GKN AXLES - FAD assali

Quarterly - Year 3 - N°5 - January 2007 - Poste Italiane Spa - Postal subscription service 70% - DCB VareseAdPeriodical of GKN AXLES - Carpenedolo (BS) V.le S. Maria 76 - Tel. 030.99861 - www.gknaxles.com - Editor in Chief Cinzia Furiani - Reg. no. 53 (15/09/2005)Global market: the adventure has startedThere can’t be many people in the companywho don’t know that, last August, GKNplc’s OffHighway started up the GKNAxles Division - a new division that unitesall the group’s axle companies (includingall accessories and connected parts).According to Domenico Traverso, ”to callthis a step forward would be a hugeunderstatement. The market for axles andstub axles for agricultural machinery is expanding greatly, andtorsion axles for road trailers display very high potential.”Traverso then points to just two figures, which say more thanwords ever could: ”to be able to develop a business activity likethis, backed up by a company with a staff of 40,000 and a turnoverof more than 6.4 bn euro, is certainly very stimulating, especiallywhen you consider the excellent results that are possible.” Thenew GKN Axles Division (with 250 employees in total) iscurrently made up of three companies: GKN FAD (Carpenedolo,Italy) - hosting the new Division’s head offices, GKN Geplasmetal(Saragossa, Spain), and GKN Jackson Center (United States).These three companies are run by a single group of managers indirect contact with the holding company.“Speaking of which, we mustn’t forget another figure,” addsTraverso: ”Fifty million euro: that’s what our new enterprise hasas its 2006 turnover. This is our starting point.” The objective ofthe new division is to provide our customers with increasinglyadvanced solutions (both technologically and in terms of service)and especially, to provide these to our large global customerssuch as John Deere, the AGCO Group, CNH and CLAAS. For thesecorporations, GKN is much more than a supplier. It is a strategicpartner, a reliable partner for developing new products.The existence of a single division will also enable synergicrelations between the three plants (the importance of this is inno way insignificant). These synergic relations not only regardpurchasing policies (the bargaining power of the Axles Divisionis much greater than the bargaining power of each companytaken individually), but also openings for team work on developingnew products and marketing strategies. So, the time has come togrow. It goes without saying that the holding company’sexpectations are enormous. During an interview, MartynVaughan - CEO at GKN Offhighway, and the first to back the“axles project” - said he is sure the Axles team will beextremely successful, thanks to the very clear idea it has of theobjectives to be achieved. Vaughan’s views are well founded.For a start, the Axles Division is the only enterprise in this sectorwhich has a presence on the global market.Secondly, a rathersatisfying thing about Martyn Vaughan’s forecasts is that theygenerally turn out to be right.Produced by: SS&C/Studio Editoriale FattiDiParole - Creative: SS&CEIMA 2006: winningover our audienceOnce again, GKN was a major draw at the five-day international GKN family in its fresh, new format. The visitors showedagricultural and gardening machinery trade fair in Bologna, considerable interest in all the products on display, and wereEIMA 2006 (Esposizione Internazionale di Macchine per particularly interested in SIDRA and GOLD (the only agriculturall’Agricoltura e il giardinaggio). The trade fair, held in the pavilions machinery axle with a 5-year guarantee). The American andof the Bologna venue, was held on 15-19 November. This was Spanish products were also very well received, judging by thethe first time all the divisions of GKN Offhighway attended a curiosity and interest displayed by sector operators. Buttrade fair, presenting the entire range of GKN Offhighway products. however important EIMA was as an event, it was more thanEIMA 2006 also provided GKN Axles with the opportunity to just a showcase for the new Axles division. It also provided amake its debut within this market as a new division, with a great opportunity for meeting up with Italian and foreignSIDRA suspension system, hubs and spindles manufactured customers and suppliers. More importantly, we had a chanceat the Jackson Center plant, Torsion segment components to establish direct contacts with the end users of the machinesfrom the Saragossa plants, and a glittering gold axle from the - with the people who install our products and who areGold series - yet again providing confirmation of the quality therefore in a position to field-test product quality andand commitment to technological innovation displayed by theVital statisticsGKN FADProducing: axles and suspension systems for agricultural trailersDirector: Massimo LimontaStaff: approx. 110Turnover in 2006: 24,000,000 euroMarkets (targets): worldwideMain customers: John Deere Group, Strautmann, Hardi Groupperformance ratings on a daily basis.GKN Jackson CenterProducing: torsion axles and springs, hubs and spindles foragricultural machineryDirector: Jeffrey MooreStaff: approx. 100Turnover in 2006: 18,000,000 euroMarkets (targets): North AmericaMain customers: John Deere Group, CNH, Claas, AgcoThis issue:CHINA ZONE: increasingly advantageous partnerships.OPEN DAY: an impressive guest list for a very successful event.IMPROVEMENT: Olugbenga Bada on the imperative of thenew corporate philosophy.GKN GeplasmetalProducing: torsion axlesDirector: Andres RodriguezStaff: approx. 40Turnover in 2006: 9,000,000 euroMarkets (targets): EuropeMain customers: Satellite Group1BACK TO BEGINNING

