The ride-control and exhaust-system specialist plans to open an engineering center in India, staffed with up to 75 engineers and technicians, within two or three years, says Tim Jackson, senior vice president-global manufacturing and engineering.
Tim Jackson,senior vice president-global manufacturing and engineering.
And Jackson tells Ward’s Monday, after his speech at the Management Briefing Seminars here, that within a year Tenneco Automotive hopes to open an engineering center in China to support the domestic market, with about 35 employees initially.
Although the Chinese tech center would devote its resources entirely to the rapidly developing automotive market in the region, the facility in India likely would support overwhelmed engineering operations in North America and Europe, Jackson says.
Tenneco Automotive currently outsources engineering work to independent companies in the two mature markets, but the service generally comes with a 25% price premium.
Sourcing the same engineering work from a new Tenneco facility in India – where engineers are plentiful, well educated and extremely affordable – will save the supplier big bucks. “We could outsource the work to ourselves (in India) at an 80% savings,” Jackson says.
Either way, Tenneco does not want to relinquish engineering control for its exhaust systems or shock absorbers. “When this facility (in India) opens, the workers will be Tenneco Automotive employees,” he says.
Tenneco currently operates five manufacturing plants in India, so Jackson anticipates few cultural barriers with regard to staffing the facility.
Auto makers and suppliers have been beefing up their global engineering capabilities with anticipation that an engineering team working on a program in Europe could hand off its work at the end of the day to a team in North America, which, in turn, could pass along the job to a team in the Asia/Pacific region, completing a 24-hour product-development cycle.
But recent studies question whether round-the-clock engineering is feasible – or even necessary.
Jackson says the intricacies of handing off complex product data from region to region “are just mind-boggling. We’re not doing business that way, nor are we aware that our competitors are doing business that way.”
In China, where Tenneco also has five manufacturing plants, Jackson remains bullish as the nation’s automotive market emerges.
Four of the plants produce exhaust systems for the domestic market (dating back to 1996), and Jackson says until recently he would have given them a “C” grade in terms of quality, largely because the Chinese operations rely on manual labor, while European and North American facilities are highly automated.
Now, after three years of intensive work, Jackson gives the same facilities an “A” rating. “The weld quality has come a long way. Our customers are pleased,” he says. “If we exported this product today, it would be competitive in a Western environment.”
The customers in China includeCorp., Volkswagen AG, AG and Motor Co.
He credits plant leadership for the improvements. In addition, the Chinese facilities are using equipment that was redeployed from underutilized manufacturing facilities in Europe, North America and South America.
“You can’t afford to have your plants at less than 90% capacity utilization,” Jackson says.
Tenneco’s Genesis program, launched in 2002, also transferred some employees from North America and Europe to China, along with equipment.
The initiative, he says, has preserved – rather than threatened – U.S. jobs because the future looks brighter for the remaining plants staying open here now that the laggards have been shuttered. “Per-employee revenue is up 34% in North America over three years,” he says.