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Arnaud COMPLAINVILLE, Carolina GIRALDO, Christophe TISSOT, Nam-Jun KIM, Patrick RECASENS

(Best in France Case Study). Group 9. Arnaud COMPLAINVILLE, Carolina GIRALDO, Christophe TISSOT, Nam-Jun KIM, Patrick RECASENS . We Thank Mr. Dominique Chauvin, former Managing Director Mr. Jon de Gaynor, Business Line Executive Ms. Catherine Dupont, Director of Diesel Operations

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Arnaud COMPLAINVILLE, Carolina GIRALDO, Christophe TISSOT, Nam-Jun KIM, Patrick RECASENS

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  1. (Best in France Case Study) Group 9 Arnaud COMPLAINVILLE, Carolina GIRALDO, Christophe TISSOT, Nam-Jun KIM, Patrick RECASENS

  2. We Thank • Mr. Dominique Chauvin, former Managing Director • Mr. Jon de Gaynor, Business Line Executive • Ms. Catherine Dupont, Director of Diesel Operations • Mr. Robert de Vaucorbeil, HR Director • Mr. Philippe Bercher, Chief Engineer - Common Rail System

  3. Delphi is the world’s largest manufacturer of automotive components • Delphi in a Nutshell • Spin off from GM in 1999 (IPO) • Services all car manufacturers in the world • Non GM sales = 39% (2003) • Company’s HQ  Troy, Michigan • Regional HQs (Paris, Tokyo, Sao Paulo) • 3 sectors : • Mobile electronics, Transportation components, Dynamics and propulsion • Worldwide manufacturing and distribution • Revenue : $ 28.1 bn (2003)

  4. In 2002, Delphi had a revenue of $27.4 Billion worldwide

  5. Delphi E&C Overview E&C annual turnover = $ 9 bn Purchased Lucas Diesel Systems from TRW in 1999 for $ 800 m Benefited from Lucas’ expertise in diesel systems Cost constraint : moderate Highly automated manufacturing Development intensive Our study is focused in Delphi’s Engine & Chassis division,part of the Dynamics and Propulsion sector

  6. Produces a comprehensive range of components such as Diesel Engine Management Systems Delphi E&C Product Portfolio • GASOLINE Engine Management System (EMS) • DIESEL EMS • BATTERIES & ADVANCED ENERGY • EXHAUST • FUEL HANDLING • SENSORS & ACTUATORS • BRAKES & MODULES • RIDE DYNAMICS

  7. It employees 3,800 people in France… Operation in France • 3,800 employees in France • 4 industrial sites (19 in Europe) • Blois • La Rochelle • Sarreguemines • Florange • 2 technical centers (11 in Europe) • Blois • Paris

  8. And have a client base that is almost all of the automotive industry (cars, trucks and off-road) Most of the car makers are Delphi’s customers… … who expects Delphi to achieve the following BMW, Caterpillar/Perkins, Cummins, Daewoo, Daimler Chrysler, Fiat, GME Powertain, Ford, GM, Honda, Hyundai/KIA, Isuzu/SIA/IBC, Mitsibushi/DSM, Nissan, PAG, PSA, Renault, Rover, Suzuki, Toyota/NUMMI, Volvo Truck, GM Tier I Customers • Develop most effective automobile component • Concurrent engineering (new models, new engines) • Follow European Union’s regulation (exhaust)

  9. Key Findings • Historically : followed GM’s international expansion, Purchase of Lucas Diesel • Today : closeness to European manufacturer, notably French • Long visibility since changes in the business correspond to changes in environmental regulations (6 years / 3 to 4 years for other business units) • Less labor intensive than other divisions • E&C (France) : Labor cost is around 25% • Harness (Portugal) : Labor cost = 70%

  10. Key Benefits of being in France are… People Benefits Environment Benefits • Skilled workforce • superior engineering schools; • academic system second to none (due to typical 5-years courses); • Availability of a wide-range of talents; • Seek to continuously improve processes and manufactured products; • Creates a virtuous circle whereby employees are increasingly qualified and increasingly creative. • Mobility • Have to use French expats in other countries (UK, Shanghai, Seoul) • Open-minded, integrate well overseas; • Location benefits • international airports in Paris • quality of life • closeness to French customers • Good acceptance of individual compensation systems (unlike Germany) • Net salaries comparable all over western Europe (excl. Portugal)

  11. Key Constraints of being in France are… People Constraints Environment Constraints • Aversion to change • Limited command of English • French managerial practices differ from the American ones (reporting, procedures, matrix organization) • Labor laws • 35h week increases hourly rate by 12% • Poor flexibility (cost of redundancy: payback is over 2 years) • Labor costs • Social charges at 47% are too high compared to other European countries (this is 15% too high) • French operators 25€/h (19€/h in the UK)

  12. Conclusion + - • Main assets • Diesel expertise in France • Qualified workforce • Threats • High labor cost • Relocation of production in Eastern Europe (long run) No major expansion plan, but France is well positioned to retain value added, highly automated activities

  13. Study Participants • Arnaud Complainville, French, Doctor in biology • Carolina Giraldo, Colombian, Banking • Nam-Jun Kim, Korean, Consultant • Patrick Recasens, Canadian-Spanish, Attorney-at-law • Christophe Tissot, French, Finance director

  14. ANY uestions?

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