CORPORATE NEWS:
ESF contemplates: costs, know-how and the future
Spring manufacturers are exposed to high performance and pricing pressures. In order to remain competitive, they must monitor market developments and make decisions which can be crucial for their own survival.
The European Spring Federation (ESF) is the representative body of European spring manufacturing associations and assists them in keeping track of market events. “We sit between two big groups, namely the raw material suppliers on the one hand and large customers such as the automobile industry and their direct suppliers on the other side”, says ESF president Dr Hans-Jochem Steim, CEO of the international spring manufacturers group Kern-Liebers GmbH. “Of course, there is also competition among ourselves. But in order to survive, we must work together.”
A useful tool to facilitate such cooperation is the ESF’s annual seminar. The last one was in Parma, Northern Italy, and attracted more than 60 participants from the ESF member states (Austria, Finland, France, Germany, Italy and the United Kingdom) and some other European countries as well as Japan.
The issues that took centre stage were customers’ purchasing policies and the transfer of production sites.
“First of all, you must keep an eye on your customers and ask yourself again and again: How do they think? What do they expect? What are they planning?” recommended Marco Vitale, a management consultant and economist, who was the moderator of a round-table conference on the purchasing policies of big spring buyers.
“The costs are the most important factor,” emphasised Flavio Borgatta, European Senior Vice President at toy manufacturer Mattel. “In the toy industry, there is immense competitive pressure. Therefore, we must work continuously to reduce costs. One way is the transfer of the production into countries with low production costs. These countries should not be underestimated.”
Mr Borgatta said he had discovered a factory in the region of Moldavia (in Romania)
which was an international-quality business. “In terms of good quality products, it doesn’t matter where they come from.”
“Big companies cannot take on the cost burden alone,” added Gian Piero Morone, Manager of Supplier Quality for Adam Opel AG. “We must pass a part on to our suppliers. That can only be achieved in partnership. It’s no use for either of us if the other one is going to go bust.”
The question was: “How can costs be reduced?” The consensus seemed to be that everyone should research the possibility of savings within one’s own company but not, it was stressed, at the expense of quality or technical know-how.
Davide Spotti, from the coffee company Illycafè, agreed with the latter point. “During the 80s and 90s many different management ideas were tried out in companies and often these were more of a hindrance than a help. Despite all these methods, one task remained the same: to have costs and quality under control.”
“So, as there is a relation between quality and costs,” summarised Mr Vitale, “there is also one between quality management and cost management. If a company is able to control quality, it can control costs too. In Europe we have a strong position in many areas. Let’s use our strengths – such as our technological know-how – and let’s cooperate closely with our customers. Then we will share a good future!”
To reduce production costs, many companies have transferred a part of their production to the Far East. Some of them have been almost forced to do so because their big customers have gone there and expect their suppliers to do the same.
Alfio Morone, CEO of the automotive supplier Adler, reported both positive and negative experiences on setting up companies in China and Thailand since the early 90s. “The biggest challenges are finding partners and protecting the copyright in technological know-how.”
Mr Morone emphasised that subsidiaries in the Far East are very important as they help their parent companies to remain competitive. However he cautioned that the parent companies retain management control throughout the set-up stage and in guaranteeing the quality of the output.
ESF board member Joseph Varoqui, General Director and CEO of Comptoir Général du Ressort, Groupe CGR, presented the results of various workshops on issues of urgent concern to spring manufacturers, namely: price reduction, bad payment terms and questions regarding insurance. The main factors for pricing pressure were seen as the steel price, customer pressure and competition from low-cost countries. Some solutions were to improve technical services, to specialise the company and to increase cooperation among spring manufacturers.
On insurance matters the proposals were: deliver only good parts, do not sign contracts which include the automatic invoicing of the supplier in the event of quality problems, and cover the risk by a specific insurance contract. It was noted that exports to the USA and Canada require an extra clause to be added to insurance policies.
Horst Dieter Dannert, ESF General Secretary, presented a summary of the Federation’s recent activities and the results of the first meeting of the International Standards Organisation (ISO) Technical Committee 227 – Springs in Tokyo, Japan, in August 2005.
The main topics were the revision of
ISO 2162-3 (standardised spring termi-nology with corresponding symbols and dimensions), IWA tolerance guidelines for compression, extension and torsion springs as well as general shot peening guidelines.
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European Spring Federation ESF |
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Germany |
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+49 |
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