US giant Dow Chemical Corp. recently grouped its fast-growing automotive operations in a new business unit - Dow Automotive.
The Midland, Michigan-based company has seen its European automotive sales double over the past five years.
US subsidiary Essex Specialty Products Inc. and automotive joint ventures like Gurit-Essex in Europe, will be integrated in the new group. Gurit-Essex has plants in Switzerland, Spain, France, Germany and England.
The reorganization is expected to be completed early this year.
Dow Automotive's products include plastics, adhesives, sealants and acoustic systems for use in interior, exterior and chassis/powertrain components and systems.
Dow Automotive's sales in 2000 are expected to be about $1 billion. Automotive News Europe's Edmund Chew interviewed Dennis McGrew, commercial director of Dow Automotive Europe.
How is your relationship with carmakers and Tier 1 suppliers changing?
We believe we have an important role to play. We try to work closely with Tier 1 suppliers, because in many instances they are the guys who have the ultimate design responsibilities.
What do you bring to the relationship between carmakers and Tier 1 suppliers?
We bring an understanding of how our materials perform and how to design with those materials, so you can eliminate parts, eliminate weight, integrate features and increase functionality. We understand the processing conditions, because a great design is meaningless unless you can make the parts and put them together.
What are the results of this approach?
We really started this approach in early 1996. In the 2001 model year - calendar year 2000 - you will see a couple of vehicles launched with significant Dow participation at the design and development stage. We had a significant input in both the Dodge Durango and the Jeep Cherokee in the USA, with early involvement in both materials and design engineering.
What about Europe?
European carmakers are extremely interested in plastic body panels, but most are dissatisfied with the current offerings. So we have had a lot of interest in the past few months in that particular area.
How are customer demands changing?
The industry is evolving rapidly. We have gone from a focus on parts quality to a focus on systems quality. I think we will see increasing emphasis on cost reduction of total systems. We will also see more emphasis on innovation and differentiation, design and styling.
What will be the main focus of innovation - customer benefit or cost reduction?
I think it will go in both directions. A major part of innovation is aimed at reducing costs, and making extremely cost effective vehicles. But the other part of innovation is creating something unique that will appeal to customers. The ideal mix is to produce low-cost, exciting cars.
What else is changing?
Clearly, globalization is a major factor. It is not sufficient anymore to be a European supplier or a North American supplier. You really have to participate wherever the carmakers go, and wherever they build a global vehicle platform.
For example, if we are working on door panels with Volkswagen we are going to have to do it not only in Europe, but in Mexico and Brazil as well - and increasingly China. Similarly, if you look at Renault, we have got to be able to satisfy their needs in Brazil and Argentina, as well as France and elsewhere.
Fiat expects you to be a supplier wherever it goes - and they go to a lot of places with the Palio.
It's not just about being able to supply products. You have got to be able to service your products and increasingly deal with design and engineering development.
What does the integration of Essex Specialty Products add to your business? (Essex, of Auburn Hills, Michigan, USA, makes adhesives, sealants and plastic acoustic systems.)
Essex has a Tier 1 position. Its expertise in adhesive bonding technology, coating technology and other different application areas will benefit Dow Automotive enormously. We are looking to build a range of capabilities as broad as anyone's in the industry. We want to boost our product portfolio and technical capabilities, and have it all available on a global basis.
What does growing demand for the recycling of plastics mean for you?
It is a very complex issue. One of the most important things is to approach recycling from a design perspective. You have to design for disassembly, design for dismantling, and design for recycling. That has got to be a part of the upfront process.