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1
ManagementDECISIONSANALYSIS
MARKET
ECONOMIC
TECHNICAL
4000 Embassy Parkway - Suite 230 - Akron, Ohio 44333-8328 USAPhone: 330-670-9566 / Fax: 330-670-9844
Email: [email protected] - Home Page: www.robertellerassoc.com
PROFITABLE GROWTH TECHNOLOGIES IN INTERIOR SOFT TRIM
PREPARED FOR:
JORNADAS DE PLASTICOS EN AUTOMOCIONBARCELONA, SPAIN
JUNE 19, 2003 papers/fcep
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PRESENTATION HIGHLIGHTS• OPERATING HYPOTHESES• CURRENT AUTOMOTIVE SITUATION• DRIVING FORCES FOR SUBSTITUTION• EUROPE/NAFTA DIFFERENCES• VALUE ADD STRATEGIES• MATERIALS/PROCESS TECHNOLOGY
SHIFTS IMPLICATIONS• UNREALIZED VALUE OPPORTUNITIES• CURRENT EXAMPLES
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ManagementDECISIONSANALYSIS
MARKET
ECONOMIC
TECHNICAL
Robert Eller Associates, Inc.
Automotive Interior Soft Trim:Skins, Foams, Coated Fabrics, Textiles, and Acoustic Barriers
Prospectus for a Global Multiclient Industry Analysis
MODULEFABRICATION
ANDINTEGRATION
TECHNOLOGIES
REQUIREMENTS
OCCUPANT SAFETYACOUSTIC REQUIREMENTSWEIGHTELV LEGISLATIONESTHETICSTELEMATICS INTEGRATIONSENSORYSMELL
INTERIOR MODULES- COCKPIT- HEADLINER- DOOR- FLOOR/ACOUSTICS- TRUNK LINER- SEATING- PILLAR COVERS
CONSTRAINTS
MANUFACTURING ECONOMICS
SKINS
FOAMS
SUBSTRATES
COATED FABRICS
TEXTILES (WOVEN, NON-WOVEN)
CARPET
ACOUSTIC BARRIERS
QUALITY
CRAFTSMANSHIP
PRODUCT POSITIONING
SUPPLY CHAIN MANAGEMENT
slide-covautointsofttrim701 02.vsd
APPENDIX1
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SOME OPERATING HYPOTHESES• SEVERE PRICE PRESSURE VALUE CHAIN SHIFTS
• VALUE-ADD OPP’YS : UNDEREXPLOITED
• BOTH MATERIAL/PROCESS COST SAVING POSSIBILITIES
• EUROPE/NAFTA TECHNOLOGIES ARE CONVERGING
• ACOUSTICS PROPERTIES WILL BE MAJOR DRIVERS
• CURRENT CONSTRUCTIONS ARE INEFFICIENT
• FOAMS ARE KEY VALUE CHAIN SHIFT ELEMENT
• NON-STRUCTURAL COMPOSITES WILL GROW
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SNAPSHOT OF CURRENT AUTO SITUATION• RECESSIONARY GLOBAL ECONOMY• VEHICLE PRICES CONTINUE DECLINE • SEVERE OEM DOWNWARD PRICE PRESSURE• RESIN PRICE INCREASES(2003) PROFIT
DECLINE• GLOBAL AUTO MFG OVERCAPACITY• TIER 1 CONSOLIDATION CONTINUES• TIER 1 PURCHASE POWER INCREASE • MINOR PROCESS EVOLUTION TO DATE• THE VALUE CHAIN MUST SHIFT
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GLOBAL OEM VALUATION ANALYSIS (2003)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
-8% -6% -4% -2% 0% 2% 4% 6% 8% 10%
ROIC-WACC, %
EV
/IC
VW
PSADCXFORD
GM
FIAT RENAULTHYUNDAI
KIA
BMW
MAZDA
MITSUBISHI
PORSCHETOYOTA
HONDANISSAN
R2 = 76%
VALUE DESTRUCTION VALUE CREATION
7
OVERSUPPLYSLUGGISH VEHICLE DEMAND
OEM PROFIT DECLINE
TIER 1 PRICE PRESSUREAUTOMOTIVE SOLUTIONS- DECONTENT- GEOGRAPHIC SHIFT- ASSEMBLY EFFICIENCY- PLATFORMCONSOLIDATION
COST REDUCTION
OUTSOURCE NEWPROCESSES
MATERIALSUBSTITUTION
SUPPLY CHAINCONSOLIDATION
CRAFTSMANSHIPW/COST SAVINGS
PRESSURETIER 2 SUPPLIERS
VALUECHAINSHIFTS
NEWTEXTILE
TECH.
