Giuseppe Volpato

Globalization or Regionalization of the American and Asian Car Industry

The three editors of the two books are co-director (Freyssenet) and members (Shimizu, Volpato) of the Steering Committee respectively of GERPISA (Permanent group for the study of the automobile industry and its employees). This international research network counts 350 members in 27 countries (2002) and has been based in France since it was established in 1981 by Michel Freyssenet and Patrick Fridenson at the School for Advanced Social Science Studies, Paris. In 1992 GERPISA became an international research network and started its first research program (1993-96) on the ‘Emergence of new industrial models’ under the research directors, Robert Boyer and Michel Freyssenet. A second research program (1997-1999) was titled ‘The automobile industry: Between globalization and regionalization’ and this was directed by Michel Freyssenet and Yannick Lung. A third program (2000-2002) under supervision of Yannick Lung investigated the topic ‘Co-ordination of knowledge and competencies in the regional automotive systems’ with support from the European Union. At present the GERPISA network is trying to consolidate its approach and findings into a new analytical framework and developing a new research program (website: www.gerpisa.univ-evry.fr ). The books under review are outputs of the second research program addressing the question of automobile globalization or regionalization. The authors rely on the findings of the first program which critically addressed the ‘One Best Way’ paradigm developed by the USA-based International Motor Vehicle Program (IMVP), a global automobile research program headquartered at the Massachusetts Institute of Technology (MIT) since 1980. In the famous book, ‘The Machine that Changed the World’ (1991), the IMVP-researchers, Womack, Jones and Roos argued that ‘lean production’ (coined by John Krafcik) is a universal best practice of automobile manufacturing in the international automobile industry making it possible to double production and quality at low costs compared to mass production. The GERPISA network developed an alternative understanding of international automotive manufacturing, the ‘Productive Models’ approach, emphasizing the mutual and dynamic conditioning of productive systems and their environment. In short, the ‘productive models’ paradigm contends, contrary to the MIVP-lean production thinking, that it is impossible to outline one universally most productive model because the contexts will vary, and hence, several productive models may be equally competitive at the same time (Volpato 2003). Where the IMVP-researchers contended that ‘lean production’ is a universal manufacturing methodology based on Japanese experiences but a-cultural and transferable, GERPISA researchers identified three successful ‘productive models’: VW represents the ‘Sloan model’ originally developed by GM in the mid-20th century; Toyota the model of ‘permanent reducing costs at constant volume’; and Honda the model of ‘innovation and flexibility’. In the conception of the GERPISA framework, ‘lean production’ is a conceptual hybrid of the Toyota model and the Honda model and hence, a contradictory and unsustainable concept of automobile manufacturing.

The labour relations heritage and lean manufacturing at Fiat

The objective of the paper is interpreting, from an evolutionary perspective, recent developments of work organization and human resource management policies at Fiat Auto, one of the worlds largest automobile manufacturers, which achieved a successful restructuring in the early 1990s. Building on a heritage of adversarial labour relations and ‘mass production’ organizational principles, Fiat developed an original and to some extent hybrid version of ‘lean’ human resource management practices (teamwork, flexible compensation, multi-skilling, etc.). The paper analyses this process of organizational change from an evolutionary perspective based on the concept of dynamic capabilities. From this standpoint, IR. HRM and work organization practices are the result of a learning process, based on original development, imitation, analogical replication, combination and selection of organizational capabilities; organizational capabilities have a cumulative and path-dependent nature; workplace innovations are also r...

Managing product life cycle in the auto industry: evaluating carmakers effectiveness

The article analyzes the evolution of product life-cycle policies of main carmakers in the three main European markets (Germany, Italy and France). Sales data regarding 212 models of 13 major carmakers are taken into consideration for the period 1970-2006. A sub-sample including more detailed data (sales and features) of 125 car models along the period 1984-2005 has been investigated with the aim of evaluating effectiveness of product innovation and product line extension. The aim of the study is to describe product replacement policies and timing pursued by carmakers within each segment and to evaluate the effectiveness of carmakers PLC policies through inter-brand comparison. According to our results, PLC is getting dramatically shorter, but the reduction does not apply to maturity and saturation phases. Generally speaking, companies seem not effective in timing for new products, with few exceptions. Moreover, carmakers tend to support sales with a policy of product line extension, while no evidence of effectiveness of such policies emerges. Product innovation seems related to increase in sales, although the introduction of new models and versions is generally delayed with respect to the optimal life-cycle timing. Results from this exploratory research are used to fromulate hypotheses to be verified in further research based on more detailed data.

