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UNIVERSIDADE TCNICA DE LISBOA
INSTITUTO SUPERIOR TCNICO
INNOVATION FOR AUTOMOTIVE INTERIOR COMPONENTS:
IMPLICATIONS FOR THE PORTUGUESE INDUSTRY
Joo Verssimo Meyer
(Licenciado)
Dissertao para obteno do Grau de Mestre em Engenharia e Gesto de Tecnologia
Orientador: Doutor Paulo Manuel Cadete Ferro
Co-orientador: MSc Andrew James
JRI
Presidente: Doutor Manuel Frederico Tojal de Valsassina HeitorVogais: Doutor Paulo Manuel Cadete Ferro
Doutor Francisco Miguel Rogado Salvador Pinheiro Veloso
Julho de 2004
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Resumo
O presente trabalho analisa a inovao nos componentes para o interior automvel a nvel europeu
com base numa tcnica de Prospectiva Tecnolgica conhecida como Mapeamento Tecnolgico, a
qual foi aplicada a trs mdulos de interior automvel.
Os dados colhidos no Reino Unido e em Portugal permitiram traar linhas de evoluo numa escala
de tempo respeitantes a configurao de produto, materiais e tecnologias, para cada um dos trs
mdulos considerados.
A indstria de componentes para o interior automvel portuguesa foi caracterizada com base num
inqurito tecnolgico conduzido em 2002, o que permitiu concluir sobre a capacidade tecnolgica do
sector face s perspectivas de evoluo tecnolgica identificadas no estudo prospectivo.
Esta anlise foi detalhada num caso de estudo relativo a um mdulo assento produzido numa
empresa de componentes nacional, donde foi possvel retirar implicaes relativamente
capacidade tecnolgica e estratgia organizacional da referida empresa.
Este trabalho permitiu obter uma representao grfica numa escala de tempo de materiais e
tecnologias chave para o interior automvel da prxima gerao de veculos. Com base nesta viso
futura foi possvel identificar desafios e oportunidades para o sector de componentes para o interior
automvel portugus.
Palavras-chave:
Prospectiva, Mapas Tecnolgicos, Indstria Automvel, Autointeriores, Inovao, Gesto deTecnologia
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Abstract
The present work analyses innovation in automotive interior components on a European level, based
on a Technology Foresight technique known as Technology Roadmapping, which has been applied
to three selected automotive interior modules.
The data gathered in the United Kingdom and Portugal enabled to draw evolution paths on a time
frame for each of the three modules considered regarding product configuration, materials and
technologies.
The Portuguese automotive interior component industry was characterized drawing on a
technological survey conducted in 2002, which enabled to conclude on the technological capacity of
the sector in view of the technologic evolution perspectives identified on the Foresight study.
This analysis was extended on a case study, regarding a seat module produced by a Portuguese
automotive component company, where implications were drawn in terms of technological capacity
and organizational strategy for the company considered.
This work enabled to obtain a graphic representation on a time frame of key materials and
technologies for automotive interiors on the next generation of vehicles. Based on this future vision it
was possible to assess the challenges and opportunities facing the Portuguese automotive interior
component sector.
Key words
Foresight, Technology Roadmaps, Automotive Industry, Autointeriors, Innovation, Technologymanagement
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Acknowledgements
I would like to thank the following persons who had a direct participation on this work:
Paulo Ferro, for accepting to be my supervisor, and for his support on the structuring of this thesis.Andrew James, for accepting to co-supervise my work. I want to thank him also for welcoming me in
Manchester and transmitting me confidence to getting on with the work.
Manuel Heitor, for his permanent availability and insightful comments along my work.
Jos Ferro Camacho, for his essential contribution on the automotive industry and for his friendly
dedication to this work.
I would like to acknowledge IN+, PREST and INTELI, and all the people working there for the
institutional support and the material conditions provided for conducting my work.
Then I would like to thank the contribution of all interviewees who accepted to participate on this
research and without which, it this work would have been impossible.
All my colleges contribution was fundamental for helping me structuring my ideas and stimulating my
creativity: Pedro, Joana, Aldina, Cristiano, zcan, Lee, Rafael, Ko, Miguel.
Finally to those people who were not directly involved in this work but who supported and trusted me:
my parents, and sister and all my friends.
Paljon kiitos, Silja
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Index
RESUMO .............................................................................................................................................................II
ABSTRACT.......................................................................................................................................................IIIACKNOWLEDGEMENTS.............................................................................................................................. IV
INDEX..................................................................................................................................................................V
LIST OF FIGURES..........................................................................................................................................VII
LIST OF TABLES............................................................................................................................................. IX
ABBREVIATIONS..............................................................................................................................................X
1 INTRODUCTION ........................................................................................................................................1
1.1 OBJECTIVES AND MOTIVATION ...............................................................................................................11.2 AUTOINTERIORS DYNAMICS....................................................................................................................2
1.2.1 Industry trends................................................................................................................................3
1.2.2 Autointeriors Global Key players .......... ........... .......... ........... ........... .......... ........... ........... ........... ...8
1.2.3 Autointeriors characterisation......................................................................................................12
1.2.4 Drivers of Innovation in Autointeriors .........................................................................................14
1.3 PORTUGUESE AUTOINTERIORS ..............................................................................................................17
1.3.1 The macro level ............................................................................................................................17
1.3.2 The technological dimension ........................................................................................................18
1.4 RESEARCH QUESTIONS ..........................................................................................................................23
2 METHODOLOGY .....................................................................................................................................26
2.1 REVIEW OF BIBLIOGRAPHY ....................................................................................................................26
2.1.1 Foresight: background and definition ........... .......... ........... ........... .......... ........... ........... .......... .....26
2.1.2 Methodologies used in Foresight..................................................................................................27
2.1.3 Overview of Technology Roadmaps..............................................................................................28
2.2 METHODOLOGY FOLLOWED ..................................................................................................................35
2.2.1 Preparation...................................................................................................................................36
2.2.2 The Consultation Process .............................................................................................................362.2.3 Construction of the Technology Roadmap....................................................................................38
2.2.4 Product Segmentation...................................................................................................................40
3 TECHNOLOGY ROADMAPPING IN AUTOMOTIVE INTERIORS................................................43
3.1 THE MODULES UNDER ANALYSIS ...........................................................................................................43
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3.1.1 Door Module.................................................................................................................................43
3.1.2 Instrument Panel...........................................................................................................................47
3.1.3 Seat Module..................................................................................................................................49
3.2 RESULTS................................................................................................................................................51
3.2.1 Industry trends..............................................................................................................................51
3.2.2 Door Module.................................................................................................................................57
3.2.3 Instrument Panel...........................................................................................................................58
3.2.4 Seat module...................................................................................................................................59
4 CASE STUDY: APPLICATION OF TECHNOLOGY ROADMAPPING TO A SEAT MODULE
MANUFACTURED IN PORTUGAL...............................................................................................................60
4.1 INTRODUCTION......................................................................................................................................60
4.2 DESCRIPTION OF THE COMPANY............................................................................................................60
4.3 DESCRIBING THE SEAT S7.8 ..................................................................................................................61
4.4 APPLYING THE ROADMAP EVOLUTION TRAJECTORIES TO THE S7.8 SEAT...............................................66
4.4.1 The scenarios offered by the Technology Roadmap .....................................................................66
4.4.2 Expected evolution of the S7.8 Seat ........... .......... ........... ........... ........... ........... .......... ........... ........67
4.5 IMPLICATIONS OF EXPECTED EVOLUTION IN THE S7.8SEAT ..................................................................69
5 DISCUSSION..............................................................................................................................................75
5.1 METHODOLOGICAL ASSESSMENT ..........................................................................................................75
5.2 TECHNOLOGY ROADMAP.......................................................................................................................77
5.2.1 Door module.................................................................................................................................77
5.2.2 Instrument Panel...........................................................................................................................815.2.3 Seat Module..................................................................................................................................84
5.2.4 Key technologies for Autointeriors .......... ........... ........... ........... ........... .......... ........... ........... .........87
5.2.5 Implications on the Portuguese automotive interior component companies .......... ............ ..........91
5.3 POLICY IMPLICATIONS AND FUTURE WORK............................................................................................94
BIBLIOGRAPHY...............................................................................................................................................96
ANNEX A INTERVIEW OUTLINE...........................................................................................................101
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List of Figures
FIGURE 1:COMPANY POSITIONING IN THE SUPPLY CHAIN (CONCEIO ET AL.2003).............................................3
FIGURE 2:AUTOMOTIVE INTERIORS NAFTA MARKET -VALUED AND INDUSTRY CONCENTRATION (CSM2002)...9
FIGURE 3:EVOLUTION OF MODULARISATION AND INTEGRATION IN THE AUTOMOTIVE COMPONENT INDUSTRY
(FIXON 1999) ................................................................................................................................................11
FIGURE 4:FUNCTIONAL REQUIREMENTS OF AUTO INTERIORS SUBASSEMBLIES ....................................................13
FIGURE 5:MATERIALS BY PRODUCT AREAS ..........................................................................................................13
FIGURE 6:SPECIALISATION OF THE PORTUGUESE AUTOMOTIVE COMPONENT INDUSTRY ......................................18
FIGURE 7:CHARACTERIZATION OF THE RESPONDENTS..........................................................................................19
FIGURE 8:MATERIALS PROCESSED........................................................................................................................20
FIGURE 9:NUMBER OF MATERIALS PROCESSED ....................................................................................................21
FIGURE 10:TYPOLOGY OF TECHNOLOGIES DOMINATED ........................................................................................22
FIGURE 11:POSITION OF FORESIGHT METHODS ON THE FORESIGHT TRIANGLE (ADAPTED FROM CAMERON ET AL.
