autoMOTIVE Logistics Leaders Forum 2010 | THE global automotive logistics conference

The General Motors Heritage Center in Sterling Heights, Detroit provided a stunning venue for the inaugural AIAG autoMOTIVE Logistics Leaders Forum. The 81,000 square foot facility contains nearly 200 vehicles representing over 100 years of GM heritage as well as artifacts and historical archives. Delegates from all over North America and further afield gathered this week to hear presentations and listen to panel discussions featuring some of the leading figures in the automotive logistics industry.

Scot Sharland of AIAG delivered the opening address during which he stressed that collaboration is key to performance saying that, “together, we will walk the talk.” He urged pro-activity, stating, “if you’re not part of the solution, you’re part of the problem.”

Bill Shaw, General Manager, GM Components Holding, GM Subsystem and Component Operations gave the keynote speech. He stressed the opportunity for collaboration between rail, truck and shipping service providers and the need to drive down enterprise cost and improve visibility. “There is a delicate balance between innovation and standardising, and we need to do both,” he said. He also highlighted the requirement for improved communication, especially in the area of inter-continental flow of parts.

Mike Jackson, director North American Vehicle Forecasts for CSM Worldwide took, ‘stand by and prepare for take-off’ as his theme. He predicted that global light vehicle sales would grow by 5.7% to 62.4 million units in 2010. By 2016, a compound annual growth rate of 51% over the period would see sales reach 84.1 million units, largely because of the expansion of developing markets. Jackson forecast a N. American production figure of 11.6 million units this year, up from 8.6 million in 2009. For the next two years, he felt that 12.7 million and 13.4 million units were feasible. His optimistic view was that 2010, 2011 and 2012 would see 12.2, 13.9 and 14.2 million units respectively.

“North American growth is real and requires affordable capacity in the supply base,” said Steve Harley, executive director MP&L for Ford Motor Company. Asked about the benefits of further collaboration between all parties, he said, “with costs come opportunities, so it is mutually beneficial.”

“Uncertainty in the market spills over into the supply chain, which requires agility to respond,” added Dana McBrien, associate chief advisor, Honda of America.

“The goal is to ensure that we have the right footprint to meet future requirements,” said Patrick Bauer, global director MP&L, Indirect Purchasing and MDS at Visteon Corp. “We are spending a lot of time managing tier 2, 3 and 4 suppliers to ensure that we receive the necessary components.”

“If labour costs are not a factor, there is little point in looking at low-cost countries,” said Mike Meier, Logistics/Supply Chain manager, Lear Seating Systems Division. “A lot of the time, globalisation is actually localisation for certain manufacturing operations.”

Asked if ocean carrier capacity would be sufficient to meet growing demand, Ingar Skiaker, president, Hoegh Autoliners, head of region Americas, said, “there is capacity and more vessels on the way.”

“We are capable of handling any demand up to 14 million units,” agreed Gary Hurley, vice president RoRo Division NYK Line (North America). “RoRo volumes plunged by almost 50% at the peak of the crisis,” added Chris Connor, president region Americas Wallenius Wilhelmsen Logistics. “The key thing for us is to have visibility of what vessels are coming.”

“OEMs need to get closer together,” said Lars Ingeberg, managing director, Partner Shipping. “There is very little cooperation between them. Working together and using the same vessels is something which should be happening globally.”

“We do not want a return to the situation where ports became parking lots,” said Connor. “We need more pull and less push from the OEMs.”

The automobile carriers panel highlighted the difficulty of finding and retaining top quality drivers. “It mystifies me that we can offer the benefits and career path that we do and not find the brightest and the best,” said Michael Wysocki, CEO United Road.

“The one single thing which could be done to improve the way vehicles are delivered is consistency of volumes,” added Greg May, president Jack Cooper Transport. “We have to pay for volume spikes or for cars that are expected but don’t show up.”

North American railroads carried 6.24 million vehicles in 2009 according to Julie Krehbiel, vice president and general manager automotive for Union Pacific. There are over 50,000 multi-level rail cars in service worth over $10 billion in replacement cost and more than 100 vehicle handling facilities worth over $3 billion. Krehbiel identified improving fleet efficiency, increasing multi-level velocity and improving Mexico-related efficiency as rail industry areas of focus.

Kevin Doucet, assistant vice president automotive for CN pointed out that the damage free delivery percentage in 2009 was 99.7, up from 99.25 in 2004. “This is testament to the collaboration between rail companies, OEMs and haulaway carriers,” he said.

Marc Allen, assistant vice president automotive at BNSF Railway, highlighted the current significant equipment surplus, something which he expects to last through 2012. Andrew Strok, assistant vice president Automotive Service Group CSX Transportation, pointed out that rail was, “the most capital intensive industry in North America in terms of owned assets.” All the panellists agreed that capacity is not a problem in the current climate.

A full report will be available in the next issue of autoMOTIVE Logistics Leaders Magazine