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003oem supp dyn 03.vsd
OEM/SUPPLIER DYNAMICS
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HIGH VOLUME PLATFORM EXAMPLES
1.0EPSILON
0.8FUTURAFORD 500FREESTYLE
MAZDA6
1.1LT. TRUCKSF-SERIES
1.7206PFIPSA
1.5COROLLATOYOTA
1.5LT. TRUCKSGMT800/900
GM
1.6FIESTAC1
FORD
1.2POLOPQ24/25
2.4GOLFPQ35VW
MM UNITSMODPLATOEM
SOURCE: REA SOFT TRIM MULTICLIENT
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DRIVING FORCES FOR INTERIORS MATERIAL/PROCESS SUBSTITUTION
• SYSTEMS COST SAVINGS• WEIGHT SAVINGS• OIL RESISTANCE• ODOR FREE INTERIORS• ELIMINATION OF COATINGS• MOLDED-IN COLOR• NVH CONTROL• ACOUSTIC PERFORMANCE• ENERGY ABSORPTION(OCCUPANT SAFETY)• RECYCLABILITY(AT ZERO COST PENALTY)
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VALUE ADD STRATEGIESA.VALUE CHAIN SHIFT
B. MATERIAL COST SAVE
C.PROCESS COST REDUCTION
D. ADD VALUEAND FUNCTION(WITH COST SAVE?)
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TPE SYSTEMS
MATERIALS PROCESS
ALLOYS
ACOUSTICBARRIER
SANDWICH
SOFTTOUCH
FOAM/SOLID
COMBO
MASTER-BATCH
CO-PROCESS-
ING
COEX
CO-IN
JECT
2-SH
OT
NEG.FORMING
(A)
IN-LINE COMP'DG./PROCESS'G
IN-MOLDDECOR-ATION
COEX(B)
BACK-COATED
RF SEAL-ABILITY
FOAM-ING
NOTES:(A) OF IP SKINS BY VISTEON AND OTHERS(B) FOR AUTOMOTIVE APPLICATIONS; TPEs COMPETING WITH ETP FILMS
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003slide-tpegrowth 02.vsd
SOFT/HARD
COMBO
VALUE-ADD OPPORTUNITIES VIA SYSTEMS7
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A. VALUE CHAIN SHIFT
-IN MOLD AIRBAG DOOR SCORING-IN MOLD TRIM-IN MOLD ASSEMBLY
REDUCE SECONDARY OPERATIONS
-TPO SKIN/PO FOAM LAMINATES-ON-BOARD ACOUSTICS
SANDWICH LAYER CONSOLIDATION
RAPID PROTOTYPINGREDUCE DEV. TIME
-FOAMING SEAT PADS-FLAME LAMINATION OF TEXTILES
OUTSOURCING
-TEXTILE SUPPLIERS CONFECTION-TIER 1 SKIN FABRICATIONRADIATION X’LINK SKINS
FORWARD/BACKWARDINTEGRATION
EXAMPLESTRATEGY
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B. MATERIAL COST SAVINGS
SUBSTRATESMASTERBATCH
-SAVES COMPD’GREACTOR GRADES
-IN-USE(JCI, FAUURECIA)-USE FOR TALC/PP?