1996).............................................................................................................................................................28
FIGURE 12:TAXONOMY OF ROADMAPS (KOSTOFF ET AL.2001)...........................................................................31
FIGURE 13:ROADMAPPING TAXONOMY (KAPPEL 2001) .......................................................................................31
FIGURE 14:METHODOLOGY FOLLOWED FOR THE CONSTRUCTION OF THE TRM ...................................................39
FIGURE 15:DOOR MODULE SUBCOMPONENTS......................................................................................................44
FIGURE 16:EXAMPLE OF AN INTERIOR TRIM PANEL AND HARDWARE CARRIER (GRUPO ANTOLIN).....................46
FIGURE 17:DOOR EXTERIOR PANEL (RAUTARUUKKI) ..........................................................................................47
FIGURE 18:INSTRUMENT PANEL SUBCOMPONENTS (SOFT PANEL) ........................................................................48FIGURE 19:INSTRUMENT PANEL COMPOSITION (GEPLASTICS) ............................................................................49
FIGURE 20:SEAT MODULE SUBCOMPONENTS .......................................................................................................49
FIGURE 21:SEAT FRAME (FAURECIA) ...................................................................................................................50
FIGURE 22:SECTIONED SEAT (LEAR) ....................................................................................................................51
FIGURE 23:MAIN FEATURES OF S7.8 SEAT (INAUTO-B2:ECO-DESIGN,IST)....................................................62
FIGURE 24:SEAT'S MAIN TECHNOLOGIES AND MATERIALS....................................................................................63
FIGURE 25:PROCESSES ASSOCIATED WITH THE PRODUCTION OF THE SEAT'S STRUCTURE .....................................64
FIGURE 26:PROCESSES ASSOCIATED WITH THE PRODUCTION OF THE SEAT'S FOAMS.............................................64
FIGURE 27:PROCESSES ASSOCIATED WITH THE PRODUCTION OF THE SEAT'S COVERS ...........................................65FIGURE 28:SWITCH FROM STEEL TO HIGH STRENGTH STEEL ...............................................................................70
FIGURE 29IMPLICATIONS OF A TECHNOLOGICAL UPGRADING IN THE FOAM PRODUCTION ....................................71
FIGURE 30:ADOPTION OF IN-SITU FOAM INJECTION TECHNOLOGY IN FOAM PRODUCTION.................................71
FIGURE 31USE OF VIRTUAL ENGINEERING DEVELOPMENT...................................................................................74
FIGURE 32:DOOR MODULE'S TECHNOLOGIES AND MATERIALS .............................................................................89
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FIGURE 33:INSTRUMENT PANEL'S TECHNOLOGIES AND MATERIALS .....................................................................90
FIGURE 34:SEAT MODULE'S TECHNOLOGIES AND MATERIALS ..............................................................................91
FIGURE 35:HUMAN RESOURCES QUALIFICATIONS - NATIONAL AND INTERNATIONAL COMPARISON (*-INTELI
2003).............................................................................................................................................................92
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List of Tables
TABLE 1:GENERIC TECHNOLOGY ROADMAP,EIRMA1997.................................................................................32
TABLE 2:TIME FRAME OF CONSULTATION PROCESS ..............................................................................................37TABLE 3:VARIABLES INFLUENCING PRODUCT SEGMENTATION.............................................................................40
TABLE 4:QUALIFICATIONS OF THE HUMAN RESOURCES IN CASE STUDY COMPANY (2002) ..................................61
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Abbreviations
Technical Abbreviations
ABS - Acrylonitrile-Butadiene-Styrene
CAD-CAM - Computer Aided Design-Computer Aided Manufacturing
CMF Compression moulded natural fibres or wood agglomerate
EPP Expanded Polypropylene
GFR Glass Fibre Reinforced
HHS High strength steel
HSNy - High stiffness nylon blend
HyF -Hydro-Formed
iC -in-colour
IM Injection moulding
LGF Long glass fibre
LPIM low-pressure injection moulding
NV Niche vehicle
PP Polypropylene
PU - Polyurethane
Sc Self-coloured
SMA - Styrene Maleic Anhydride
SS - slush skin
Tf Thermoforming
ThC thermo-covered
XLPO - Cross-linked Polyolefin (PP based solution)
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Non Technical Abbreviations
FDI Foreign Direct Investment
MNE Multi National Enterprises
MPV Multi Purpose Vehicle
NAFTA North American Free Trade Area
NHV Noise Vibration and Harshness
NIC Newly Independent Countries
OEM Original Equipment Manufacturer
SME Small and Medium Enterprise
TRM Technology Roadmap
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1 Introduction
1.1 Objectives and Motivation
This work analyses the technological evolution on automotive interior components. The objectives
consist of identifying possible transformations in materials used and technologies adopted in the next
generation of automotive interior components, as well as the main transformations in product
structure. It also draws implications of those changes on the Portuguese automotive interior
component industry.
The motivation for this work results from the realisation of the critical moment the Portuguese
automotive component industry is facing. It has been acknowledged the need for a transformation on
the development model followed until now (Veloso et al. 2000, Lobo et al. 2002).
The history of the automotive component industry is much connected to its consecutive stages of
development. Ever since the start of the first assembly lines in the late fifties and early sixties, it has
focused on process improvement and manufacturing and drawn on low cost labour (Fria 1999). The
most recent milestone has been the Autoeuropa project, in which Ford and Volkswagen set up an
assembly line through a joint venture. The settling of this assembly line has made a decisive
contribution to the growth and consolidating of the Portuguese automotive component sector, but
striking differences still persist between foreign and national suppliers. Presently, these Portuguese
suppliers are facing challenges from increasing competitiveness of new European accession
countries and the opening of new markets in Asia (China and India) and South America. These new
global players have typically inexpensive labour costs and often highly skilled workforce, thus
becoming very attractive option for investing companies. (Veloso et al. 2000, Selada et al. 2003)
On the Portuguese side, there has been a strong commitment by Universities, the Government,
industry associations and research and technology centres to promote activities and programs
directed at increasing the competitiveness of this industry. Recent examples of such commitment are
the constitution of the CEIIA (Centro de Excelncia e Inovao para a Indstria Automvel1), the
implementation of INAUTO Program2, and the creation of the CEDP (Centro de Engenharia e
Desenvolvimento de Produto3) in Maia.
