Module Future Still Bright

Worldwide restructuring of the auto industry has led to more vertical integration at some auto makers, but the leading supplier of front-end assemblies argues the trend toward manufacturing with modules will continue.

Ford Motor Co. says by 2012 it will have brought back enough work from suppliers to add nearly 2,000 jobs at its unionized U.S. plants, and several other OEMs expect similar results.

Manufacturing with modules is not synonymous with outsourcing. Cockpits, for example, often are manufactured by auto makers, themselves, on separate subassembly lines.

But the effort to reduce costs has led many OEMs to outsource modules, such as cockpits and front ends, to suppliers, whose workers earn lower wages.

HBPO GmbH is an invention of the era of modules. German lighting expert Hella KGaA Hueck & Co. first made a joint venture in 1999 with German cooling specialist Behr GmbH to provide front-end modules to European auto makers.

In 2004, French plastic bumper expert Plastic Omnium SA joined what now is a company with three equal owners.

The module business is "a logical consequence of the world situation in which car models become more and more diversified and overall volumes of each model become smaller, while complexity gets higher, with more engines (and) new powertrains," HBPO CEO Martin Schueler says in an interview.

"Model diversification fits totally with modules," he adds. "(OEMs) want to produce a car. They don't want the expense of space in the plant. Throughput is one of the key indicators, and it can only be really good if you have cockpits, you have doors, you have front-end modules."

Auto makers will focus more on their core competencies, including engines and powertrains, while continuing to rely on suppliers in other areas, Schueler predicts. "We see it happening," he says. "In the next two years, we are opening three new plants in Europe."

In addition, new modules are possible, with Plastic Omnium developing rear-hatch modules and auto makers designing battery modules for electric cars.

Modules ought to be a logical consequence of vehicle development, Schueler says. "But there might be good reasons for not doing it."

Those factors include the new lower pay scales at some OEM plants in North America, and promises from companies such as Volkswagen AG and Renault SA to their government minority owners to maintain employment.

Schueler believes his module supplier can outlast the in-house trend because "we are totally focused on front-end modules. That is the big difference. It is our only product line, and we believe that we are the experts. It doesn't mean that the OEMs don't know how to do it, but they have a different system."

Auto makers "might develop the best tooling and the best bumper fascia," he says. But when it comes time for a module, "they might find, 'Oh, we forgot a clip here and an angle there and some screws.'" That adds a lot of cost in the end, Schueler says.

HBPO works with its parent companies, but it does not limit itself to them as lower-tier suppliers.

"You can only survive in our business if you have the freedom of sourcing," says Schueler. "If we were to be limited to using a mother company's part, that would be a tremendous roadblock in HBPO development."

The backbone of a front end is the carrier that holds the bumper, radiator, headlamps and other elements together.

The approach of battery-electric vehicles will have only a small impact on front-end designs, Schueler says.

"A car will have cooling anyway; you will need a condenser," he points out. "You will have a battery and an electric motor, and there is the question of how that is cooled. You will need a lot of specific know-how in air flow. We are already doing this."

HBPO has 15 assembly plants worldwide and regional technical centers in North America, Europe and Asia.