TRAVERSE CITY, Mich. -- Rising from the financial beating that many took four years ago, automotive manufacturers have a new vision of how to operate in the future that is smaller and cheaper than in the past.
And they mean literally smaller. As in smaller factory tools, smaller work cells, shorter assembly lines and smaller buildings.
Or maybe no buildings at all.
"The last trend had companies moving into supplier parks to reduce costs, and we did that," says Bill Kozyra, CEO of global fuel and fluid line producer TI Automotive. "That's not enough now. You need to be operating out of the customer's building.
"We're asking our customers, when you build a new assembly plant, can you save a corner for us to operate out of?"
That is what Nissan Motor Co. permitted at its two U.S. plants, in Smyrna, Tenn., and Canton, Miss. TI produces brake and fuel lines off to a side of Nissan's assembly area.
According to manufacturing executives assembled for the CAR Management Briefing Seminars here last week, things that occupy less space will translate to fewer investment dollars and a more nimble approach to operating. Factory operations that currently take up a section of floor space measuring 10 feet by 10 feet will ideally -- in the very near future -- occupy just 5 by 5.
"Every square meter costs money," says Jan Spies, head of global factory planning for Volkswagen AG. "If you can bring down the overall size of your factory, you will invest less money."
It may be a bigger issue for parts companies than for carmakers in the coming years, considering automakers are asking suppliers to step up production to meet swelling U.S. car sales.
That push comes as suppliers ride a wave of new profitability, in contrast to the bloodying many got in the 2009 downturn. According to data contained in the annual Fortune 500 rankings, the industry's top 10 parts suppliers posted combined profits of $18.9 billion last year, up from $15.8 billion in profits divided among 11 suppliers a year earlier. Meanwhile, the 23 automakers included in the Fortune 500 rankings had profits decline over the same period to $95.7 billion last year from $103.1 billion the year before.