ITT Automotive: Global Manufacturing

Strategy - 1994
Group 04

Kranthi Kumar Goud| Aravind N | Arun Balan | Sachin B | Swaroop George | Ajai Cherian
Philip
ITT Automotive as a Company

Brief History
❑ Company global headquarters in Auburn Hills, Michigan

❑ ITT Automotive is divided into

– ITT Automotive North America - Auburn Hills, Michigan
– ITT Automotive Europe – Frankfurt, Germany (R&D)
– ITT Teves - Frankfurt, Germany (R&D)
❑ Anti Breaking System – Improve vehicle stopping capacity

❑ Market though growing is constantly demanding low cost ABS systems

❑ Company’s latest ABS – MK20

❑ Dilemma – What should be the extent of Standardization and the level

of automation required

ITT Automotive - Global Manufacturing Strategy 2

 Implications for cost of automation

Huge investment required to install robots and reduce

1
human interface

Recruitment of Design Engineers to write codes that would

2
manage the entire process flow

Final Assembly of products will require high skilled labour →

Cost Implications 3
Plant cannot be in a low wage country

Timely maintenance of the machines would again cost the

4
company

High defect rates in some areas, may not be good idea to

5
set up plant in such places

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Flexibility of automation

ABS MK-20 will give the flexibility to incorporate future

1
enhancement

Automated Processes may lead to standardization which will

2
not in-turn reduce flexibility to change

Automated machines will tend to be useless once the ABS

Flexibility 3
design drastically changes

The flexible conveyor belt system will increase the

4
complexity of the process

Morganton plant’s success was a result of implementation of

5
Kaizen and not automation

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 If you automate, you stagnate?

Standardization of processes will eliminate any

further process improvements

Yes, we agrees to the fact that “If

you automate, you stagnate?” As number of employees come down, so will
the degree of interaction between employees

Well, the automation will not bring about the

reduction in cost

Well, its not necessary that the automation

might definitely bring down the cost

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 Need for standardization
Motives behind

Competitive pressure
Competitive pressure results in low margins and demand for cheap products. The need for high
volume and low cost and sophisticated products – the need for economies of scale

Open untapped market

The need for lighter versions of anti-lock brake systems for the major share of light motor vehicles
and higher growth percentage of the same calls for high volumes within limited time line

Greater control
With similar processes for similar products across different plants, greater control in production can
be achieved and centralized decision making ability can be achieved. Risk of out-of-stock condition
can be avoided with development of cross functional plants

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 Recommendations
Road ahead

Frankfurt to continue with process standardization – The

1 demand for high volume low cost requirements of MK20

Geographical standardization required as there is difference

2 in labor cost, and customer preferences across different
Standardizing process plants in different geographies

technology across all the plants 3

Consider quality aspects of the materials supplied as there is
considerable differences across geographies

Proper training and hands-on for the work force as they will
4
be new to the automation

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 Implementing Recommendations & Overcoming Resistance

Develop plant specific execution plans for

Phase wise Implementation phase wise implementation

As Morganton plant has sufficient degree of

Morganton Plant automation, workers are comfortable with that. Project
results at Morganton plant to Asheville Plant.

Improve supplier base and supplier relationship to

Supplier Quality source consistent and same quality products across all
plants. Move towards global sourcing

Continuous knowledge transfer across plants

Knowledge Transfer and employee training for new standards.

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 Reasoning against Automation

Reduced Customization Lesser Flexibility

Customers like to see their dedicated lines Reduces flexibility across product
and modify it. Automation removes such generations, product mix, and changes to
possibility product specifications. High set up costs.

Training Reusable Investment

No for
High cost involved in training the workforce Shared piece of equipment across product
and changing the existing work practises Automation lines is nil. Hence one time investment
which becomes obsolete as product
changes

No scope for Kaizen Cheap Labour

Worker’s flexibility in improving productivity, Unlike Frankfurt, cheap labour is available in
reducing defects and optimizing workflow is Ashveille
not available in automation

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 Road ahead according to Klaus Lederer

Full automation at Frankfurt and Morganton

Phased Implementation at Asheville Plant

Implementing Options Shift towards global sourcing and increase bargaining power
Increase bargaining power with OEMs due to lower costs

Achieve Low Cost, High Volumes, High Quality

Fitment into broader
Corporate Strategy Higher Economies of Scale
Planned delivery of products to customers

ITT Automotive - Global Manufacturing Strategy 10

Thank You