DIRECT COMPOUNDING
-SUBSTRATES-SAVES PAINT
MOLDED-IN COLOR
NEED LOW TEMP PROPERTIESPVC SLUSH SKINS
MONOMATERIALSCONSTRUCTION
SCRAP REDUCTION
AVOID PAINTINGDECORATIVE FILMS
DOOR TRIM THIN WALL
NOTE/EXAMPLESTRATEGY
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AUTOMOTIVE TEXTILES . . .AN ECUMENICAL PERSPECTIVE
COATED FABRICS
REGENERATEDFIBER BATTING
(SHODDY)
NONWOVENSFACINGS
FOAMS(COMPETE/COMPLEMENT)
NEW LIGHTWEIGHTACOUSTIC FIBERS
WOVEN/KNITTEXTILES
ARTIFICIALLEATHER
LEATHER
AUTOTEXTILESMARKET
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003ecu persp 03.vsd
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NEW TECHNOLOGY NONWOVENS’ SUPERIOR ATTRIBUTES
• IMPROVED PERFORMANCE:SOFTNESS,TACTILE, CONFORMABILITY/DRAPE DURABILITY
• BREATHABILITY/CONTROLLED POROSITY• ACOUSTIC/THERMAL INSULATION, FILTRATION• UV RESISTANCE• PRINTING,EMBOSSING, DYEABILITY• NON-FRAYING(VS. TEXTILES)• MICRODENIER• FILTRATION• MARKET ONLY 17% PENETRATED
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NON WOVEN HEADLINER SHARES
0
1020
30
4050
60
70
8090
100
EUROPE NAFTA KOREA JAPANSOURCE: FREUDENBERG VITECH
MA
RK
ET S
HA
RE,
%
OTHER
NONWOVEN
TRICOT
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f o a m s 0 2
E X H I B I T 3
R I G I D S E M I - S T R U C T U R A L F O A M S A N D W I C H S T R U C T U R E
B A R E :
M A Y B E C O L L A P S E D T O F O R M I N T E G R A L H I N G E
R I G I D F I B E R M A T S K I N
B E A D F O A M
C A R P E T / N O N - W O V E N / W O V E N T E X T I L E L A M I N A T E :
C A R P E T O R W O V E N O R N O N - W O V E NB A C K I N GR I G I D F I B E R M A T S K I N
B E A D F O A M
R I G I D S K I N O R N O N - W O V E N B A C K I N G
S O U R C E : R O B E R T E L L E R A S S O C I A T E S , I N C . , 2 0 0 2r s f o a m s a n d w ic h 0 2 . v s d
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AUTOMOTIVE FABRICS MARKET VALUE (NAFTA/EUROPE), 2002
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
INT. TRIM ACOUST. BKNG / REINF.
NOTE: INCLUDES TEXTILE, NONWOVEN, WOVEN, COATED FAB., REGEN. FIBER BATTING
$ (BIL
LION)
SOURCE: ROBERT ELLER ASSOCIATES, INC., SOFT TRIM MULTICLIENT
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C. PROCESS COST SAVINGS
BODY SEALSRUBBER REPLACE-EXTRUSION, INJECTION-BLOW MOLDING
CO-PROCESSING
-FLOOR ACOUSTICS -DOOR TRIM ACOUSTICS-HEADLINER ENERGY ABSORB
SANDWICH CONSOLIDATION
HVAC LOUVERSIN MOLD ASSEMBLYWIDELY USED (EUROPE)HINTERSPRITZEN
-EPP FOAM/TEXTILE -DOOR TRIM -DECORATIVE FILMS
IN LINE NEGATIVE FORMING SKINS
EXAMPLESTRATEGY
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CURRENT MODULE FABRICATION (INEFFICIENT)
RESINS
MOLD SKIN MOLD SUBSTRATE
BACK-FOAMHIGH SCRAP PU FOAM
MOLDED PLASTICPRE-MODULE
ASSEMBLED MODULE
ADD-ON PARTS
4-STEP OPERATION
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003CPE-mod fab 03.vsd
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FUTURE MODULE FABRICATION (IDEAL)
MODULE FABRICATION
IN-MOLD ASSEMBLY
SKIN RESIN/FOAM
LOW SCRAP ADD-ON PARTS
SUBSTRATERESIN
ASSEMBLED MODULE
(IDEAL) 1-STEP OPERATION
DIRECTCOMP'DG.
