Freudenberg-NOK, the global leader in sealing and antivibration components, is shifting to smaller, more focused plants.
Together with Japanese partner NOK Corp., Freudenberg's annual automotive sales total about $1.67 billion. Despite its size, Freudenberg wants to maintain close customer contacts.
'We believe we can be entrepreneurial in small, decentralized groups,' says Freudenberg Chairman Jorg Sost.
For example, in recent years Freudenberg has adopted a strategy of focused factories in the brake business, Sost said.
Freudenberg previously operated one big brake components complex in France. But it has moved into two new French complexes, in Andrezieux and Montrond.
The Andrezieux plant opened two years ago. Montrond, which concentrates on brake hoses, opened in September.
Freudenberg's annual sales in the brake hose business are about $25.6 million. Its customers include DaimlerChrysler and Opel.
Sost expects the brake hose business to grow 35 percent by 2003 on the basis of existing contracts. 'Focused factories bring us big quality advantages and enable us to manufacture more efficiently,' Sost said.
Freudenberg invested $25.6 million in the Montrond plant. It employs 60 people.
The number of product variants in the two factories is relatively low, Sost said. Therefore, the manufacturing process is streamlined.
Montrond will function as the lead plant for Freudenberg's growing brake components business, tying in with the Flexitech plant in Plymouth, Mich., and Meiji Rubber & Chemical Co. Ltd.'s plant in Kanagawa, Japan.
Flexitech was set up in August 1999. It is 51 percent owned by Freudenberg-NOK, 29.4 percent by Meiji and 19.6 percent by Mitsubishi Motors Corp. It offers brake hose assemblies, as well as power steering, vacuum, oil cooler and automatic transmission hose assemblies.
Sost says there are three main ways Freudenberg aims to set itself apart from its competitors:
1. Global competency. Together with its partner NOK, Freudenberg has operations in 27 countries. It has a global balance in each of the three major automotive markets - Europe, Asia and North America. It is opening a plant in India in February or March 2001. 'Wherever cars are made, we are present,' Sost said.
NOK is Japan's leading oil seal manufacturer. The two companies operate a U.S. joint venture, Freudenberg-NOK, in Plymouth, Mich.
Freudenberg-NOK produces seals; noise, vibration and harshness components; and precision molded parts for suspension, fuel and electrical systems.
2. Leanness. Partly through NOK's influence, the Toyota Production System Concept is central to Freudenberg's manufacturing operations. Freudenberg has a longstanding kaizen program of continuous quality improvement and has completed more than 10,000 kaizen projects in Europe and North America.
3. Technological competence and a complete product portfolio. 'We aren't a systems supplier, but we do try to make components with additional functions,' Sost says. 'It has always been our aim to offer package solutions - complete sealing, for example.'
Regarding Freudenberg's relationship with NOK, Sost says: 'It is very close and open. We purchase together globally and have common development projects.'
There is an international personnel exchange program between the two companies and a global project management structure.
Freudenberg's customers don't want 30 or 40 engine seals delivered by 20 different suppliers. They want one competent partner who can solve all of the problems and carry out tests, Sost said.
This reduces cost and improves quality, he says.
Freudenberg is offering complete packages and components with additional functions such as o-ring engine seals that incorporate sensors to detect leaks.
Freudenberg also offers some modular integration of antivibration technology in the axle area.
'We aren't just specialists in the commodity area,' Sost said. 'We want to differentiate ourselves through competence and deliver innovative services to our customers.'
Sixty percent of Freudenberg's sales are automotive. Its other sales mainly are in tooling and textiles. The company has its roots in the leather business.
Freudenberg would like its non-automotive businesses to eventually contribute 50 percent of sales.
Says Sost: 'It is important to have other legs.'