Global Chains and the modular design of autoparts: The case of México

1. Global Chains and the modular design of autoparts: The case of México Dr. Arturo A. Lara Universidad Autónoma Metropolitana – X. México- D.F.

2. This analysis focuses on the production plant network of Lear Corporation in Mexico, and its aim is to describe and analyze the technological up-grading process, as well as the strategy of intra-company coordination and cooperation (in the North American market) developed by Lear within the framework of modular production.

3. I

4. NUMERO DE PATENTES DE LAS PRINCIPALES EMPRESAS PRODUCTORAS DE ASIENTOSAUTOMOTRICES (1976-2002)

6. hypotheses:Lear-México is an autoparts company that is bringing together an increasingly large amount of automobile interior sub-systems and components, including seats. This process has been made possible by: a) the incorporation and intra-firm application of the technological capabilities it has developed on a global level, b) the use of a modularization and specialization strategy in a cohesive cluster of technological sub-systems and c) productive and technological coordination processes on an intra-company level.

7. How can we explain the evolution of Lear’s technological capabilities, from the production of seats to entire interior systems? In order to answer these questions, it is necessary to describe the interdependent nature of seat design.

8. Establishing the architecture. The steps are: • 1.- Crate a schematic of the product. • 2.- Cluster a rough geometric layout. • 3.- Identify the fundamental and incidental interactions.

9. Integral architecture An integral architecture has the following properties: • Functional elements of the product are implemented using more than one components (chunks).(many-components-to-one function) • A single component implements many functional elements. (one-component-to-many-functions) • The interactions between components are ill defined and may be incidental to the primary functions of the products.

10. Modular: one-to.one function/component • One architectural feature essential for many of the advantages associated with modular product designs requires a one-to-one relationshipbetween function and component.

11. Deviation from a one-to-one relationship. • 1.- There can be a one-to-many relationship: Multiples components contribute to a particular function (protection and comfort in automobiles). • 2.- A function can be provided by a component that simultaneously provides also other functions (the automobile´s body)

12. Deviation from a one-to-one relationship. • 3). There can be a many-to-many relationship between functions and components (the power unit of the computer).

13. Fuente: Fixson & Sako (2001)

14. Modularity and Outsourcing • In theory, modularity captures the notion of a clear division of labor between the architect with architectural design knowledge and designers with knowledge of each module. • The dichotomy between integral and modular architecture is conceptually powerful. But the reality is not pure.

15. The broad ties and interconnection of interfaces among the different modules that make up the interior of a vehicle – a process called modularization– have made it possible for Lear to make a huge leap: from being a supplier of a segment as specific and specialized as seats, to offering the whole interior system. Modularity and Outsourcing

16. Modularity and Outsourcing • Acquired technological knowledge and the processes involved in the manufacture of these other modules have strengthened Lear’s competitive capacity to extend production to cover the whole interior system

17. Lear Seating Corporation Plants In Mexico, (1995)

18. Lear Corporation Plants In Mexico, 2000

19. Interior system task structure Matrix

20. ESTADOS UNIDOS MEXICO Lear U S A Ensambladoras • Lear • Silao LearCuautitlán A Ensambladoras LearCd.Juárez Lear Tláhuac JohnsonControls • Lear • Puebla E A B B C D D E Flujo de suministro y fabricación de asientos e interiores en Lear Tláhuac Fabricantes de autos Competencia Sentido de la cadena de suministro Plantas de Lear Planta de Lear “proveedor exclusivo” Fuente: Elaborado con información de entrevistas a plantas de Lear Corporation.

21. Costura/ Espuma Bastidor/Espuma B A B A A B C D A B C D Contraste de los diseños integral y modular en Lear Corporation Diseño Integral Diseño Modular Nodos de fabricación Lear Plantas Lear Clientes Proveedores Clientes Estados Unidos México Cd. Juárez Tláhuac Plantas de Lear Plantas de la competencia Clientes

22. Conclusions1.- During the 1990s, Lear-México underwent an impressive process of expansion. This company opened numerous plants in different parts of Mexico, increasing the number of people it employed and diversifying its productive processes. 2.- Lear offers a successful case of a world class supplier that went from being a specialist in the manufacture of seats to a producer and assembler of different components (upholstery, harnesses and interiors) which are then distributed to the terminal industry.

23. 3.- This company has managed to orchestrate the broadening of the range of products it offers with a growth strategy, not only through geographical expansion but also by improving its technological capabilities and organizational strategy. Conclusions

24. Conclusions4.- The case study of Mexico reveals that the policy of expansion and the location of Lear’s plants is part of the process of economic and commercial integration of this country resulting from the North American Free Trade Agreement. Lear’s decisions with regard to location are in response to the search for lower salaries, the reduction of transport costs and the needs of its main customers (Chrysler, General Motors, Volkswagen, etc.).

25. Conclusions5.- A company that increases its size, the number of plants it has, its technological capabilities, its human resources and the range of products it offers is facing up to the challenge of dealing with complexity and uncertainty. Lear has managed to overcome these obstacles by acting on three basic levels: 1) intra-company coordination, 2) its strategy of capability expansion, and 3) modular design.