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BRIGHT STRATEGIES: HELLA'S INDEPENDENT APPROACH

Here's how an automotive supplier of lighting, electronics, and other advanced technology products is working to gain market share through innovation, competitive pricing, and collaborations. All indications are that it's working.

A BUSINESS APPROACH

In a business environment characterized by companies working to get bigger largely through acquisition, this is not an approach that Hella KgaA Hueck & Co. (Lippstadt, Germany) is taking. Rather, according to its CEO, Dr. Rolf Breidenbach, as the company moves forward, it will do so as it has for more than 100 years, which is as an independent company, with the growth expected being the consequence of a strategy that includes improved deployment of internal and external resources. Broken down into constituent parts, this includes:

  • Fractal concept. The Hella organization (23,900 employees arrayed in three business divisions—Electronics, Light, Aftermarket & Special OE—working in 18 countries) personnel are units working in an entrepreneurial manner to fulfill customer needs.
  • Triple I philosophy. Working on product and service innovations. Achieving synergistic integration with internal and external participants. Being available to customers internationally.
  • Network strategy. Working with other companies either in joint ventures or as partners. While there is ownership in a joint venture company (e.g., HBPO GmbH, which is an organization that is jointly owned by Hella, Behr GmbH & Co., KG (Stuttgart), a specialist in air conditioning and engine cooling, and Plastic Omnium Auto Exterior (Paris), a supplier of body components and parts), the partnership approach is one whereby, Breidenbach explains, there is mutual benefit achieved by collaborative work between companies.
  • Continuous improvement. Of both product and process. 

That said, a question arises. Consider that privately held Hella is competing in the market with major, publicly owned suppliers. In lighting for example, with the likes of Visteon and Valeo. How can it compete with companies that are 10 times bigger or more in developing technology? Breidenbach suggests that the independence has an advantage, as they are not focused on the results that will be obtained during the next three to 12 months. Rather they have a mid- to long-term strategy that is "not attractive" to those who are more driven by short-term financials. "When we can't afford to develop new technology, we bring in partners."

Another thing that they've done is to organize into three divisions—electronics, light, aftermarket & special OE (as in large truck manufacturers)—that are roughly the same size and which tend to be counter-cyclical so that there is balance.

Within the markets that they serve, Breidenbach says that they want to be second to no other company which, he admits, is "a quite challenging goal." So they're building on what he describes as "four pillars": leadership in Technology/Innovation, Service, Quality, and Cost.

 

A DEVELOPMENT-MANUFACTURING STRATEGY

Hella operates a 34,250-m2 plant in Paderborn, Germany, which it opened at the start of the decade. Inside the factory, there are several tail lamps produced for cars including the Opel Astra, BMW 5 series, Volvo S60, and Mercedes SLK. Output is on the order of 20,000 signal lamps per day. The production process consists primarily of injection molding the lenses (e.g., the two-colored Astra lamps are molded with a polymethylmethacrylate material; in one area of the lens small polymer particles with a different refraction index are injected into the base material so that the area appears to be frosted glass; this is said to be the first such application of the material in a mass produced vehicle); vacuum metalizing the reflectors, and assembling the products. When the plant was opened, there were six production lines. Even though the layout of those lines was based on a lean system that provided a 25 to 30% improvement as compared with the layouts used in older Hella plants, it was deemed necessary to add two additional lines just a year later. Today, there are approximately 635 people who are involved in the production process. (There are also 54 apprentices in the facility, which, although thought to be characteristic of German factories, are becoming comparatively rare.)

But more than serving as a production operation, the Hella Leuchten-Systeme Paderborn operation also houses another 200 people who are dedicated to design, development, and technology. The purpose of the facility, in addition to manufacturing, is to perform product and process developments. It is a competence center. Tail lamps are developed, as are the means by which they are produced. For example, while it is common practice to seal lamps through such means as ultrasonic and laser welding, there is a loop at Paderborn where laser welding is being assessed for full-scale deployment.

Breidenbach says, "We will have a production network. We will be steering production and R&D in Germany." At places like Paderborn. But then there is the potential for the proven production processes to go from Paderborn to other Hella facilities. For example, the tail lamp for the Golf Plus, which is an advanced LED-based combination lamp, was developed and initially launched in Paderborn. Once the process was proven, the line was dismantled and shipped to one of Hella Slovakia's operations in Bánovce nad Bebravou. The objective is to have more manufacturing done in lower cost locations around the world, not only in eastern Europe, but in Asia, as well.

In speaking of innovative technologies for production of products like lighting, Breidenbach states, "Price is the most important factor. We know how to be more competitive." And the Paderborn facility is a place where addressing the OEM's cost down needs through competitive products and processes is an abiding consideration.

 

A RESEARCH STRATEGY

It's called the "L-LAB." It's a research institute that focuses primarily on automotive lighting. That, in itself, isn't particularly unusual. But what is out of the ordinary is that the L-LAB is a public-private partnership created by the University of Paderborn and Hella. This is another example of Hella leveraging resources. Each of the parties pays for 50% of the research lab.

The lab was established in 2000. There are 18 full-time scientific researchers and from 20 to 25 students who are pursuing advanced degrees at the L-LAB; they will typically spend three years in the lab performing research. Presently housed within the Hella Leuchten-Systeme Paderborn facility, the L-LAB will be moving to the university campus by the end of 2006.

There are five research areas encompassed by the L-LAB:

  • Active light and mechatronics. This includes such things as pixel headlamps, which can do such things as project images onto the road ahead (think of a navigation system with the turn arrows appearing on the pavement rather than a screen), and collision avoidance.
  • Mesopic vision. This refers to the ambient lighting conditions that occur between daylight and dark-ness. The work here looks at such issues as glare and its effects on perception (e.g., is it discomforting or disabling?).
  • Measuring technology and simulation. To examine quantitative aspects of lighting (including thermodynamics) and related systems.
  • Human-machine interaction. Cogni-tive studies of systems. (Dr. Jürgen Locher, an L-LAB co-director, is a psychologist, so it is not all about technology per se.)
  • Material science and surface technology. Examinations of such things as composites and nanotechnology.

For the most part, basic research—not applied—is being performed. Although much of what is being done manifests itself in physical systems that resemble currently available (or near-term) product, the developments are said to be two generations ahead of the current series of products.

Although the L-LAB is described as being "an open platform for research," and while it is open for projects from companies other than Hella, direct competitors of Hella need not apply.