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003CPE-one step 03.vsd
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EXHIBIT 1
AUTOMOTIVE FOAMS TARGETS
HOOD SEALS
DOOR ENERGY ABSORBER,DOOR TRIM SKINS
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2002foam tgts 02.vsd
DOOR SEALS(PRIMARY/SECONDARY)
HEADLINER ENERGYABSORBER
PILLAR TRIM
PACKAGE TRAY
REAR DECKLID SEALS
KNEE BOLSTER
INSTRUMENT PANEL
LIGHTINGGASKETFLOOR
SYSTEMS(ACOUSTICANDLOAD FLOOR
HOOD ACOUSTICINSULATOR
GLASS RUN CHANNEL
SEAT BACK
TRUNKFLOOR
REARSEAT
BELT LINEMOLDING
DASHMAT
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EXAMPLE OF PU FOAM TRUNK LINER BY RIETER
SOURCE: ROBERT ELLER ASSOCIATES, INC. 2003
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EXAMPLE OF EPP USAGE IN HEADLINER(2002 PT CRUISER)
SOURCE: ROBERT ELLER ASSOCIATES, INC. 2003
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LOCATIONS OF ACOUSTIC MATERIALS
SOURCE: JANESVILLE PRODUCTS, 2002
26
EXAMPLE OF DASH MAT LAYER CONSTRUCTION
HEAVY LAYER
ACOUSTIC BATTING
CARPET
SOURCE: COLLINS AND AIKMAN
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EXAMPLE OF ACOUSTIC COMPONENTS
SOURCE: HP PELZER
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RIM MOLDING OF CARPET/ACOUSTIC BARRIER BY C+A
PU-RIM MOLDING OF UNDER-CARPET BARRIER FOR ROVER FREELANDER
CARPET SECTION ON LOWER HALF OF PU-RIM TOOL
PHOTOS: C+A
29
EXAMPLE OF ACOUSTICALLY TUNEABLE FIBER
SOURCE: COLLINS AND AIKMAN
30
20% TALC-FILLEDPP RIGID FRAME OVERMOLDED SEBS LIP
OUTSIDE
VEHICLE INTERIOR
ADHESIVE
GLASS
EXAMPLE OF RIGID/FOAM VALUE ADDED SYSTEM
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D. VALUE ADD AT REDUCED COST(SOMETIMES)
BETTER ACOUSTICSIMPROVED DRAPE
MICRODENIER NONWOVENS
-BUTTONS - OTHER SURFACES
SOFT TOUCH
SEAT DOOR TRIM,IPLUXURY FABRICS
JCI CRAFTEC PROCESSCRAFTSMANSHIP
-NEW NONWOVENS-NEGATIVE FORMING
SURFACE ESTHETICSFLOOR/ACOUSTICSLIGHT WEIGHT FIBERS
-METALLICS-PATTERNS
IN MOLD DECORATION
EXAMPLESTRATEGY
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VALUE-ADDED DECORATION WITH TPEsRUBBER:
ALL BLACK
TPE VENEER: COLORED TPESOLID/FOAMED RUBBER
IN-MOLD DECORATION (IMD):BACK-PRINTED LAMINATES CLEAR SURFACE FILM
BACK PRINTED (PATTERN OR COLOR)TPE (OR ETP) SUBSTRATE
IN-MOLD DECORATION (IMD):CO-EX FILM/SHEET
CLEAR SURFACE FILMCO-EX COLOR LAYERSUPPORT/SUBSTRATE LAYER
MOLDED-IN DECORATIVE(MID) EFFECTS: MOLDED-IN PARTICLES
SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003vadecoalt02.vsd
TRANSPARENT
33
EXAMPLE OF LEATHER (ALCANTARA) MEDALLION INSERT
SOURCE: ROBERT ELLER ASSOCIATES, INC. 2003
34
