Siemens VDO and Faurecia have big plans for the U.S.

Suppliers see growth potential for cockpit modules

Munich. Siemens VDO of Germany intends to team up with its French joint venture partner Faurecia to deliver integrated cockpit modules to the North American market.

John Sanderson, president of Siemens VDO Automotive, said he is expecting opportunities for growth in this segment because North American manufacturers have shown increasing interest in such modules.

Both suppliers are already leaders in cockpits in Europe through their 50-50 joint venture, SAS Automotive Systems of Karlsruhe, Germany, Sanderson said.

The joint venture leads the European market in outsourced cockpit modules, but has no presence in North America. Roughly a quarter of all cockpit modules are outsourced.

U.S. production

Faurecia is the leading European supplier of interiors and interior module assembly, while Siemens is strong on instrumentation, electronics and controls.

Sanderson is convinced that "greater cost savings are only possible through concepts such as the CESAR modular cockpit design developed by Siemens," Sanderson said.

The CESAR cockpit is based on four modules comprising driver, center console and passenger modules, and a module for electrical wiring and electronic controls.

Cockpit modules so far have only been offered in the U.S. for mid-consoles, which integrate infotainment components as well as controls for heating, ventilation, air conditioning and electronics.

One of the cornerstones of Siemens VDO's production group is in Huntsville, Alabama. The supplier was able to buy a former Chrysler electronics factory in that city and boost its revenues to 2 billion euros last year, up from 1.5 billion euros in 2003.

Siemens VDO took over the factory in spring of 2004 and now manufactures instrument clusters for cockpits, engine and transmission controls, body-electronics components, and radios for the Chrysler, Jeep and Dodge brands.

Potential U.S. acquisitions

Sanderson said Siemens VDO management has long been looking for potential acquisitions in the North American market, aiming to accelerate its growth in U.S. revenues.

"Numbers one, two and three all make money. Everyone else loses," Sanderson said, referring to the positions of suppliers in various business segments.

In his view, only the large suppliers can achieve the kind of constant revenue flow required to justify continuous investment in new technology.

"Other companies, by contrast, have aggressive cost-cutting programs to handle declining revenues, and they keep saving until nothing more is left," Sanderson said.

To make Huntsville fit for the future, Siemens VDO is now closing Factory No. 1 at the site. Instrument cluster assembly is being transferred to the company's Vallejo factory in Mexico.

Over the next 18 months, the supplier is taking the remaining three business areas and consolidating them in factory No. 2, which is more than three times as large as Factory No. 1. Those three areas include engine and transmission controls; audio; and body electronics.

Last year, Siemens VDO transferred technical planning employees from its U.S. headquarters in the Detroit area to Huntsville, bringing design closer to production.

Sanderson said expanding technological resources in North America is making it possible for the company to help customers with their detailed technical and design questions.

He is especially thinking about engine management systems for diesel engines. They require close cooperation with manufacturers in both planning and production.

Tags: Suppliers

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