GKN PeopleAndresRodriguezSpanish axlesInnovating to achieve leadership: this might be a good sloganfor everything the GKN Axles Division does. Within the newstructure of the Offhighway group, GKN Geplasmetal(Saragossa) plays a key role in all our new products andtechnologies. We met Andres Rodriguez, the operationsmanager at the Spanish plant, who explained how every newsolution proposed by his company is the product not just of atried-and-tested mix of technical skills, know-how andresearch, but also of the constant attention his companypays to customer needs.Mr Rodriguez, what does the Geplasmetal plant inSaragossa produce?Here in Spain we produce torsion axles and draw bars foroverrun braking systems for road trailers. These are productswith specific applications and we are investing a great dealin them, so as to provide our customers with even higherquality products while also ensuring improved productivity.Can you outline Geplasmetal’s role within the new GKN Axles division?Our most important task is developing the European marketposition, by building on the advantages gained throughsynergy with the other companies of the division. In otherwords, we are working towards putting the skills and expertiseacquired by the various departments over the years to bestadvantage while optimizing the processes and costs of thenew organization. Geplasmetal will also become the technicalcentre for development for all torsion segment axles.A large portion of the GKN group’s budget consists of R&Dinvestments. What does "innovation" mean for your sector?In a sector like ours, which occupies an area very close tothe automotive sector, being a market leader means, firstand foremost, being a technological leader. GKN knowsthis, and it invests considerable resources not just in thevery best equipment but also, and more importantly, in people.Our teams are not just made up of experts in their respectivefields; the team members are also highly motivated andefficient. This is why they always come up with new, improvedproducts.Tell us something about the innovations your company hasrecently presented.We have just completed a very interesting project, a softsuspension system which, by eliminating vibrations, enablessignificant savings in tyre wear and therefore also in thecosts borne by end users.Can you give us a ‘sneak preview’ of products currently atthe design stage?We are working on new, compact bearings which will bemanufactured via a briefer production process, and which willprovide customers with greater reliability, hence lessmaintenance. We believe we will be able to market theseproducts by March 2007.The GKN group, in its activities, has always put customersfirst. Indeed, ideas for new products and new solutions aregenerated by listening to our customers. How doesGeplasmetal interact with its customer base?Our customers are becoming increasingly involved in theproduct development process and they have become anintegral part of the project as a whole, which meanssharing objectives and strategies with us. If we want theirtrust and respect, there must be no secrets on our part.Can you outline the phases of new product development,from the project conception stage through to marketing?There are ten steps that a new product goes throughbetween project conception and the marketplace. These are:1. demand2. pre-project3. financial analysis4. project5. prototype production6. field testing7. pre-production8. process control9. final financial analysis10. industrializationWhat does investing in quality mean for Geplasmetal?It is very hard to gain the trust of customers in this market,but it’s very easy to lose it, even through the slightestshortcoming.Investing in quality means making no mistakes. It also meansstaying competitive in terms of price and service. Moreimportantly, it also means investing in production processesto cut product flaws down to an absolute minimum.Randy NewlinA glimpse at the StatesNewlin’s role in GKN OFFHIGHWAY covers acquisitions in theUSA, and he also heads up sales and marketing in GKNAXLES. He is a key figure, and the global market has nosecrets from him.2Why has GKN acquired a small specialist like QDSHenschen?Already before acquisition, GKN Offhighway had a marketingarrangement with QDS Henschen for hubs and spindles.By acquiring this company, GKN has ensured higher incomesand profits for itself.When he visited the QDS plants, Martyn Vaughan realized thattorsion axles might provide interesting development opportunitiesfor Offhighway, too.How can this operation increase GKN’s volume of business?From the very start, acquisition meant increased sales andpro- fits for GKN Offhighway.In the medium term, acquisition of QDS Henschen willbroaden out the global range of GKN Offhighway axles onoffer and will provide the company with a base in NorthAmerica to be used as a launch pad for further developmentof activities.Continue to page 3BACK TO BEGINNING

Paolo DanzeroPartners in the OrientThe GKN Axles Division, the newly established GKN Offhighway division made up of GKN FAD Axles in Carpenedolo (Italy),GKN Geplasmetal Axles in Saragossa (Spain) and GKN Jackson Center (Ohio/U.S.A.), is concentrating its efforts on takingmaximum advantage of intercorporate synergic relations between these three players to optimize production. A key item inthe balance sheets of the new division is procurement of GKN product components. Many of these items are to be foundwithin the Chinese marketplace. Paolo Danzero, who manages the GKN Axles Division’s supply chain, talks about his joband describes relations between our company and the Chinese marketplace.What does optimizing the supply chain from China entail forthe three production locations?In concrete terms it means implementing shared supply andlogistics processes, while maximising the similar profiles ofcertain commodities and developing the intake of materialsfrom China in a coordinated and optimized manner. Thismeans purchasing and transport costs can be lowered and italso means that we can create more stable, enduring relationswith our suppliers. In a word, we save money and improvecustomer service into the bargain!Of the three