1 Centre for Excellency and Innovation in the Automotive Industry
2http://inauto.ceiia.com
3 Centre for Engineering and Product Development
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Due to this joint commitment, the present moment is also of an opportunity to launch the industry into
another stage of development and implement a new strategy with increased focus on collaborative
research, towards the conception and development of more complex and added value products
through design and integration of technology and a stronger presence on foreign markets.
The present work results from the participation on two activities of the INAUTO Program. The firstactivity - Autointeriores, analysed the automotive interior industry, namely major innovation-driving
forces, new developments in materials and technologies and product structure evolution. The second
activity - Keyteckaimed at studying and applying Foresight methodologies to the automotive interior
industry, in order to assess possible evolution paths in automotive interior components, which could
be relevant for the strategic positioning of the Portuguese automotive interior component industry.
This work analyses possible evolution paths in automotive interior components and the implications of
such changes in the Portuguese automotive components industry. These evolution paths are drawn
based on key technologies and materials that have been identified, following a technology foresight
methodology.
This technology overlook has not the prophetic intention of determining the future of autointeriors and
its technologies and materials, but contribute to define the positioning of the Portuguese suppliers
and shed light onto the main challenges and opportunities that result from that evolution.
1.2 Autointeriors Dynamics
This section explores the main issues influencing the automotive industry on a global scale and
considers possible implications of such influence on the Portuguese automotive interiors componentssector.
As consequence of the global status that the automotive industry has achieved, technological
strategic choice of companies should be consider not only in its supply push dimension, but also
including other dimensions, often exogenous to its self, such as political and regulatory constrains,
shifts in economic and social values or increasing competition on a global scale.
These issues are essential to understand dynamic aspects of the automotive components industry,
made of choices that often seem irrational from a strictly technological perspective. The major trends
in the automotive components industry should provide inputs to prevent possible threats and explorenew opportunities for the Portuguese autointerior component sector.
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1.2.1 Industry trends
Characterizing the Supply chain
Modern vehicles are in general very complex systems and presently, most manufacturers are
reluctant to handle the whole production process. Instead, they prefer to keep the development andproduction of core products and other strategic activities, and turn to external suppliers for
strategically less important components. The industry is therefore organized into rather complex and
long supply chains, constituted by OEM (Original Equipment Manufacturers); the several tiers of
suppliers, including system integrators, component assemblers and component manufacturers; and
raw materials suppliers, whose features are worth highlighting here.
At the top level, OEM focus their activities on design, product development, part of the final assembly
stages and marketing, leaving most of the production and labour intensive stages of the process to
sub-contractors. OEM are therefore obliged to deal with a great number of suppliers - raw materials,
first- tier, second tier, and so forth4.
First tier suppliers work often in close relationship with OEM, and participate in development
activities, thus supplying subassemblies and components of considerable complexity and integration.
At a lower level of the supply chain operate the commonly called component suppliers, who take on
the most labour intensive stages of production, focusing on simple manufacturing processes involving
a reduced number of parts and families of materials.
Component Subassembly ModuleSystem
2nd + Tier 1st Tier
Differentiated
Commodities
Rear View Mirror
Fuel Injector Steering Column
Medium Value Added Grey-Box Design
Commodities
Small Stamps Small Injected
Parts
Low Value Added Build to Print
Development
Components
Door
Dashboard ABS
High Value Added Black-Box Design
Growth Strategy
Figure 1: Company positioning in the Supply Chain (Conceio et al. 2003)
4 Although second tier may not supply OEM directly, they are often chosen by them. For this reason, OEM must
be aware of the capacity and technological resources of second or third tier suppliers, in order to control the
selection stage.
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Important to emphasize is the fact that the greatest added value activities are those which involve
development in design and engineering, occurring in a more intensive way on the upper levels of the
supply chain (Figure 1).
A sustained growth strategy aims therefore towards a scaling up of the supply chain. In order to
remain competitive companies should be able to continuously add value to their products by offeringinnovative solutions. This can consist of gathering different techniques to produce a more complete
assembly, where style and design can be applied and systems can be integrated as differentiating
features. This transition - from component to subassembly manufacturing - involves a risk taking
commitment of companies to invest in technological upgrading. There are several factors critical for
being able to take this step. Some of them endogenous to the company, like the culture, the size, the
human capital or the technological capabilities (Veloso and Kuhmar 2002), but also exogenous
factors related to competition or inter-firm relations (Meyer 1999).
Competition
The competitive nature of the industry has, among other effects, originated recently a wake of
mergers and concentrations at a global scale. The automotive industry has become increasingly
concentrated and there have been consolidation trends pointing towards a significant reduction on the
number of first tier suppliers (PWC 2000). It has been estimated that the number of 2500 first tier
suppliers that existed in 1995 may be reduced to 1500 by 2005, (MacDuffie 2001). As a result OEM
have been focusing on development and marketing activities, leaving to their suppliers the burden of
most production and assembly work. Consequently, it has also been observed an increase on the
manufacturing and assembly business in general, and the emergence of a number of 1st tier
suppliers5, with considerable dimension and engineering capacities, comparable to OEM its selves.
First tier suppliers are able, due to their dimension, to focus on the development of complex modular
assemblies, which are then supplied to OEM. The supply of components to different OEM has also
enabled to benefit form scale of production. In fact, modular construction in autointerior components
enables the sharing of some components throughout different products (non-differentiating
components such as structural parts, cables and harnesses, or HVAC units). First tier suppliers
typically offer high production volume solutions, and due to their market domination, make it difficult
for other smaller dimension suppliers (such as the Portuguese autointeriors suppliers) to ascend in
the supply chain.
On the other hand customers expectations have been evolving influenced by the instability of shorter
social and economic cycles. Faced with a mature product, costumers are now more aware of their
5 most originating from spin-offs of OEM like the case of Faurecia from PSA group, Delphi form GM or Visteon
from Ford
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needs and aspirations, demanding increasing variability and customisation of their vehicles. If some
components in the autointeriors can in fact be shared, there are others that play a crucial role in
differentiation between brands and segments, thus originating a huge variety of solutions. This
pressures the industry to diversify its offer, reduce development time and increase the rate of product
renewal.
Therefore, the dynamic pace of the industry and the constant demand for differentiation create also
opportunities for new comers proposing niche solutions that mainstream suppliers are not prepared to
deliver, thus further intensifying competition. The Portuguese suppliers, due to their reduced
dimension should therefore focus on development activities based on collaborative work pursuing
innovative solutions, seeking and creating market gaps left by bigger-dimension players.
Demand Changes
The geographic distribution on the demand for automobiles has also been shifting. Existing mature
markets are becoming saturated and at the same time new markets have been coming into playshowing high growth rates of car ownership. A definition proposed for the production locations of
automakers, offers, per se, a good insight for understanding the market issues being discussed
(Veloso et al. 2000).
Accordingly, the author defines Large Existing Market Areas (LEMAs) such as NAFTA, Europe
(except Iberian Peninsula) or Japan, as markets with high income and vehicle per capita ratio, but
where sales growth is stagnant of negative.
