With two and a half million shafts and steering columns sold the world over, Fuji Autotech France stands as a major European player in Fuji Kiko's quest for world leadership.
Fuji Autotech France ( FAF), formerly called Faurecia Systèmes de Direction, specializes in the design and production of mechanical steering systems. It totals 450 employees of which 120 are interim workers to allow for flexibility in production planning. With a 16% market share in Europe, FAF expects to generate sales of 70M€ for 2005, its customers include Renault, PSA, Nissan, VW, Dacia...
Located in Mandeure in the region of Franche-Comté, the company's time-built expertise spans over a century. “The historical industrial site at Mandeure is where the first Peugeot motor cars were produced at the end of the nineteenth century,” says Jean-François Ferry, FAF's chief executive officer. After a period specializing in the manufacture of Peugeot's two-wheeled vehicles, mopeds and bicycles, in the mid fifties the plant developed its activities towards the fabrication of tube-based car parts such as exhaust pipes, seat frames and some time later, steering columns. The company then changed hands to join successively SIA in 1987 and Faurecia, the leading automotive equipment supplier, in 1997. Steering columns no longer being a part of Faurecia's development policy, the group sold the totality of the company to the Japanese group Fuji Kiko in 2004 who, already established in the geographical areas of Asia and America, was desirous to gain a foothold on the European market. On becoming a subsidiary of the Fuji Kiko group, Faurecia Systèmes de Direction was renamed Fuji Autotech France. In November 2004 Fuji Kiko sold 21% of its shares in the company to the Indian group, Sona Koyo Steering Systems Ltd , which is a partner of Koyo, itself a major shareholder of the Fuji Kiko group.
“In January 2005 Fuji Kiko created Fuji Autotech Europe alongside FAF on the Mandeure site to drive European development and commercialisation based on decisions taken by car manufacturer's in Europe,” says Jean-François Ferry. Today, Fuji Autotech Europe has three European production sites and one South American factory under its fold : Fuji Autotech France which develops shafts and steering columns for passenger cars and light goods vehicles, Fuji Koyo Czech, an assembler of steering columns for passenger cars, and Fuji Autotech AB in Sweden which manufactures steering columns for lorries and heavy duty application. Fuji Autotech Autopieças do Brazil produces steering columns for passenger cars.
The creation of two companies at the French site thus gives the former subsidiary of Faurecia a double role making it a strategic asset within the Fuji Kiko group. “Our integration in the group constitutes a win-win operation,” says Pascal Moury, sales director. “Firstly, Fuji Kiko brings in capital while allowing us a free hand to enhance our technical, production and sales resources and so strive conjointly for global leadership. Secondly, our mechanical steering technology, particularly in the transformation of shafts, is complementary to Fuji Kiko's expertise in electric systems. Thirdly, the group brings us a production as well as a commercial foothold in the economic zones of Asia and America, as we bring them production presence and a pool of clients in Europe. But above all, the ultimate winner is the client.”
As well as remaining receptive to potential new markets, FAF's primary axis of development is to reinforce business with existing customers, and to establish links with clients brought in by the group. “Our first course of action was to determine how Fuji Kiko could benefit from our position with European car manufacturers and how we could gain by their position with car makers in Japan,” says Pascal Moury. Consequently, since the takeover in August 2004, knowledge sharing has become an integral part of Franco-Japanese relations. “We have set up communication systems to share information on commercial operations, technical know-how as well as management and business development processes,” says FAF's sales director. “This allows us to build a coherent strategy nourished by the strong points of both parties.”
This knowledge sharing enables the two parties to develop products conjointly which adroitly coincides with the car industry's trend to move towards developing vehicles from world platforms. “This trend is likely to accentuate which is why we are gearing up to meet our clients' demands,” says the sales director. “Take the example of the Renault-Dacia-Nissan, vehicles are developed on the same platform, some are intended for the Asiatic market others for the European market. With our global knowledge of both markets we are able to adapt our organisation within the group to reply to the car manufacturer's needs.”
To endorse the group's global policy, FAF has recently signed a world exclusivity contract to supply Renault/Dacia with steering columns for their “economical car”, the Logan, to be manufactured in countries like Romania, Russia, Morocco, India, Colombia and Brazil. Pascal Moury explains how the group operates. “Steering columns manufactured in France are intended for production sites situated in Romania, Russia, Morocco and Colombia. Via one of our licensees we've been awarded the program for Iran. Thanks to our Indian shareholder, Sona, we have been able to secure the business for India. We have also signed for Brazil, thanks to our production site in that country.”
The development of the Logan is representative of how the car industry may evolve in the future. In short, the car manufacturer develops a world platform to build cars. The production of the cars is distributed to plants situated near the end user. “This contract is extremely important for us as it allows us to be present at the outset in world-car manufacturing,” says Jean-François Ferry. “Though for this large volume market we only develop one product, the economic requirements are nevertheless extremely difficult to attain, and we must respect a level of quality in accordance with international legislation.”
In the car steering sector, interest in preventing failures is extremely high, which is why FAF applies FMEA (Failure Mode and Effects Analysis) principles to their products as well as to their fabrication processes. Further to this their products are traceable from design to manufacture and undergo shock and vibration tests in accordance with legislation. “The renowned durability of our products together with our benchmark know-how in anti-vibration techniques are no doubt two reasons why we have captured 45% of the European market in the light commercial vehicles segment,” says Jean-François Ferry.
The site at Mandeure includes a 40 person strong research and development centre including full testing capacity and know-how in safety products assembly, a trial laboratory, 6 catia stations, a prototype workshop, a product design team, a process engineering team, a purchasing team, and a sales force led by Pascal Moury who also heads new project programs. In keeping with the group's policy to have a unique European coordination centre for sales and engineering, the research and design units at Mandeure now come under the banner of Fuji Autotech Europe. “The research and design department develops products within the scope of our programs, it can take two to three years to develop a product from design to manufacture,” explains Pascal Moury. “Research and development for larger scale concepts outside our programs is carried out in Japan, it can take up to fifteen years for a concept to reach the fabrication plant.”
FAF is currently in a phase of new program acquisitions, although it expects a drop in activity for 2006 due to the fabrication of the Renault Clio and the Twingo coming to an end. Business from the Twingo will however be renewed by its replacement, though probably not till the end of 2006.
The highly competitive environment of the automobile industry, along with a drop of 3% in European sales for the third quarter of 2005, means that the company has to continually find new ways of cutting its costs, which for Jean-François constitutes a considerable challenge. “For example, between the Peugeot 206 and its replacement we've had to lower our price by 30%,” says the CEO. What with high steel prices, how does FAF plan to meet up to such a challenge ? “By optimising our production processes, by including our component suppliers upstream in the development phase to enable them to reduce their fabrication costs, and by redesigning our products for maximum optimisation,” explains Jean-François Ferry. “Furthermore, today, thanks to Sona, our Indian shareholder, we are able to look for sourcing solutions in India to generate gain in order to counterbalance the rise in steel prices.”
“Ultimately all this organisation has been set up for the benefit of our clients, and we intend to be present on their vehicles developed in Western, Eastern and Central Europe, as well as on models developed by European manufacturers for emerging markets,” says Pascal Moury.
This strategy is certainly steering the company is the right direction. Fuji Autotech Europe has conquered the market for the production of steering columns for the Peugeot 207, to be launched on the 15 th November 2005 at the Czech Republic site in Pisan, with components to be made in Mandeure.
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