

 4 conferences to present the programme in Russia, China & India

– Meanwhile, 1st edition got extended follow-up: budget from 2 -> 2,6 Meuro)

– Programme was awarded “Challenges 2005” prize

Good practice example 3: CTAG

Diagnosis prior to creation of CTAG:– Lack of technological back-up to support

innovation activities on behalf of local firms

– Regional companies had to turn to centres in other parts of the country or even abroad

– Risk of becoming footloose» In order to retain a sizeable and future-

oriented automotive sector in a peripheral region:

Being able to carry out innovation activities locally is of vital importance

»Conceiving of CTAG

Good practice example 3: CTAG

Inaugurated end of 2002– Concentration on a confined number of technology fields

– Cooperations with other centres to complement services and facilities on offer

Achievements:– Strongly growing demand after centre’s services

Good practice example 3: CTAG

Assessment of outcome:– Turnover figure is especially high in view of small size and

satellite character of regional automotive complex

– Importance to regional supplier community’s innovation activities is arguably considerable

– CTAG has served as important catalysator for regional R&D

– CTAG produces positive spill-over effects for other sectors in the region

– CTAG reduces the need for locally-based companies to go abroad (complete delocalization or off-shoring R&D)

Ford Genk Supplier Park – Conveyor Bridge

System for Automatic Sequence Delivery, i.e.: » a fully automatic transport system

» which delivers large and/or complex vehicle parts just-in-time and just-in-sequence

» from the assembly lines of suppliers to the assembly line of the customerCONVEYOR

Lear

IAC

TDS Automotive

SML

Assembly

Ford Genk Supplier Park – Conveyor Bridge

Achievements:

Final reflections

Common denominators behind most good practices– Initiatives must be market led

» Business community has to be behind initiatives

– Benefit from tapping into economies of scale and scope: » If benefits are not region or industry-specific

» Enhancing sustainability of initiatives

– Big firms and public authorities often function as champions / levers to erect structures:

» Spill-over effects to wider automotive community

» Overcoming market failures

» Contribute to funding strategies