Countries like Portugal, Spain, Mexico, Eastern European countries, on the other hand, are usually
referred to as Periphery of Large Existing Market Areas (PLEMAs). Their main feature is having lowcost labour where LEMAs can turn for supplies. Their proximity enables OEM in LEMAs to implement
complex logistics at a competitive cost.
The third group of countries is the Big Emerging Markets (BEMs). Countries like Brazil, China or
India, highly populated and with high growth rates and low vehicle per capita ratio, have a potential
increase in demand for vehicles. This imbalance in demand and supply has been originating a wave
of relocation of production units from mature markets (where they originated) towards emerging ones.
Several reasons can be pointed to justify the re-location of production units (Camuffo 2002):
Models produced on matured markets often fail to address emerging markets customersneeds.
Governments of emerging markets often introduce constrains to trade in order to reduce import
rates and create incentives to attract foreign direct investment.
The location of production units near target markets favours marketing sales and logistics
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Cost differentials (particularly in labour) often justify per se the process of relocation
Considering this structure, it is easy to understand the motivation for a re-location of OEM factories to
countries where the demand for new vehicles is high and growing (BEMs) or in countries where low
labour cost and geographical proximity make it attractive (PLEMAs).
The relocation of production units, not only alters the geographic distribution of supply of automobiles,
but also induces important organizational changes. In recent literature (Camuffo 2002) it has been
observed that in the process of re-location, OEM tend to reduce the scale of the assembly plant. The
main reasons are as follow:
Reducing investment costs
Distributing risks throughout a number of suppliers
Increasing flexibility in the case of sudden changes in supply
Shortening equipment upgrading and product restyling
Minimizing job impact in case of crisis
This has decisive effects on local economies. Not only it opens up opportunities for local companies
to access more demanding customers, but may also trigger important spillovers such as innovative
business practices and technology transfer.
The relocation can constitute an opportunity for local suppliers to access the supply chain and this
may boost local technological capabilities as local companies try to access.
On the other hand, relocation can have a negative impact in countries that cannot remain competitive.
Considering the particular case of the Portuguese industry, the expansion of the European Union can
motivate the relocation of existing production units to new accessing countries due to their highly
skilled labour force, lower salaries and proximity to LEMAS like Germany and France.
After a period of inflow of production units to Portugal due to its privileged conditions, the attention of
OEM has drawn other actors such as the new accessing countries as well as China, India and Brazil.
The implications to the Portuguese industry can be of two natures. For one, relocation processes are
becoming increasingly agile, which means that more countries can now compete with Portugal in
attracting production units. This means that the Portuguese supply industry has to be able to become
more competitive and differentiate itself from new players. On the other hand, the type of production
unit originated by these relocation processes is changing, requiring more capability and commitment
from the local supplier base.
It is therefore needed to define Portugals position in the group of relocation receivers, namely since
other competing countries are coming into play, and the nature of relocation is changing.
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Political Intervention
In view of the potential for knowledge creation, technology transfer and economic growth, public
policies play a key role in attracting the relocation of production units.
The broadness of the auto industry entails the possibility to reap very important spillovers, through
synergic interaction among different sectors. Hence, the interest of governments on creating
conditions through special regulatory frameworks in order to attract Foreign Direct Investment (FDI)
and promote trade. This has been demonstrated by the Autoeuropa project, which attracted the
largest amount ever of FDI in Portugal and enabled to create conditions for fundamental upgrading
of the sector (Veloso et al. 2000).
In the present work, it is important to emphasise on the other hand, some challenges and barriers that
may arise in the presence of governmental incentives to promote trade and attract FDI.
The influence of FDI incentive policies can do more than spicing up local competition. They can also
cause distortions and asymmetries, which pose additional challenges to local suppliers. In an analysisof the MNEs influence on Eastern European Countries, Meyer (1998) points out some factors that,
due to the nature of the countries under analysis, are of particular relevance to Portugal.
When an OEM establishes an assembly plant on a less developed country, there is a process of
selecting the suppliers integrating the supply chain. The local government is usually particularly
committed in involving national suppliers to participate, through the promotion of total or partial
acquisitions and incentives to technological upgrade or quality certification. A number of the best
ones manages to adapt to the new level of demand (costs, quality, on-time delivery, etc.) either
supported by their own dimension, or through mergers and partial acquisitions with MNE.
The smaller ones however, seem to experience difficulties to adapt to the new circumstances. OEM
tend to prefer the long lasting business relationships, since they foster relationshipspecific human
capital. This closeness is self-enhancing since the costs of transaction tend to diminish over time
(Meyer 1998), giving incumbents an increasing competitive advantage over new entrants (a sort of
switching cost at a corporate level). So instead of turning to local suppliers, the establishing OEM is
usually followed by their long lasting suppliers, who enter like was said before, either directly, or
through acquisition.
Moreover incentive to investment may offer special benefits to incoming firms such as more flexible
hiring and firing policies, (Blomstrom 1996). This creates inevitable market competition distortions.
Meyer (1998) goes further on claiming that most studies show that foreign-owned firms and firms with
non-equity cooperation with foreign partners outperform purely domestic firms.
This influence of foreign owned companies is also noticeable on the Portuguese context, considering
their importance on the automotive components sector. The biggest eight foreign companies out of a
total of 180 (national, foreign and mixed), accounted for 45% of turnover in 1999 (Basauto 2000). In
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spite of constituting a positive influence on the way they spiced up internal competition, the presence
and dominance of multinational players constitutes a strong challenge for Portuguese companies
even when operating in their own market. This has happened with the Autoeuropa case and is bound
to happen with any other OEM that may move to invest in Portugal in the future.
Political incentives should also consider the technological dimension. The Autoeuropa project hasundoubtedly contributed for an upgrading of the sector, but the reality is that there are still great
differences between local national suppliers and multinational ones. Now that the certification process
has been overcome, it is essential for national suppliers to develop a to the future attitude based on
informed knowledge of the evolution in their businesses and start being aware of the major innovation
trends, in order to adopt a move proactive approach.
1.2.2 Autointeriors Global Key players
There is not a definition of automotive interiors, but observing solutions proposed by the major firsttier suppliers can contribute to a characterisation. In 2002 the biggest European-level suppliers were
Faurecia for the Instrument Panel and the door module and Johnson Controls Inc (JCI) for the Seat
module. Occupying leading positions both at European and Global-level were also Visteon, Delphi
and Lear.(Autointeriors 20026)
Each supplier specialised in the following types of systems:
Faurecia: cockpits, door panels, insulation, IPs, seats/seat parts, trim
JCI: door panels, electronics, headliners, IPs, seats/seat parts, trim
Visteon: door panels, electronics, glass, HVAC7, IPs
Delphi: door panels, IPs, safety restraints, steering wheels
Lear: door panels, IPs, electronics, headliners, seats/seat parts
From the list above it is possible to notice the predominance of systems such as the door panel, the
instrument panel or the seats, as well as sub-systems in a different aggregation-level as is the case of
electronics, insulation, trim and HVAC.
6 Leading European Suppliers Model 2001, downloaded from www.autointeriors.com in 2002
7 Heat Ventilation and Air-Conditioned
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The interiors Market
Considering the automotive interiors market the focus of the present work , a recent study on the
automotive interiors NAFTA Market shows the relative importance and distribution of each
subassembly.
Figure 2: Automotive interiors NAFTA market - Valued and industry concentration (CSM 2002)
For the different subassemblies or modules, it is observable different realities. Whilst in the restraining
and acoustics systems, the concentration is much more significant, due probably to a trend towards
standardisation and scale related issues, on the cockpit, door and seat modules, the number of
suppliers is much greater and so is the distribution among them. One could say that there is not so
much propensity for standardization, since the range of possible solutions is much wider.
