1. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY Francisco Veloso Chris Henry Richard Roth Joel P. Clark December 1999 Students: Carlos Neves Tiago Ratinho

2. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY  Objectives and Scope  Analytical Approach  Major Conclusions  Critical Recommendations Contents

3. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY Automotive industry:  Massive generator of economic wealth and employment  Predictable demand for each country  Other sectors dependent, like rubber or steel  Highly dependent of government trade, safety and environmental regulations  Its impact depends crucially on the specific role  Governments look at automotive industry as an important industrial development opportunity Objectives and Scope

4. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY Objectives and Scope Portugal:  1987-1997 the autoparts industry grew seven times  together with assembly industry leads the stock of FDI  7% of GDP How can parts and components produced in Portugal remain internationally competitive? What strategies should national firms follow to move up the tier structure? When it is necessary to internationalize production, and under which conditions should it be done? What role should the government play?

5. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY Analytical Approach (1) Macroscopic:  Provides an understanding of the industry as a whole  Discusses the technical trends in the global automotive industry  Globalization and changes in the supply chains Intermediate:  Macroscopic level, addressing common aspects across the supplier base in Portugal

6. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY Analytical Approach (2)

7. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY Analytical Approach (3) Micro:  Technical cost modeling for: -Stamping and molding processes -Logistic -Logistic strategies

8. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY  Company size: product development capabilities; manufacturing should achieve minimum efficient scales;  Labour Market: labour considerations play a role in the manufacturing cost for higher value added products; engineering and development costs;  Geographical considerations: logistics cost penalty arising from its peripheral location; significant automotive manufacturing industry in place in Spain; investments in Brazil;  Manufacturing competencies: represents 7% of GDP; 20% of national exports and 20% of all foreign direct investment stock; presence of AutoEuropa and substantial commercial vehicle manufacturing sector; high levels of certification and quality practices; MAJOR THEMES OF THE PORTUGUESE AUTOPARTS INDUSTRY

9. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY  Cooperation: cooperation programmes among companies with complementary business objectives; specialization according to specificity of equipment; considerer mergers and acquisitions;  Development: higher value added products; companies working together; the area of cars interiors should be looked with particular attention; attracting engineering and research centers from major auto components corporation; research in logistics from Portugal, with the support of government funds;  Human Resources: low wages requires a better-qualified workforce; creation of a technical vocational school for the auto; CRITICAL RECOMENDATIONS (1)

10. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY  Internationalisation: depending on the types of components being produced and overall company strategy; investing abroad should be seen by the government as a positive evolution of the local industry (Brazil in particular);  Manufacturing Management: narrow product range; higher levels of worker education and responsibility; a balanced and adequate use of methods for manufacturing planning and control; careful equipment time management; choice of the appropriate equipment for the product being manufactured;  Supply Chain: disseminating the best practices of the supply chain capabilities  Overall Strategy: development of the auto parts companies; strong cooperative environment between local industry and public sector. CRITICAL RECOMENDATIONS (2)

11. Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE PORTUGUESE AUTOPARTS INDUSTRY OVERALL STRATEGY Not AttainableLarge Product Focused Company Small Process Focused Company Large Process Focused Company Higher Growth Higher Complexity Product Focused Process Focused Single CompanyGroup of Firms 43 21 Very broad array of low value products Small facilities Lean business structure Direct logistics strategy No engineering Moderate array of low value products Larger plants Focus on manufacturingperformance JIT or distribution center Full process engineering team Narrow array of high value products Larger plants Focus on integration of technologies Full product engineering JIT shipping logistics