TARACELL IP EPP SEMI-STRUCTURE/TEXTILE COVERING CONCEPT (TEXTILE DETAIL)
SOURCE: TARACELL
35
TARACELL IP EPP SEMI-STRUCTURE/TEXTILE COVERING CONCEPT
SOURCE: TARACELL
36
TARACELL EPP ON INTERIOR OF DOOR
SOURCE: TARACELL
37
TARACELL DT EPP SEMI-STRUCTURE/TEXTILE COVERING CONCEPT
SOURCE: TARACELL
38
DEMAND TRENDS IN EUROPEAN SLUSH/ SPRAY IP SKINS
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1995
1996
1997
1998
1999
2000
2001
2002
YEAR
'000
VEH
ICLE
S PR
OD
UC
EDTPO SLUSHTPU SLUSHPU SPRAYPVC SLUSH
SOURCE: ROBERT ELLER ASSOCIATES, INC., SOFT TRIM MULTICLIENT STUDY, 2003
39
f o a m s 0 2
E X H I B I T 2
A U T O M O T I V E F O A M F A M I L I E S A N D E X A M P L E A P P L I C A T I O N S
A U T O M O T I V E F O A M S
P O U R E D( B A C K F O A M )
S H E E T B L O C K P R O F I L E
E P D M T P VP U P U P V C P OS H E E TF O A M
O T H E R( R U B B E R )
S H E E T I N T E G R A LS K I N( U E V )
X L P O N O N -X L P O
G A S K E T S
S T E A MC H E S T
M O L D E D
E P P E P P O
S T R A N D -F O A M
P U
B O D YS E A L S
I N T E R I O RE N E R G Y
A B S O R B E R S
S K I N SG A S K E T SI N S T . P A N E L ,S E A T ,
A C O U S T I CB A R R I E R S
T E X T I L EL A M I N -
A T E S
B U M P E RS Y S T E M S ,
L O A DF L O O R
S O U R C E : R O B E R T E L L E R A S S O C I A T E S , I N C . , 2 0 0 2f o a m f a m i l i e s 0 2 . v s d
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WHAT WILL DRIVE PO AUTO FOAM GROWTH?• H20 BLOWN FOAM REPLACEMENT IN BODY SEALS• GROWTH OF PO MICROCELL TECH.(TREXEL)• PROLIFERATION OF RAD-XL PO TECHNOLOGY• ENTRY OF LOW COST PO SHEET FOAMS• PO SHEET FOAM/TEXTILE LAMINATION• HMS PP PROLIFERATION• EXTRUDED THICK SHEET FOAMS(STRANDFOAM)• IN MOLD SKIN/FOAM LAMINATION(EPP/TPO SKIN)• MULTI-DENSITY CAPABILITY(EPP BEAD FOAMS)• I.M./EXTRUDED RIGID SHEET FOAMS(SUMITOMO)
41
EXAMPLE OF MAGNESIUM ON A FIAT VEHICLE
SOURCE: FIAT
42
SUMMARY• INTENSE MODULE PRICE PRESSURE:
-VALUE CHAIN SHIFTS-NEW MATERIALS/PROCESS TECHNOLOGY
• POSSIBLE TO ADD VALUE AT REDUCED COST• TARGET GROWTH SECTORS:
-FOAMS(EPP, SHEET FOAMS, BODY SEALS)-NEW NON WOVENS-PVC/SPRAY SKINS-ACOUSTICS-SURFACE DECORATION -RUBBER REPLACEMENT(TPVs IN BODY SEALS)
• RECYCLING - NOT U.S. DRIVER, SIGNIFICANT EUROPE DRIVER
• EURO/NAFTA USE PATTERN WILL CONVERGE
43
ABOUT ROBERT ELLER ASSOCIATES, INC.
• TECHNICAL, MARKET AND ECONOMIC ANALYSIS IN SUPPORT OF MANAGEMENT DECISION
• AUTOMOTIVE – ONE OF SEVERAL SPECIALTIES• OFFICES IN US AND EUROPE• RECENTLY COMPLETED SOFT TRIM MULTICLIENT
STUDY• INITIATING AUTO NONWOVENS STUDY• REPRESENTATION IN SPAIN( PROTOMOLD-
BARCELONA, [email protected])