Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Francisco Veloso
Chris Henry
Richard Roth
Joel P. Clark
December 1999
Students: Carlos Neves
Tiago Ratinho
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Contents
 Objectives and Scope
 Analytical Approach
 Major Conclusions
 Critical Recommendations
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Objectives and Scope
Automotive industry:
 Massive generator of economic wealth and employment
 Predictable demand for each country
 Other sectors dependent, like rubber or steel
 Highly dependent of government trade, safety and
environmental regulations
 Its impact depends crucially on the specific role
 Governments look at automotive industry as an important
industrial development opportunity
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Objectives and Scope
Portugal:
 1987-1997 the autoparts industry grew seven times
 together with assembly industry leads the stock of FDI
 7% of GDP
How can parts and components produced in Portugal
remain internationally competitive?
What strategies should national firms follow to move up
the tier structure?
When it is necessary to internationalize production, and
under which conditions should it be done?
What role should the government play?
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Analytical Approach (1)
Macroscopic:
 Provides an understanding of the industry as a whole
 Discusses the technical trends in the global automotive
industry
 Globalization and changes in the supply chains
Intermediate:
 Macroscopic level, addressing common aspects across
the supplier base in Portugal
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Analytical Approach (2)
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Analytical Approach (3)
Micro:
Technical cost modeling for:
-Stamping and molding processes
-Logistic
-Logistic strategies
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
MAJOR THEMES OF THE PORTUGUESE AUTOPARTS INDUSTRY
Company size: product development capabilities; manufacturing should
achieve minimum efficient scales;
Labour Market: labour considerations play a role in the manufacturing
cost for higher value added products; engineering and development costs;
Geographical considerations: logistics cost penalty arising from its
peripheral location; significant automotive manufacturing industry in place in
Spain; investments in Brazil;
Manufacturing competencies: represents 7% of GDP; 20% of national
exports and 20% of all foreign direct investment stock; presence of
AutoEuropa and substantial commercial vehicle manufacturing sector; high
levels of certification and quality practices;
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
CRITICAL RECOMENDATIONS (1)
Cooperation: cooperation programmes among companies with
complementary business objectives; specialization according to specificity
of equipment; considerer mergers and acquisitions;
Development: higher value added products; companies working
together; the area of cars interiors should be looked with particular
attention; attracting engineering and research centers from major auto
components corporation; research in logistics from Portugal, with the
support of government funds;
Human Resources: low wages requires a better-qualified workforce;
creation of a technical vocational school for the auto;
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
CRITICAL RECOMENDATIONS (2)
Internationalisation: depending on the types of components being produced
and overall company strategy; investing abroad should be seen by the government
as a positive evolution of the local industry (Brazil in particular);
Manufacturing Management: narrow product range; higher levels of worker
education and responsibility; a balanced and adequate use of methods for
manufacturing planning and control; careful equipment time management; choice
of the appropriate equipment for the product being manufactured;
Supply Chain: disseminating the best practices of the supply chain capabilities
Overall Strategy: development of the auto parts companies; strong cooperative
environment between local industry and public sector.
Master in Engineering Policy and Management of Technology, 8th Edition
Science, Technology and Innovation Policy
Product Focused
Focused
Company
Process Focused
Very
broad
array of low value
products
Small facilities
Lean business
structure
Direct logistics
strategy
No engineering
1
2
Small Process
Focused
Company
Large Process
Focused
Company
Higher Growth
Higher Complexity
GLOBAL STRATEGIES FOR THE DEVELOPMENT OF THE
PORTUGUESE AUTOPARTS INDUSTRY
Narrow array of
high value products
OVERALL STRATEGY
Larger plants
Focus
on
integration
of
Single Company
Group of Firms
technologies
Full
product
engineering
4
3
JIT
shipping
logistics
Not Attainable Large Product
Moderate array of low
value products
Larger plants
Focus
on
manufacturing
performance
JIT or distribution
center
Full
process
engineering team