locations, FAD in Carpenedolo is the player withthe longest track record in terms of relations with China,which means it can rapidly transfer the purchasing bestpractices it has developed in Eastern markets to the othertwo. One of the key aspects to be considered when developinga global supply chain from China is the importance of beingthere, being physically present in the country itself, with acompetent body of staff capable of managing commercialrelations both with local partners and divisions.Seen from this angle, we understand how important it is forGKN to have an office in Shanghai, where Creation Chang, aChinese engineer with considerable experience, has the taskof managing GKN Axles' relations with local partners.Which materials do GKN Axles division companies importfrom China? Tell us about the plus factors displayed byChinese producers with respect to Western companies.From the Chinese market, we purchase the traditional commoditiesand manufactured items required by engineering industrialconcerns. Chinese products provide excellent quality atlower prices than in the West. The companies of the Eastalso provide very high quality service, in terms of flexibilityand responsiveness (which includes fast response times).Our experience here tells us that Chinese manufacturers aremuch more customer satisfaction-oriented than theirWestern counterparts. As part of a tried-and-tested partnerrelationship, this translates into a competitive strength bothfor GKN and the users of GKN products and services.Tell us something about GKN Axles’ Chinese suppliers. Arethey large- or small-scale enterprises?GKN’s portfolio of commercial relations with Chinese suppliersis constantly growing. Our suppliers are privately owned,small to medium-size enterprises with QS 9000 certificationand also in some cases with ISO-TS 16949 certification. Inother words, these companies are run according to modernstandards, both in terms of the production itself and in termsof technical and commercial aspects.How are customer-supplier relations evolving betweenChinese and Western companies?I think we are at last abandoning the stereotype of Chinesecompanies that do little more than copy products that othershave developed. GKN’s partners are capable of providinghigh technology content products and, increasingly, ourengineers are looking towards involvement on the part ofthese companies at the trialling stage for new or improved solutions.What are the main problems you encounter in your role ascoordinator between Chinese suppliers and western customers?Working with Chinese partners means stretching supplychain times. Each delivery takes more than a month to beshipped by sea from the producer to our warehouses. On theone hand, this means we must have modern MRP systems,as well as staff who are well qualified in the procurementand production planning areas.On the other hand, we must strengthen ties with our customerswith regard to demand forecasting. However, what looks likea weak point turns out to be a strength. Working to mediumto-longterm schedules means we can avoid the surprisesand upsets that come with the last-minute approach, and thisleads to improvements on the service front.Does GKN look into the questions of workplace safety and theworking conditions of the staff of the Chinese companies withwhich it has dealings?Workplace safety and ethical conduct are vitally importantto GKN. This is why we only have dealings with supplierswith the right certifications, and we also require certificationfor quality and environmental safeguards. In fact, beforesigning any contracts, we pay visits to the companiesconcerned to check that, at all levels and for all functions,the standards and conduct will comply with our ownrequirements.How will the acquisition of QDS Henschen alter GKN’sstrategies in the United States?The operation will enable GKN to enter the torsion axles andsprings market as a major player.How will QDS be reorganised?The current structure will underpin all future developments.GKN has already brought an Operations Manager into thecompany, who is concretizing processes of simplification andrecovery of efficiency at the Jackson Center productionfacility.And the new production unit also has close contacts withits counterparts operating in the axles sector in Italy andSpain.When will reorganisation be complete?The first stage of restructuring at the Jackson Centerproduction unit has been completed. Integration with theGKN world is ongoing and will be completed over a period offive years. Improvements to processes have started up and,over time, these will become a corporate standard.Does QDS only target the American market?Most definitely not. GKN has already made QDS an integralpart of its GKN Offhighway division, engaged in the productionand marketing of axles worldwide.QDS will therefore be able to sell its own products in the fourcontinents.What will the mission of the Jackson Center productfacility be?Jackson Center will become an extremely importantmanufacturing hub for GKN Offhighway. It won’t just beproducing hubs, spindles, torsion axles and springs. Thereare also interesting projects in assembling other productsfor the American market.Jackson Center will also remain the marketing centre forall products linked to the torsion sector.A glimpseat ChinaWe asked the engineer, Creation Chang (see above),which objectives he thinks are the most important inmanaging Chinese companies acting as suppliers to alarge Western group.«It is vital to invest in research and quality in order toprovide better products atCreation Changcompetitive prices, and to set upand Walter Rohregger -increasingly advanced logistic President GKN Asiasystems to optimize flows of and Pacificorders and supplies. We arecurrently engaged in manyprojects concerning the productionboth of standard componentsand of special components fornew products and prototypes.»3BACK TO BEGINNING