Modularisation and integration
The international Motor Vehicle Program (IMVP) in MIT has been concerned with modularisation and
outsourcing issues, namely its implications on automotive assembly. Through the use of specific
cases studies on the door module and instrument panel they have been investigating the extent of
these trends in the auto industry and the implications for the role of automotive assembly and
structure of the industry.
A common feature to various practices of modularisation has been identified: It [modularisation]entails having larger units in subassembly and also often involves outsourcing these subassemblies
to suppliers (as most frequently observed in the European auto industry) (Takeishi et al. 2001).
The increasing trend towards the production of modular units as a way to optimise the production
system has influenced both the hierarchies in production systems (and how they are organised) and
inter-firm relationships (between OEM and their suppliers). The nature of modularisation presents
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significant variations depending of many aspects including industrial culture or product strategy. The
general belief is that an increasing responsibility is being given to suppliers. It has been reported that
the turnover associated with manufacturing and assembly in the auto industry has increased five fold
in 2002 (ADM Press 2003). This can be attributed to modularisation and the increasing role attributed
to suppliers (inter-firm relationships), but also to a certain extent to the increasing number of
variations, which increased the business volume (production systems).
On a more global perspective, there has been a trend towards a growing importance of the interiors
as part of an automotive. More specifically, on the interiors market, it has been observed a growing
participation of n-tier suppliers on product development. The value chain has been expanding
together with the lean-thinkingness of OEM. Due to the new division of labour, it is natural that
suppliers try to add more value by supplying subassemblies with more integration. In view of
increasing demand for variability OEM have been trying to rationalise products structure by pushing
the concept of platforms and modular construction. This consists of developing standardised
components that can be shared throughout different models of vehicles, thus seeking to obtain acertain degree of diversity while maintaining scale related benefits. It has been accounted along the
90s an increase of 33% in the production volume for each platform of vehicles sold in the European
market at the same time as an increase on the number of vehicle body types (Sako, et al. 1999). So
in spite of a greater number of vehicles sharing a same platform, the number of vehicle body types
has increased. Within the same platform it has been possible to share components and at the same
time maintain product diversity.
On the other hand, modular development allows certain autonomy in the development of different
areas of the automotive, which may ultimately lead to the development in outsource. Helper et al.
(1999) have presented three scenarios for the evolution of modularity and outsourcing on the
automotive industry.
The first is similar to what has been occurring on the computer industry. It represents the paradigm of
modular production. Components are standardized offering common interfaces. OEM outsource each
component and all the activities related to its fabrication development, production and testing. They
keep some core technology development in-house, as well as the marketing and sales strategy.
Commoditisation is present due to the little differentiation between products and therefore suppliers
are under a lot of pressure to reduce costs and be the first to market in order to try and reap profit
from fast declining prices.
The second corresponds to the opposite situation, where OEM refuse to accept undifferentiated
products that might attenuate or even eliminate their distinctive look. They refuse to move to
modularity due to the great variability that exists between brands and models. Modular production has
also the risk of information leakages, particularly when suppliers work with more than one OEM.
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Finally, the third scenario points to a milder hybrid version of the previous two: modularisation
occurring on some modules, but not all OEM controlling critical modules and outsourcing non-
modular structures, or modules of little strategic significance.
Fixon (1999) clarifies this point by presenting a scenario for the evolution of modularity and
integration in automotive components (Figure 3). Accordingly, it is expected that interior productsevolve from a fragmented to a more integrated structure with a decrease on the number of
components per module (dashed curve). Simultaneously, it is expected a consolidation of
components into modules in the mid run followed by a decrease on the number of modules as a
result of the integration trend (uninterrupted curve).
Figure 3: Evolution of modularisation and Integration in the automotive component industry (Fixon 1999)
Considering the current product structure in automotive components, MacDuffie (2001) has
underlined the difference that still exists between the products computer and motor vehicle. The
differences are clear and the evolution trend seams to point towards a hybrid scenario on
modularisation, according to the description above. Further he systematised the forces driving
modularisation in the automotive industry. These are related with Product Strategy (increasing
complexity, integration and multidisciplinary nature of products), Financial Strategy (leanness in
organization for increased flexibility and risk reduction), Technology Strategy (integration of design
and concept competition) and Marketing Strategy (increased focus on customer through variability,
differentiation and customisation)
The impact of these drivers on suppliers is not yet fully understood. As it was said before, within the
auto industry it is possible to find different contexts of production systems. While the European auto
industry has been interested mainly in modularisation in inter-firm system, the Japanese has focused
on modularisation in production. Neither of them has addressed modularisation in product
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architecture. However, this is at the moment an inevitable consideration8 since it has been affecting
products, both technology and materials choice, and industrial relations. It is determinant for suppliers
to be aware and consider modularisation in their strategic positioning when approaching their
customers (both OEM and other suppliers).
In the context of this work it is pertinent to consider modularisation in view of the possible changesinduced on product configuration and also inter-firm relation particularly in what the Portuguese auto
components companies are concerned. It is clear that modularisation has strong conceptual links with
outsourcing in a way that there has been a shift of responsibility towards suppliers. Modular supply
involves dealing with increasing complexity of outsourced components, competence in design,
integration of systems, request for innovative solutions and technologies addressing current
requirements in style, differentiation, safety or environment.
1.2.3 Autointeriors characterisation
Automotive interiors are a set of components and subassemblies included in the vehicles passenger
compartment. Many classifications and configurations have been adopted throughout the industry, so
it is always a challenge to make an attempt to draw the boundaries of this product. Considering
automotive interiors as a set of integrated systems or modules can be a first step towards that
division. Consequently, the following modules can be found in most passengers vehicles: Seat
module, Door module, Instrument panel, Overhead module and Floor module. Being part of a bigger
system (the vehicles interior) these subassemblies have certain functional requirements. A possible
systematisation is offered below (Figure 4).
8 there is clearly a modular architecture in certain systems (safety and comfort systems, for example) and
components (door interior trim panel)
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Figure 4: Functional requirements of Auto interiors subassemblies
It can be seen from the figure above that many modules share functional requirements. These
functional requirements correspond to particular product areas, such as a structure or a cover. As a
result, a further systematisation can be made considering the materials used for a particular
functionality (Figure 5).
Figure 5: Materials by product areas
It can be noticed that the automotive interiors are complex product composed by a significant amountof different subassemblies, which are not always connected in a harmonious way.
There are also different functionalities and requirements that autointeriors have to satisfy, and for
each function, several options in terms of materials and technologies.
Materials
Structure Covers (skins) Upholstery Panels Knobs & switches
SteelsAluminumMagnesiumCompositesHybrid
LeatherTextilesPolymers:PVC, PU, PP,TPO, ABS...
ABS, PP,PE, PA,PVC...
Flexible PU,TPO Foams
PolymericComposites (fiberglass, Woodstock,Natural Fibers...)
Functions in Interiors
Seats Instrument Panel Overhead Door Panel Floor Module
ErgonomicsStructuralSafetyAestheticsComfort
AestheticsSupport forintegrationErgonomicsInsulationSafety
Support forintegrationInsulation
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Figure 5 also evidences the wide knowledge base required to produce such components due to the
diversity of materials and technologies necessary to master and also the great challenge from an
organisational point of view to put together each subassembly.
This factor stresses the importance of the technological dimension in the autointeriors and the need
to develop methodological tools of technology forecasting to understand and gain insight into futuredevelopments in this industry.
1.2.4 Drivers of Innovation in Autointeriors
The recent evolution of autointeriors allows concluding on the major innovation driving forces that
have been and are still thriving change, both on product structure, materials or manufacturing
technologies. These driving forces are based on trends and innovations observed on recent evolution
of automotive interiors components.
Innovations in autointeriors have been driven by market issues, regulatory framework, and even by
the evolution of the supply chain management.
