Welcome to a new week! Spring finally arrived in New England on Saturday and it’s hard to concentrate on work this fine day. But it’s a busy week, so let’s get right to it. I’ll be in Atlanta for Solid Edge University and hope to see you there. I’m told that “Hotlanta” is an extremely uncool thing to say, so will concentrate on not doing that.
Today’s Morning Coffee is a bit different from usual. We’re nearing the end of earnings season and it’s been the usual mixed bag of this geo up, that one down, this industry doing well … We’ve been trying to cover PLMish company announcements in other posts, but we also listen to engineering software users‘ conference calls and want to recap some of the most interesting things we’ve heard. Note: these snippets are taken out of context and don’t imply anything at all, one way or another, about the companies quoted here. We’re listening for mentions of quality, design and engineering initiatives, reshoring manufacturing, working with supply chains, and so on and more or less ignore everything else. We’re trying to learn how these companies, the leaders in their industries, look at their product innovation, creation and maintenance programs.
First up, automotive. The top car manufacturers have hard a tough couple of months. Recall after recall leading to a lot of bad press and mea culpas from executives.
GM CEO Mary Barra covered the recall in detail on her company’s earnings call and told investors
I want to begin by stating in no uncertain terms that the ignition switch recall and the factors led up to it are unacceptable to me, to my leadership team and to our Board of Directors. It doesn’t matter if the roots of the issue are more than the decade old …
In July 2012, we simplified our product development leadership structures to remove silos and complexity. In January 2013, we launched a comprehensive program to retool our product quality and durability validation process. To accelerate our drive to leadership we organized and restructured our global product development team during the last six weeks.[W]e also rolled out fundamental changes in the way we develop vehicles. Going forward our global vehicle engineering organization will consist of a global vehicle components and sub-systems team and a global product integrity team. The objective is to improve cross systems integration and deliver more consistent performance across vehicle programs and ensure functional safety and compliance of all our vehicles … A vehicle is a collection of 30,000 individual parts; integrating those parts into a cohesive system with industry-leading safety and quality is the key to winning in this customer driven business … Finally, we will now require all engineers to study for a Design for Six Sigma blackbelt by 2015.
Ms. Barra said that she expects the organizational and validation process changes to create efficiency while not adding engineering cost to developing new vehicles. In fact,
when you look at the way we’re going to work across the organization, I think it’s going to allow us to increase our speed once we understand an issue. And ultimately if you discover an issue and the cause more quickly, overall that’s going to be a lower impact as well.Ford didn’t spend much time on the engineering and design implications of their recalls, but CFO Robert Shanks gave a glimpse into what its recalls might cost. He told investors that Ford increased its warranty reserve by $400 million for “field service actions, which include safety recalls and other product campaign related to 2008 through 2013 models as well as expense for 2001 through 2005 model vehicles.” Not cheap.
Volkswagen covered financials, order books, inventories and all the stuff financial analysts love. They also used some of their call to talk about “Porsche DNA” and other design attributes — VW’s earnings call felt very different from the others. Christian Klingler, Head of Sales & Marketing and Member of Board of Management, told investors about
innovative design and sophisticated technology … The new Audi A3 Cabriolet is the perfect example of sportiness, elegance and versatility which offers uncompromising luxury. SEAT plans its Leon family with the new Leon Cupra, which is the fastest SEAT vehicle ever. This new model underlines what makes them special — the perfect balance between emotion, performance, and dynamics as well as exclusive elements for individualization.
It’s not really fair to compare companies that have to justify hundreds of millions of dollars in warranty exposure to one that doesn’t have that PR nightmare to deal with*. But there is actually a lot of common ground: Ford is launching 23 new models worldwide this year. GM is revamping its design team structure. VW is focusing on customer attributes. Not once was PLM, CAD or simulation mentioned –not surprising, I guess, for these conglomerates that design, source, build, sell and finance and where the people talking are CEOs and CFOs. There’s no question, though that PLM underpins each of these companies’ initiatives in 2014.
*VW put a “stop sale” order on a bunch of cars earlier this spring and amended that to a recall of 26,400 vehicles that were built between February 1 and April 6 and that are powered by VW’s 1.8-liter, turbocharged four-cylinder engine. VW said that only 1,655 of the 26K cars are customer vehicles so the PR damage hasn’t been as noticeable.
