| Poll |
| Is this a profitable business ? |
| yes |
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100% |
[ 2 ] |
| no |
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[ 0 ] |
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| Total Votes : 2 |
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| Author |
Message |
foreverinchina
PopStar
Joined: Nov 21, 2005
Posts: 1250
Location: 徐家汇
Status: Offline
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 Posted:
July 05, 2006 - 03:49 AM |
 
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| Post subject: Automotive and plastics industry in Shanghai |
This is my new website: www.lincostar.eu
My website is uploaded and is 'finished', but he has to be optimized and tuned in many ways. But that's another topic.
What i would like to know is whether there is a need for this kind of services for car builders or their suppliers in China. From the very few small projects i did in China up to now, i feel there is a profitable market for real deep knowledge in these issues.
You can post your answers here or contact me via the address on the website. Oh, yes, i can speak some Chinese, but wode Zhongwen bu tai hao. I'll move to Jiading in August. |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13292
Location: Wuhan Hubei China
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July 05, 2006 - 06:08 AM |
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I've skimmed over your web site, but cannot simply say yes or know. Here are a few very key factors:
- Most Tier1's still call out North American or European exotic resins which are very expensive and have a lead-time of 3 months. Molders need to have a voice in the design so that fairly equivilent local resins which much shorter lead-times such as 1 month. It also doesn't help that resin costs are ever increasing.
- Compared to Europe and North America, the cycle times are too high and sometimes not competitive. This is because of the technical capabilities of some suppliers and the lack of technical support from resin mfg'ers.
- You need to use bring your best technology to China and you need to be inovative. Many molders believe that you are automatically profitable because you are in China .. wrong !! Many molders shift injection machines that are over 15 yrs old from other facilities. Example is thermo forming, or for metal hydro forming. Inovation is where it's at. Of course it is difficuly when you are given a drawing with limited info and asked to quote the next day.
- When molders get started in automotive, they sometimes are from other industried such as consumer products and don't have the tight discipline and quality systems to deal with leading OEM or Tier 1's. Then the operation "bleeds"c and costs creap up due to quality issues
- Many molders offer what OEM's and Tier1s can't accept. Cost creap. Whether it's duties or custom's, quality reps if you're exporting, going in and out of different FTZ's there are all kinds of surprises. Margin's may be 8-12% on paper but you need to offer 3% give back every year for 5 yrs .. do the math. |
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foreverinchina
PopStar
Joined: Nov 21, 2005
Posts: 1250
Location: 徐家汇
Status: Offline
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July 05, 2006 - 07:29 AM |
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Hello Bougie, thanks for your interesting reply
Almost all of your answers i was aware of in some degree. You either confirmed or detailed my viewpoints. Here is what i have learned about it:
Are the prices still increasing at the same rate ? For the very ordinary plastics, PE, PP and so, i thought there was a huge increase of production capacity in Shanghai ?
Even for more technical plastics like PC, there is a big new factory now in Pudong if i'm right. I suppose that the current price increases are globally the same, not just in China.
I fully agree with you about the fundamental importance of the technical support of the resin producers for the molders. But even in EU or US not all molders are convinced of that. We all know terrible stories about dragging quality issues due to a lack of knowledge of the material.
And the cycle times: agree again. From a couple of small projects i did in China i noticed it myself. But i also noticed a growing consciousness of the importance of cycle time, quality, systhematic approach in China.
Exactly in the field you mentioned, the change over of making plastic parts for household to plastic parts for automotive, i advised a pure-Chinese company. Not easy but very gratefull.
Yes, i can imagine that in China you ar facing all kind of surprices and quality issues. But, it is up to the car manufacturers to face this problem in a proper way. They should guide and coach their suppliers much more on a Toyota way than on a VW way, if you know what i mean. With that approach, the quality can even be made better than with a rigid "German" approach.
And i agree again with you about the technology. Of course we should bring the latest technology to China. Exactly in that field i am used (from my pre-China time) to grab and collect new technology and know-how wherever it is available.
About the margins, i disagree: it's the same everywhere, nothing to do with China: If you -from craddle to grave- don't keep a clear control over whatever project, your margin is dead. in EU, US or CN. |
_________________
To govern a big country is like cooking a small fish.
Stir as little as possible.
- Lao Zi, Daode Jing 256 BC |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13292
Location: Wuhan Hubei China
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July 05, 2006 - 06:31 PM |
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Are you in Shanghai? If so we could meet over a beer and talk shop. I see you have a french OEM flag, are you french? If so we could converse in French as well, I will soon join a French tier 1 so I'd be interested to talk to you.
Most of the prices are going up, and the good news is that "some" of the Tier1's will accept resin increase, but still squeeze you on productivity increases.
And let me repond to you last point. Definitely, the margin issue is an big issue evrywhere, alot of american molders are going bankrupt. My point was that when a molder is new to the automotive, there are costs that they simply don't know about such as GP12, etc. We are all at risk, everywhere. Another example is tool transfers: You quote based on customer information, but once the tool is in the machine you can't duplicate the process or part because the actual CT was 10-20% higher .. ouch |
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foreverinchina
PopStar
Joined: Nov 21, 2005
Posts: 1250
Location: 徐家汇
Status: Offline
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July 07, 2006 - 07:02 AM |
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Yep, i got your point.
By the way, my avitar, that flag is the national flag of Flanders.
and, as you might know:
没有比利时人，比利时人不存在。
我出生在 佛兰德, 鲁汶。
我是佛兰德人.
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_________________
To govern a big country is like cooking a small fish.
Stir as little as possible.
- Lao Zi, Daode Jing 256 BC |
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thomasw98
Lurker
Joined: May 10, 2006
Posts: 32
Status: Offline
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Aug 05, 2006 - 08:06 AM |
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| foreverinchina wrote: |
| And the cycle times: agree again. From a couple of small projects i did in China i noticed it myself. But i also noticed a growing consciousness of the importance of cycle time, quality, systhematic approach in China. |
On the cycle times issue, it is my experience that this is the ultimate area of "hiding profit" in most Chinese molders. They may claim a cycle time of 24 seconds, and when you visit the factory the machine will be running at 24 seconds, but as soon as you are gone, the crank it up (down?) to 18 seconds.
I managed one of the largest cosmetic packaging molders in Shanghai a few years ago, and this was always our best way to make money (that, and using lots of recycled material). Especially when dealing with clients that wanted a full detailed analysis of all costs plus wanted to limit our net profit to 7%...sorry dear clients, we need to deliver 28% net profit to our headquarters whether you like it or not. So that is why we always used the good ol' cycle time trick to hide our profits.
Yeah, I know you will say that any real buying expert can sniff out these articificially high cycle times, but you would be underestimating our skills at storytelling. |
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