Automotive News - Traverse City - August 6, 2019 - 1

CAR MANAGEMENT

TUESDAY

autonews.com

BRIEFING SEMINARS

DAILY
AUGUST 6, 2019

THE BUZZ

A summer
of new
trends

Sometimes you don't notice a
major trend until it's on top of
you and all around you.
"Things are happening," is
often the
best
observation
a person
can muster
amid the
daily
hurricane of
work.
That's one
LINDSAY
of
the
CHAPPELL
reasons for
NEWS EDITOR
this annual
conference,
now in its 54th year. The
Management Briefing Seminars
were created to bring far-flung
engineers and executives
together to compare
observations. And that's why its
value has always been the
sprawl of its topics: economic
outlooks, manufacturing
innovations, political worries,
labor issues, trends in
electronics and tooling.
Based on conversations I've
had with some of this year's
speakers, you can be prepared
to hear at least about these
three macro trends:
1. A new cost squeeze is
coming. Sales are soft, profit
margins are thinning. And for
various reasons, such as the
addition of tariff costs, supply
chains will be pressed to get
leaner and cut overhead and
product prices.
2. AI is coming at us like a
tsunami, and everywhere at
once, including: factory shop
floors, vehicle cabin cameras,
supply chain management,
machinery maintenance,
vehicle safety systems,
autonomous steering systems.
Automotive companies will be
rushing to digitize.
3. Lighter, lighter, lighter. You
may think you know all about
lightweighting. But the industry
is just getting warmed up as
automakers press for more gains
- driven increasingly by nonU.S. market issues. You're going
to hear about material advances
that will make the pounds melt
away. Listen for this week's new
bonus word: Float.
You may email
Lindsay Chappell
at lchappell@crain.com.

Magna tackles tariffs as it transforms
Changing factory plans is a new phenomenon

Michael Martinez
mdmartinez@crain.com

s Magna International prepares its business for tomorrow, it's been forced to
reckon with challenges that threaten
the bottom line today.
This year, it scrambled to move wire harness
production from China to Thailand after the
Trump administration slapped 25 percent tariffs
on Chinese goods. And company officials say
they've been forced to consider moving production of other components.
A spokesman said Magna estimates tariffs on
Chinese goods could cost it $34 million this year.
"It's had a definite impact," Chief Marketing
Officer Jim Tobin told Automotive News ahead of
his Thursday presentation here. "It's in our dis-

you're meeting expectations of investors,"
Tobin said. "How do you make sure we
have balance on the returns of today as
cussions with our customers and we're
we're investing in tomorrow - and that totaking localization into consideration."
Tobin said much of the uncertainty
morrow, in some cases, we don't have a
around trade could be resolved with the
good feel for when it's going to materialpassage of the United States-Mexiize."
Tobin said Magna is committing significo-Canada Agreement, which he's
cant investment into lightweighting, adhopeful could be in place by the start of Tobin: More
next year. Magna has been in close spending on tech vanced driver safety systems and other r&d
areas in autonomous and electric vehicles.
communication with the Office of the
He said Magna intends to spend $100 million more
U.S. Trade Representative over aspects of the
on r&d this year than it had planned, with much of it
deal including regional value content figures.
going into developing new technologies.
"We're hoping it will come through to a fair
The company is also aggressively targeting partconclusion," Tobin said.
But even when Magna gets relief on trade and
nerships and alliances to help control costs. In Chitariffs, the company faces the uncertainties of inna, Magna has entered a joint venture with BAIC to
build EVs there. It will be producing vehicles in a
dustry electrification and automation.
plant outside Shanghai in 2020, Tobin said. m
"You have to make sure at the end of the day

JOE WILSSENS

Breaking the ice

Attendees renew old acquaintances and make new ones during the welcome reception Monday. Seminar sessions kick off Tuesday morning.

Suppliers' standing at risk, new study warns
Deloitte: Electrification will lead to commoditization

Larry P. Vellequette
lvellequette@crain.com

upplier executives, beware: You might
soon get commoditized.
The global industry transition to electrified propulsion will render many companies secondary suppliers in the next few years as
automakers increase reliance on complex electric
systems with fewer outsourced parts, a new global
automotive supplier study from Deloitte argues.
The coming shift in vehicle sourcing will require
supplier executives to take a new, hard look at what
roles they are prepared to play in the supply chain.
The consulting firm's fourth annual Global Auto-

motive Supplier Study, to have been released Monday, recommends that supplier executives realistically examine whether their businesses operate in
growing, stagnant or declining product segments.
With automakers investing heavily in electrification, autonomy and other mobility trends, suppliers need to think strategically, said Neal Ganguli,
Deloitte's U.S. automotive supplier practice leader
and one of the four authors of this year's study.
"We believe what suppliers need to do is really
take a look at their product portfolio and figure
out, 'What does this mean for me? There are
pieces of my portfolio that probably need investment for growth, there are pieces of my portfolio

that potentially are stagnant and or declining,"
Ganguli told Automotive News.
The strategies to successfully navigate each
segment are different, he said.
"If you're playing in a stagnant segment," Ganguli said, "go for skill, go for consolidation, go for
cost leadership and efficiency. Somebody is going to consolidate that market, and it's just that
it's going to be a commodities market."
The strategy will be different depending on
whether demand for a company's product is
likely to grow or decline in the face of electrification, he said. And suppliers that serve multiple
segments will want to narrow their business focus, as companies such as Visteon and Aptiv
have done, Ganguli said. e

lll

INSIDE THIS ISSUE
n LMC Automotive's Jeff Schuster
says sales look flat and the risks
are rising in the global vehicle
market. I PAGE 21 I

n MEMA's Ann Wilson expects
help for suppliers, automakers
from the new North American
trade deal. I PAGE 22 I

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