The Drivers of Innovation express the pressures subjected to automotive interiors components on a
technological level, and were used to assess possible transformations on existing products during the
present work. The following drivers have been identified.
Cost reduction
Weight Reduction
Environment
Comfort
Customisation/ variability
Safety
Product Architecture
These were thought to be the drivers, which could be generalised to the whole industry. There might
be other factors (technological path dependence, surrounding industrial environment) influencing the
auto interiors industry in a localised way, at corporation level, or country level9, but those were notconsidered.
9 An existing expertise in a certain technological process or long term contracts with suppliers may be such
factors to influence the choice of technology in a given company
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Cost reduction
This driver concerns the costs in the activities related to the beginning of the products life cycle
conception, development and production. It can be translated in the use of alternative less expensive
raw materials, technological improvements, improved assembly processes and all assembly related
stages. The reduction of cost or the decrease in the ratio cost vs. benefit is an implicit requirement forthe introduction of innovations on an industrial context. But cost reduction can also be a reason per
selike the use of PVC covers to replace leather on seats and interior trim areas.
Weight Reduction
Weight reduction is an important goal, which relates to cost reduction and environmental
performance. Reducing a vehicles weight by 100 kg may reduce fuel consumption by approximately
0.8 liters per 100 km (HypoVereinsbank 2001). From the suppliers point of view, a weight reduction
can reflect its self on savings in raw materials and improved handling and distribution (Faraday
Advance 2003). Although the average cars weight has increased slightly in recent years (from 1015kg in 1990 to 1 132kg in 1998) (APME 1999), this was due to increasing safety concerns and
comfort requirements and has been attenuated by the increase of plastics utilization.
Environment
The environmental issues are linked with the recent EU directives concerning ELV (ELV directive
2000), establishing a minimum limit for the recycling of these products (EU Directive on ELV). This is
particularly important for the automotive interiors. Not only the share of interior components in total
vehicle weight is increasing in modern vehicle - meaning that, in order to comply with the limits of
recycling, it is no longer enough to separate the ferrous metals -, but it also poses some serious
challenges when it comes to sorting out the expanding myriad of different materials present
(Environmental Defence 1999, Net composites10). Many OEM (particularly the higher volume ones)
are working with their suppliers to find environment friendlier solutions design for disassembly or
mono-material constructions (Shah et al. 2000).
Another issue considered in this trend is the reduction of VOC (Volatile Organic Compounds), which
can be released from some plastics used in car interiors (e.g.: PVC) when exposed to high
temperatures and which can constitute a serious threat to human health.
Comfort
This trend is related with increasing demand from customers of new features and functionalities. Most
companies are aware of this and try to gain some extra competitive edge by offering a more
10http://www.netcomposites.com/news.asp?1644
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complete pack. Some of the issues addressed are human comfort (improved ergonomics, thermal
management systems), NVH (Noise, Vibration and Harshness), connectivity though telematics,
fatigue countermeasure systems, amongst others.
Customisation/ variability
This driver relates to satisfying the customers need for variability11 and differentiation. The interior is
one of the most important sources of differentiation and automakers have been trying to provide it
through product segmentation and allowing a certain personalisation by offering optional features.
With the outsourcing of some of those components, it has been possible to offer some differentiation
whilst maintaining scale related benefits12.
Safety
Road accidents are still one of the major causes of casualties in developed countries13. In spite of
continuous efforts of European countries to reduce this number, this was still the cause of death of
about 41.000 EU citizens in 200014.
In-vehicle safety has been one of the issues addressed to fight this problem. Nowadays vehicles
include more safety features and the tendency is to increase. It has been observed that many of the
safety features only present in top class vehicles are becoming more common in the lower categories
as well. Further, due to the increasing presence of telematics, new features are being proposed with
focus on accident prevention, through sensors technology.
Product Architecture
Current interior architecture is going through a period of undecidedness (Mercer 2003).
In an initial phase, the outsourcing of some components to assemblers and suppliers has favoured
modular construction. This allowed reducing the number of parts and optimising the assembly
process. From the perspective of improving coordination and optimising the assembly process, an
11 On variability see Article of Just Auto: Automotive Product Development, conquering complexity -
https://autoassembly.mckinsey.com/html/knowledge/article/ProdDev.asp
12 In the case of a seat frame, for example, vehicles of the same segment belonging to different brands canshare it, as long as the brands distinctiveness is assured though the shape of the foams and the type of seat
cover.
13 ACEA
14 CARE for EU data, http://europa.eu.int/comm/transport/home/care/index_en.htm; For U.S. data:
http://grouper.ieee.org/groups/1616/37StatisticsShowSafety.pdf
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expected trend would be to continue to integrate, ideally having the suppliers supplying the whole
interior rather than each component separately (MacDuffie 2001). This would allow a further reduction
on the number of parts, and at the same time a more integrated interior where the different modules
would fit together in a more harmonious way. Current challenges faced by OEM are: an imperfect
integration (variation in module boundaries), the risk of losing brand differentiation and the risk of
giving up too much responsibility to suppliers. The first, pushing towards an increasing integration,
and the second and third, to rethinking the supply chain management.
1.3 Portuguese Autointeriors
1.3.1 The macro level
Having considered the main factors associated with the dynamics of the automotive industry and the
major trends in autointeriors, this section intends to frame the present work on the Portugueseindustry, by offering a characterization of the Portuguese automotive interior component sector. The
characterization will be made in view of the threats and opportunities mentioned above and also in
view of the crucial role that technology and innovation plays on the automotive industry.
The Portuguese automotive industry is constituted by five Original Equipment Manufacturers (OEM)
supplied by around 180 component manufacturers. The automotive component sector is constituted
by a few large multinational corporations and a series of nationally owned Small to Medium
Enterprises (SME) most of them having less than 500 employees, (INTELI 2000).
In recent years there has been a growing convergence of the national components sector towardsautomotive interiors components. As Figure 6 shows, interior components have outcome Electric
Components and systems and Engines Brakes an transmissions to become the most important
product area in the Portuguese automotive components industry when measured in turnover.
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Turnover by product area
0
500
1000
1500
2000
25003000
3500
4000
4500
Inter
iors
Electric
Com
pone
ntan
dsys
tems
Engines
,bra
kesa
ndtras
miss
ions
Bod
ycom
ponents
,Sus
pens
ionan
dCha
ssi
Buss
esTir
es
Othe
rs(M
oulds
,tools
,etc)
Total
MEuro
19921995
1998
2000
Figure 6: Specialisation of the Portuguese automotive component industry
Considering the distribution along the supply chain, the Portuguese companies are typically
positioned on the lower levels, operating as component manufacturers or manufacturers with
assembly capacities, with more than half of the components produced being supplied at a first tier
level, but with a significant amount being also supplied at a second tier level (Veloso et al. 2000). The
organizational structure is characterized by a focus on production process and reduced product
improvement, supplying mostly simple components with a low degree of integration (Selada et al.
2003).
1.3.2 The technological dimension
A survey conducted between April and June 2002 as part of the activities in the project A8
Autointeriores of the INAUTO Program, allowed acquiring newer and more specific information of
capabilities and challenges faced by Portuguese companies (Camacho 2003). The sample included
companies whose activities addressed automotive interiors products or whose technology expertise
could be directed to that market. A total of 42 companies were contacted, and a rate of response of
43% has been obtained. The sample represents a total turnover of 594 M , corresponding to around
52% of the total turnover in the components sector for automotive interiors. The following distribution
of company size was obtained based on sales volume in 2001:
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Sales in 2001
0% 5% 10% 15% 20% 25% 30% 35%
100
M
Number of Companies
Average: 33 M
Standard Deviation: 48 M
Figure 7: Characterization of the respondents
The picture evidences a predominance of medium sized companies. This sample has on average
greater dimension companies with around 35% of the companies being situated above the 25
million Euro level , when compared with recent statistics for the automotive component companies in
Portugal (INTELI 2003). It also shows a heterogeneous distribution, consistent with the asymmetries
in company size pointed in the same source.
