Arnaud COMPLAINVILLE, Carolina GIRALDO, Christophe TISSOT, Nam-Jun KIM, Patrick RECASENS

Group 9

(Best in France Case Study)

2Group 9

Presentation

We Thank

• Mr. Dominique Chauvin, former Managing Director

• Mr. Jon de Gaynor, Business Line Executive

• Ms. Catherine Dupont, Director of Diesel Operations

• Mr. Robert de Vaucorbeil, HR Director

• Mr. Philippe Bercher, Chief Engineer - Common Rail System

3Group 9

Presentation

Delphi is the world’s largest manufacturer of automotive components

Delphi in a Nutshell 

• Spin off from GM in 1999 (IPO)

• Services all car manufacturers in the world–Non GM sales = 39% (2003)

• Company’s HQ Troy, Michigan

• Regional HQs (Paris, Tokyo, Sao Paulo)

• 3 sectors :–Mobile electronics, Transportation components, Dynamics and propulsion

• Worldwide manufacturing and distribution

• Revenue : $ 28.1 bn (2003)

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Presentation

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Delphi BoschAuto*

JCI Visteon Denso* Lear Magna* Dana*

$ B

illi

on

sIn 2002, Delphi had a revenue of $27.4 Billion worldwide

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Our study is focused in Delphi’s Engine & Chassis division,part of the Dynamics and Propulsion sector

Delphi E&C Overview

• E&C annual turnover = $ 9 bn

• Purchased Lucas Diesel Systems from TRW in 1999 for $ 800 m

• Benefited from Lucas’ expertise in diesel systems

• Cost constraint : moderate

– Highly automated manufacturing

– Development intensive

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Presentation

GASOLINE Engine Management System (EMS)

DIESEL EMS

BATTERIES & ADVANCED ENERGY

EXHAUST

FUEL HANDLING

SENSORS & ACTUATORS

BRAKES & MODULES

RIDE DYNAMICS

Delphi E&C Product PortfolioDelphi E&C Product Portfolio

Produces a comprehensive range of components such as Diesel Engine Management Systems

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Presentation

Operation in FranceOperation in France

3,800 employees in France

4 industrial sites (19 in Europe)

•Blois

•La Rochelle

•Sarreguemines

•Florange

2 technical centers (11 in Europe)

•Blois

•Paris

It employees 3,800 people in France…

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And have a client base that is almost all of the automotive industry (cars, trucks and off-road)

Most of the car makers are Delphi’s customers…

Most of the car makers are Delphi’s customers…

BMW, Caterpillar/Perkins, Cummins, Daewoo, Daimler Chrysler, Fiat, GME Powertain, Ford, GM, Honda, Hyundai/KIA, Isuzu/SIA/IBC, Mitsibushi/DSM, Nissan, PAG, PSA, Renault, Rover, Suzuki, Toyota/NUMMI, Volvo Truck, GM Tier I Customers

BMW, Caterpillar/Perkins, Cummins, Daewoo, Daimler Chrysler, Fiat, GME Powertain, Ford, GM, Honda, Hyundai/KIA, Isuzu/SIA/IBC, Mitsibushi/DSM, Nissan, PAG, PSA, Renault, Rover, Suzuki, Toyota/NUMMI, Volvo Truck, GM Tier I Customers

… who expects Delphi to achieve the following

… who expects Delphi to achieve the following

Develop most effective

automobile component

Concurrent engineering

(new models, new engines)

Follow European Union’s

regulation (exhaust)

Develop most effective

automobile component

Concurrent engineering

(new models, new engines)

Follow European Union’s

regulation (exhaust)

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Presentation

• Historically : followed GM’s international expansion, Purchase of Lucas Diesel

• Today : closeness to European manufacturer, notably French

• Long visibility since changes in the business correspond to changes in environmental regulations (6 years / 3 to 4 years for other business units)

• Less labor intensive than other divisions- E&C (France) : Labor cost is around 25% - Harness (Portugal) : Labor cost = 70%

• Historically : followed GM’s international expansion, Purchase of Lucas Diesel

• Today : closeness to European manufacturer, notably French

• Long visibility since changes in the business correspond to changes in environmental regulations (6 years / 3 to 4 years for other business units)

• Less labor intensive than other divisions- E&C (France) : Labor cost is around 25% - Harness (Portugal) : Labor cost = 70%

Key Findings

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Presentation

Environment Benefits

• Location benefits

– international airports in Paris

– quality of life

– closeness to French customers

• Good acceptance of individual compensation systems (unlike Germany)

• Net salaries comparable all over western Europe (excl. Portugal)

People Benefits

• Skilled workforce– superior engineering schools;– academic system second to none (d

ue to typical 5-years courses);– Availability of a wide-range of talents;– Seek to continuously improve proces

ses and manufactured products;– Creates a virtuous circle whereby em

ployees are increasingly qualified and increasingly creative.

• Mobility– Have to use French expats in other c

ountries (UK, Shanghai, Seoul)– Open-minded, integrate well oversea

s;

Key Benefits of being in France are…

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Presentation

Environment Constraints

• Labor laws– 35h week increases hourly

rate by 12%– Poor flexibility (cost of

redundancy: payback is over 2 years)

• Labor costs– Social charges at 47% are

too high compared to other European countries (this is 15% too high)

– French operators 25€/h (19€/h in the UK)

People Constraints

• Aversion to change

• Limited command of English

• French managerial practices

differ from the American ones

(reporting, procedures, matrix

organization)

Key Constraints of being in France are…

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Conclusion

Main assets • Diesel expertise in

France• Qualified workforce

Main assets • Diesel expertise in

France• Qualified workforce

++

Threats • High labor cost• Relocation of

production in Eastern Europe (long run)

Threats • High labor cost• Relocation of

production in Eastern Europe (long run)

--

No major expansion plan, but France is well positioned to retain value added, highly automated activities

13Group 9

Presentation

• Arnaud Complainville, French, Doctor in biology

• Carolina Giraldo, Colombian, Banking

• Nam-Jun Kim, Korean, Consultant

• Patrick Recasens, Canadian-Spanish, Attorney-at-law

• Christophe Tissot, French, Finance director

Study Participants

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uestions?

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