Rover Group's design and engineering department has more work than ever under the BMW Group. Nick Stephenson, director of design and engineering, was interviewed at Rover's Gaydon, UK, technical center by Ian Morton.
How does being part of BMW Group affect your work?
We work extremely closely with our Munich colleagues. While remaining independent, we are integrated in terms of common engineering. It means that at component level we are looking to maximize the economies of scale, but this will not affect different brand identities, which will be sustained because the two brands are being developed by separate teams.
How far can component commonality go for BMW and Rover?
It can reach 40, 50, even 60 percent. We are looking for increasing commonality as new products appear. It will of course be in those areas out of sight and touch - powertrains, for example - and we are already engaged on a joint engine plant at Hams Hill in the UK. It will probably take two generations of new product before full commonality potential is achieved.
How will this affect suppliers, particularly in the UK?
Developing common components and group suppliers is an absolute priority. I am responsible for purchasing and these days I am really only making group purchase decisions, which have to be long-term, strategic decisions. We are hopeful that we don't have to move significantly more component purchasing out of the UK, but if we feel that we must do it for our own business welfare, we shall.
How far can non-UK sourcing go?
Rover Group sourcing overseas was 15 percent and will increase to 25 percent. If present trends continue - and we are watching the commercial and financial situation with some trepidation - it will go higher, perhaps to 40 percent.
Won't this put firms in your own area under threat?
Of course this concerns us deeply. As a business organization Rover sees itself as part of the West Midlands, and it is painful to have to make decisions that adversely affect local industry. But if we have to make tough decisions, we will.
There is a sea change in the supplier world. In the age of globalization there will be room only for large suppliers. As the industry gets more complex and customer requirements ever more demanding, small Tier 2 and 3 suppliers will find it difficult to compete on quality, cost and delivery in volume. One of the most positive things we can do is to help smaller suppliers become larger by involving them in product development, or perhaps by introducing them to larger suppliers of which they might become a part. There is a lot of takeover madness.
Would you recommend being taken over?
Becoming part of a larger group gives the resources to move forward, but in order to survive, firms may have to come to terms with losing their independence.
Don't local suppliers have a real advantage because they are close to your factories?
That is an encouraging aspect. The way the modern car is made, suppliers need to be available close to the point of manufacture, and even a global supplier still needs assembly and manufacture close to our factories. If small local suppliers can get their act together with large suppliers, they will find there is plenty of business with us in the West Midlands.