The materials processed by a firm can constitute an indication of the technological areas that it
controls. The following graphic compares the percentage of companies whose main activities involve
processing a certain type of material:
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0
2
4
6
8
10
12
14
Steel Aluminium Cork Rubber Foam Fibres/
Fabrics
Nat. Leather Plastics
Type of material processed
Numberofcompanies
0
50
100
150
200
250
300
350
400
450
500
Salesvalue[M
]
Number CompaniesSales value
Figure 8: Materials processed
Data presented in Figure 8 provides a description of the materials preferably supplied in Portugal for
automotive interior components (both considering companies and their sales). It can be noticed a
strong presence of plastics producers as well as fibres and fabrics, steel and foams.
Rearranging the data, it is also possible to obtain the degree of specialization of firms, considering the
array of materials processed. As it was shown in section 1.2.3, an automotive interior product is a
complex one constituted of several subassemblies of different materials. A wide array of different
types of materials processed is an indication of an equally wide array of technology expertise and
potentially of increased complexity of the products produced.
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0%
10%
20%
30%
40%
50%
60%
1 2 3 4
PercentageofComp
anies
0
10
20
30
40
50
60
70
AveragesizebasedonS
ales[M
]
Percentage of CompaniesAverage size based on sales
Figure 9: Number of materials processed
The majority of firms integrate a reduced array of different type of materials into its products, with half
of the firms considered processing a single type of material, as represented in Figure 9. This fact
demonstrates the low degree of complexity concerning automotive components produced in Portugal,
as already referred above. Still in Figure 9, a similar kind of comparison was made, in order to
account for company size. The group of companies who processes only one material has a very
small average company size, whereas the group of companies who processes two materials a much
greater average size. The remaining groups have a medium average size. This relationship between
company size (given by sales volume) and diversification (given by the number of materials
processed) seams to suggest (at least for the sample considered), that a focus on a few array ofmaterials is the best compromise between specialisation and diversification, as supported by
extensive literature (Anupindi et al. 1998)
Another indication of the degree of specialisation of firms operating in Portugal can be assessed by
the type of technologies used. Based on the array of technologies that the firms inquired claimed they
dominated, these were divided into four groups. Figure 10 presents the results for each group.
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0
5
10
15
20
25
30
35
Simple Forming/
Shaping
Welding/ Joining Surface Treatment Simultaneous
processing
Type of Technology
Figure 10: Typology of technologies dominated
Forming and shaping this group includes basic manufacturing technologies based on
mono-material processing in simple production steps. Some examples include steel sheet
stamping, tube bending, machining, plastic injection, fabrics cutting and sowing, among
others
Welding and joining this includes assembly processes with additional complexity requiring
the capacity to integrate different parts into an assembly. Some technologies include different
types of metal welding (spot, Mig/ Mag), aluminium brazing, plastics friction welding, hot-meltbounding.
Surface treatment this group of technologies can be associated with a stronger focus on
aesthetics, design and styling, areas where the greatest added value of the component often
resides. These include painting, surface treatment, embossing, soft paint of plastics, laser
engraving.
Simultaneous processing it involves production processes with increased complexity, that
often agglutinate a series of steps into a single stage. Some examples are low-pressure
injection moulding over a cover, pour-in-place foam injection, in-mould assembly, bi-injection of plastics (two different materials). It demonstrates a higher technological capacity
due to the increased complexity of the process.
Figure 10 demonstrates a predominance of simple processes and a low focus on integration of
components, as well as a reduced emphasis on appearance and sensorial aspects, so important in
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automotive interiors. It also demonstrates a limited use of complex production technologies involving
the simultaneous processing of different materials and one-shot processes.
1.4 Research questions
The strategy followed so far by Portuguese automotive suppliers is threatened by the increasing
global competitiveness of the industry. Newcomers challenge the Portuguese industry to differentiate
itself from its competitors, moving up on the supply chain and participate on those highly profitable
and technologically advanced activities involving conception, development and production of complex
assemblies making use of innovative materials and technologies. Selada et al. (1999) have
suggested four strategic paths that could foster these changes:
stronger inter-company cooperation in order to take advantage of synergic interactions
increase of the added value, both upstream and downstream of production
evolution on the complexity of products, going from simple component production towards
modular assembly
demonstrate technological and organizational capacity in order to attract the attention of OEM
and promote an image of innovation and competence at an international level
According to the description of the Portuguese autointerior component industry, there are a number of
limitations in terms of technologic capacity. Section 1.3 has shown that the majority of the Portuguese
companies, when analysed autonomously, are focused on a reduced array of technologies and
materials (Figure 9), producing parts of limited complexity, and with a technology portfolio orientedtowards process with limited focus on complex assemblies and product differentiation technologies
(Figure 10). The focus on process hampers the capacity to integrate different technologies in order to
produce complementary components on a modular construction basis.
However, it is also possible to notice in the Portuguese automotive component industry an increasing
focus and competence building around autointerior components. When put together, Portuguese
autointeriors manufacturers hold most technologic capabilities that it takes to produce an interior
module.
Considering the technological aspects, it becomes critical for Portuguese companies to be aware of
the perceived evolution of automotive components at a product level. This includes different product
configurations, their constituting components, technologies and integrated systems. Having a vision
of such evolution will enable to reduce the uncertainty caused by the fast pace of innovations in the
automotive industry, and the intense competition among its actors.
In order to move from a reactive to a proactive attitude, companies must be capable of mastering
information about future developments in their businesses, beyond the normal planning framework.
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They should have the knowledge about the whole product and not just remain attached to the
process they dominate. Proactivity involves being aware of future needs in terms of market in the
case of Portuguese automotive components companies, the needs of their customers: OEM and First
tier suppliers and being able to anticipate those needs.
It is therefore critical for the Portuguese automotive interior component sector to be informed aboutmajor innovation trends and possible development pathways in this sector. The first research
question for this thesis is:
What are the key technologies and materials for the future of the automotive interior
components industry?
In this dissertation a Foresight technique known as Technology Roadmapping was used with the
purpose of gaining insight into the future of automotive interiors. The role of Foresight in the context
of the present work aims at obtaining an extended vision into the future developments of automotive
interior components. By identifying the key technologies and materials, it was possible to draw
evolution paths and introduce the discussion of the implications for the Portuguese autointerior
component industry.
The hypothesis pursued is that the roadmaps will indicate the future evolution in autointeriors for the
modules considered, and that that future vision is consistent with the trends observed in the previous
scanning process. The Roadmaps will also reveal evolution trajectories that can followed the
Portuguese industry.
Having perceived an evolution for the autointerior components, it becomes critical to assess its
implications on the Portuguese industry, in view of their technological capability. This has led to the
second research question:
What are the implications of that vision, for the Portuguese automotive interiors industry?
These implications have been analysed at two distinct levels: firstly, concerning the industry ingeneral, based on the results of a technology survey done in 2002 described in section 1.3; secondly,
through a case study performed in a Portuguese automotive interior component manufacturer
presented in section 4, where the general trends are applied and validated.
From the description of the dynamics of the automotive components industry and the innovation
drivers of autointeriors there are, for a number of reasons, challenging opportunities for Portuguese
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companies to position themselves with innovative solutions, particularly on niche markets. This
relates, on one side to the volume of production involved (usually substantially smaller) and on the
other, on the choices in design and materials (preferably dissenting with existing mainstream
solutions). There is, in this case, a combined effect of volume and technology that may discourage
global tier one suppliers (the volumes of production are too small) and open up opportunities for
smaller dimension players relying on niche technologies.
