The news that Magna – one of two bidders for
General Motor’s European arm – wants to turn Opel into a contract manufacturer will echo around the global automotive industry.
Perhaps it has taken a contract manufacturer to point out the obvious to the mass producers, but the plan to offer Opel’s Delta and Epsilon platforms – and space on the production lines - to other car makers has been a long time coming.
Magna’s logic is rock solid. Designing and engineering a new platform is extremely expensive. That means that a car maker has to build huge volumes of vehicles based on the said platform to make a profit.
General Motors grasped the volume nettle with its global platform programme, which would have seen the Delta and Epsilon II platforms being used globally by a number of different brands. Ironically, GM has fallen to pieces just as the global project was being rolled out.
Now Magna has picked up the pieces and extended the logic of platform sharing. Instead of building huge global auto companies, just share the technology between smaller, independent carmakers.
This logic has been used for years in other areas of product manufacturing. Computers increasingly use the same central processing chip. The differences in computers now lie in the operating system and exterior design.
20 years ago, when I was involved in the mountain bike industry, cycle design had been revolutionized by the near-universal adoption of alloy-steel and aluminium tubes and TIG welding as the main methods of construction. Meanwhile, Shimano supplied almost all a bike’s main components.
These flexible construction methods allowed frame designs to change slightly every year, and most mountain bikes were made under contract by Taiwanese factories. Each bicycle maker would have its own production slot, where a year’s production run would be built in just six weeks or so.
So while all bikes were made up from the same basic building blocks, manufacturers could differentiate their output through relatively simple tweaks in frame design (including suspension systems), the particular mix of components and through colours and graphics.
This kind of production logic also means that global mountain bike companies could, for example, be based in a small industrial unit in Northern California.
The HQ would concentrate on design and component specification, marketing and distribution, while the manufacturing was contracted out to specialist factories. And these factories would always be humming, because they had contracts with numerous brand names.
However, while few car buyers could care less about the difference between the rear axle designs of a Bravo, a Megane or a Kia Cee’d, you can be sure that many senior car company executives will.
Recently, Daimler made strong public hints about the sense of Mercedes and BMW combining many of their engineering operations.
BMW bosses hit back, insisting that the BMW brand was worth billions and they would not risk that by ‘diluting’ the brand by sharing too many components with another car maker, premium or not.
In truth, car companies will have eventually had to follow the industrial logic that underpins most global product design.
Customers value design, style, reliability and innovation. They don’t care about the differences in BMW’s and Mercedes’ respective rear axle designs. Magna should be congratulated for pointing the way forward.
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