For Decoma International Inc., it's what's on the outside that counts. Decoma, which was spun off from Magna International Inc. in March 1998, is a high-volume producer of bumpers and exterior trim. But CEO Alan Power says the Canadian supplier is increasing its focus on 'mass customization' - creating low-volume exterior programs for niche vehicles. He talked with Staff Reporter Gail Kachadourian on March 8 at Decoma's offices in Troy, Mich.
How do you define mass customization?
Anything done off the main assembly line for probably less than 15,000 units a year. Mass customization to the ultimate is building a vehicle exactly to one customer's specifications.
Which automakers are the most interested?
General Motors is where we've had probably the most interest in the past. A lot of that was driven out of necessity when GM went through its restructuring in the early 1990s. DaimlerChrysler and Ford are pursuing the idea of low-volume, niche vehicles very aggressively right now.
How are you preparing for mass customization?
From an engineering standpoint, I think the most significant change is the amount of cost it has added to our business. Engineering used to be a fairly low percentage of the overall cost. It continues to grow as we have less volume to recover that on.
What is the status of the aftermarket Woody accessory kit that Decoma and 3M Automotive have designed for the PT Cruiser?
You can't buy it currently. We're still investigating with DaimlerChrysler the idea of offering it. We do very little directly into the aftermarket as a company. It's not our intention to get into any kind of competition with our customers.
Have you had to add engineers for these niche programs?
In the 1992-1993 time frame, we had about 10 to 15 people in design engineering. Today, we have close to 300. That's actually down a little bit over the last six months because of some of the slowdown in the industry.
Does the European market have as much potential for mass customization as North America?
As much or more so in Europe, there's opportunity for differentiation. The industry has gone through a lot of consideration here in North America, and a lot of fundamental changes on the exterior side of things, in terms of manufacturing capabilities and those kinds of things. Europe is just going through that transition. Our overall goal in Europe is to reach the same level of dominance that we have in North America.
How has Decoma's image changed since you spun off from Magna?
Depending on whom you were talking to, they (automakers) would include exterior capabilities or not include that in their view of what Magna was. When car companies think of the exterior of the vehicle, we want the first thing that comes to mind to be Decoma. When you talk about interiors, Lear, JCI and Magna are the first three names that come to people's mind. When you ask someone, `What do you think when you say the exterior of the vehicle?' not too many people actually have an answer.
What types of programs account for the majority of Decoma's business?
Ninety-some percent of our sales still come through high-volume mainstream vehicles, bumpers and trim. We've been getting more diversified into the low-volume, niche vehicles. That's a market trend. A lot of things, ABS, as an example, start as a niche product. Our very first OE running board program for the 1992 Ford Explorer started out at a 10 percent installation rate. It was a fairly low-volume, niche product. Today, the installation rate is about 85 percent.
How has the pressure for increased speed to market affected Decoma?
If you go back into the 1980s, average vehicle development time was five to six years. You had time between prototype and production, and if you tried something, and it failed, you could go back to an old way of doing things. The car companies used to fund a lot of their research and development. For the most part, the supply base funds that now.
You could have a great idea that you spend millions of dollars developing, but because of the window of time, you have 24 to 30 months or less now. It's much more difficult to get an automaker to take a risk on that because there's no room for failure. You have to prove it to them ahead of time, which, of course, ends up costing a lot more money. A lot of good ideas don't ever see the light of day because of timing pressures and because of the fear of failure on the part of our customers.
What are Decoma's cost-cutting strategies?
We've got two formal programs in place. One is called Winning Teams, which is a continuous improvement program, that actually recognizes and rewards employees who participate in cost-reduction teams. Most of that gets passed on to our customers. A lot of it is internal, as well.
Over the last year, we've put a program in place called Ideas in Motion, which is basically an innovation program. It builds on the whole concepts of Winning Teams but takes it to the next level. Instead of making the small, little improvements day-in and day-out, let's find some radical breakthrough-type ideas as well, so that we can totally change the way we manufacture something or come up with a new product or whatever. That's just getting up and running.