The hypothesis is that the existing capacity of the Portuguese autointeriors industry is not prepared to
address future technological needs. In a more detailed way, there is a lack of strategic areas in the
application of new materials, an evolution in product structure towards a more modular construction,
and the clear demand for niche solutions, which represent market needs that are not being currently
addressed by incumbent players, and that can therefore constitute an opportunity for the Portuguese
automotive component sector.
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2 Methodology
This chapter addresses Technology Roadmapping as an activity within the field of Foresight. In the
first section, a brief overview of Foresight will be made. The second section will present an overview
of the Technology Roadmapping methodologies done in recent years. In the last section, themethodology followed in this work will be presented, including the definition of the consultation panel
and the description of the procedures adopted during the consultation process.
2.1 Review of bibliography
2.1.1 Foresight: background and definition
Futures studies have achieved growing recognition in the 50s and 60s from public initiative to assist
on managing complex and far reaching military projects. The need for such approaches was mainlydue to the following realisations:
The awareness that the expenditures with research had to be managed with a greater
efficiency and prioritisation couldnt be avoided
Technologies were becoming increasingly multidisciplinary and hence the need to bring
together actors that normally would not interact
The pace of technological change was increasing, requiring a longer vision planning of policy
making and research activities
Helmer-Hirschberg and Resch (researchers at Rand) have established in 1958 the philosophical base
for forecasting in The Epistemology of the Inexact Science (Helmer-Hirschberg, O. et al. 1958).
Accordingly,...in fields that have not yet developed to the point of having scientific laws, the
systematic use of expert judgement and pseudo-experimentation can be used as a valid source of
knowledge, as long as methodologies are defined, which take that into account. This intrinsic
characteristic implies the definition of suitable methodologies that can enable appropriating this useful
but sometimes spread and unstructured pool of knowledge.
Since their first applications, foresight studies have gained increasing importance in other sectors of
activity form governments to industry associations, to direct their strategic action, promote the
construction of shared visions or prioritise actions.
A recent definition of Foresight is offered by Miles et al. (2002): Foresight is a systematic,
participatory process, involving gathering intelligence and building visions for the medium-to-
long term future, and aimed at informing present-day decisions and mobilising joint actions.
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Analysing the key words in the definition above, the following points should be emphasised. A
systematic process should have two basic characteristics: it should be dealt like a broad and inclusive
system constituted by other subsystems; on the other hand, the process should follow an ordered
approach, drawing on a predefined methodology. Several acronyms are often used to define the
kinds of information that should be considered in Foresight studies. A common approach draws often
on the STEEPV acronym (Social, Technological, Environmental, Economical, Political, Human
Value). The subsystems considered are characterised by having strong interconnections and
interdependencies with each other.
The process should also involve a minimum critical mass of participants, representing the interested
parties (government, industrial associations, academia). These different actors should be involved
in working together to build a shared vision. It should be created an environment that promotes the
interchange of opinions and knowledge. The discussion should inform present policymaking of future
needs, challenges and opportunities.
The recent rationale for organising foresight studies when compared to the first initiatives in the 60s,
draws on the growing evidence that technologic actions cannot be detached from their implications in
society from a social equity and sustainable development perspective (Castells 1998). Hence there is
an increasing need for tools which enable multidisciplinary approaches and the analysis of complex
realities.
The networking aspects have been equally relevant since the knowledge base required for current
technologies is both extent and diversified. The subject under analysis the automotive interiors
clearly illustrates that.
2.1.2 Methodologies used in Foresight
The systematic nature of Foresight Processes implies the use of appropriate methodologies and tools
for collecting, structuring and analysing data. Some of these methodologies consist of Delphi surveys,
Cross-impact Analysis, Trend analysis or Scenario analysis, as well as Technology Roadmaps, the
later being described in more detail on the next section.
As Loveridge (1996) refers, the choice of methods should be eclectic. There should not be a strict
application of one or other technique, but rather the attempt to pursue the benefits offered by each of
the available techniques.
Foresight methodologies can be broadly divided into (i) Quantitative and (ii) Qualitative; the first
drawing heavily on past and current data, such as Trend Extrapolationor Simulation Modellingand
Systems Dynamics, whilst the later with a more future-oriented vision. Miles et al. (2002) make an
additional distinction within the qualitative methods. A further division between methods for eliciting
expert knowledge to develop long-term visions and scenarios (Expert Panels, Brainstorming, Delphi
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Method, Cross Impact Analysis) and on the other hand those methods for identifying key points of
action to determine planning strategies (SWOT Analysis, Critical / Key Technologies).
Another classification draws on the relative importance of three different kinds of activities (Cameron
et al. 1996): Different methodological emphasis can be organised in a triangle like in figure 1.
Methodologies with strong focus on the expertise of the participants like Panels should be placed onthe apex of Expertise, while science fiction writing, should instead be place next to the Creativity
apex, and so on.
Figure 11: Position of Foresight Methods on the Foresight Triangle (adapted from Cameron et al. 1996)
2.1.3 Overview of Technology Roadmaps
In this section it will be described the tool utilised in this methodology. First, a definition will be offered
based on recent publications, followed by a description of the most commonly used frameworks and
steps to be taken. Then there will be given an overview of processes where the methodology has
been applied.
Technology Roadmaps (TRM) are one of the tools available in Foresight studies to assist on
gathering, structuring and analysing data collected. One of the main elemental characteristics of
Technology Roadmaps is to map an evolutionary path of technology, product development, R&D
needs or other strategic issues on a time frame.
Galvin (1998) has defined Roadmaps as an extended look at the future of a chosen field of inquiry
composed from the collective knowledge and imagination of the brightest drivers of change in that
field. The underlying definition being: a document representing the evolution in time of a certain
theme, industry or corporation, which, was obtained with the contribution of a diversified group of
leading people, related to that theme.
Expertise InteractionAlignment
Creativity
Sciencefiction
La Prospective
Impactmatrix
ConferencesPanels
Scenario
writing
Essays
Delphi
Brainstorming
Combinationsof Methods
Workshops
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Its visual output should enable the understanding of the complex interactions and interdependencies
occurring between customer needs, technology responses and R&D programmes (Barker 1995). It
should facilitate a systemic approach to foresight studies by enabling the condensation of large
amount of information.
Benefits of Roadmapping
More recently, due to the increasing competitive environment surrounding most firms, other
organizational aspects of TRM have been emphasised. TRM have increasingly become part of an
integrated activity in some greater dimension companies and industry associations, such as the
American Glass Industry (Energetics Incorporated 1997), the Aluminium Industry (ORNL 2000),
Sandia National Laboratories (Garcia et al. 1997) or Philips Electronics (Groenveld 1997) enhancing
the exchange of knowledge between business units (Phaal et al. 1999). TRM have been seen, not
only as mere tools of Foresight processes, but also as a framework for introducing the discussion of
business trends, challenges and opportunities faced by companies governments and academia(Barker 1995, EIRMA 1997, Phaal et al. 1999, Kappel 2000). Moreover, there should be a clear
distinction between a project and a roadmap exercise. In EIRMAs words: A TRM is a living
document and is constantly evolving as circumstances change. It is quite different from a project plan
with its precisely defined milestones and objective to deliver a completely specified outcome (EIRMA
1997). In each case, the time scales are incompatible, since the uncertainty and risk between the two
are different.
The essence of building a Technology Roadmap implies the following (Probert et al. 2003):
A team engaged on building a common vision of their future and what they intend to achieve A collective learning process where members identify discontinuities and new directions of
evolution
A team developing a common language, thus improving the communication among its
members
A process where a team improves its ability to communicate their strategic vision to other
actors suppliers, customers or partners
The achievement of a evolution paths in a given sector
As it is imp