THE ARRIVAL OF SHAREHOLDER VALUE IN THE EUROPEAN AUTO INDUSTRY A CASE STUDY COMPARISON OF FOUR CAR MAKERS

The paper deals with changes in the corporate governance systems of major European flagship companies in the car industry – Fiat, PSA, Renault and Volkswagen. While all four companies are protected from immediate capital market pressures either by family or state ownership, they have clearly opened up to shareholder value principles in recent years. The central questions of the paper are: to what extent traditional characteristics of corporate governance have converged under the pressure of capital markets; the different approaches companies take to governance and how this affects their performance. To answer these questions, the paper discusses the recent developments of a shareholder value policy and the corresponding changes of targets and controls, as well as of incentive systems, in these companies. The paper also assesses what these companies use the capital markets for: do companies need the stock market to finance their operations? Or does the importance of the stock market rather lie in its function as a market for corporate control? What comes out clearly from the analysis is that none of the companies used the stock market for their operational activities, including major investments. The most important influence of the stock markets lies in the potential for hostile takeover. Even though all four companies investigated are to some degree protected by family or state ownership, they feel the need to raise a defence against this potential danger. As to performance indicators, the analysis shows that a shareholder value policy does not necessarily lead to better economic performance. On the contrary, the analysis shows that the more engaged companies are towards shareholder value policy, the less well they performed in terms of profit margins and returns on capital.

Partnering in the global auto industry: the Fiat-GM strategic alliance

GM and Fiat have formed a strategic industrial alliance, creating an important partnership for the companies in two of the worlds largest automotive markets: Europe and Latin America. Observers think the alliance promises opportunities to create value for both Fiat and GM shareholders through significant synergies in such areas as parts cost reduction, optimisation of activities regarding powertrain modules, efficiency in financial service operations, cross-sharing of automotive technologies, common platforms and architectures. From the financial standpoint, GM and Fiat remain independent from one another and will continue to compete in markets around the world, even if GM has acquired a 20% stake in Fiat in exchange for, approximately, a 5% share of GM outstanding stocks. This article analyses the details of this operation, describes what has been done to date in terms of streamlining and synergies seeking in the two major areas of the alliance (powertrain and purchasing) and evaluates its impact, from the strategic and organisational perspectives, on the two partners. The article also focuses on the possible future evolution of the alliance, and tries to assess if shared ownership of assets fosters or hinders organisational learning and performance improvement processes.

The role of ICT in the strategic integration of the automotive supply-chain

An analysis of the recent evolution of the automotive supply chain shows that an extraordinary reorganisation in the whole industry structure has begun. The most relevant goal of this reorganisation is the integration of all the automotive chain from the part-supply flow to the OEM for the final assembly, to car delivery. It is a wide re-engineering project based on a deep integration of all the activities of the automotive chain, made possible by the new potentialities offered by Information & Communication Technology (ICT). Nonetheless, ICT alone cannot solve problems arising from organisational inadequacy and from defective customer-supplier relations. This paper investigates these issues and presents the main results of an empirical research.

In quest for a sustainable motorisation: the CNG opportunity

This article describes the opportunity deriving from the substitution of conventional fuels with the compressed natural gas (CNG). The advantages of this fuel are: a) relevant, as it concerns consumers expenses and ecological aspect; b) rapidly achievable; c) close to hand for Europe, the USA and other countries where the motorisation is at the take-off stage, like the BRIC countries and Iran, Pakistan, Indonesia and so on. These advantages makes CNG a viable solution, with relevant advantages both on the side of pollution and expenses, while waiting for the availability of new technologies. Presently, the most important bottleneck for a large-scale implementation of this solution is represented by a possible shortage in the distribution network. Those countries crossed by gas pipeline could rapidly overcome this bottleneck without relevant costs. Otherwise, the solution could be achieved either through gas carriers ships or through local production of biomethane by the exploitation of biomasses.

Knowledge Management in the automotive supply chain: exploring suppliers' point of view

The paper investigates the implementation of Knowledge Management (KM) projects in five first-tier suppliers. The aim is to understand the management concern about the various forms of knowledge exchange and generation. We assumed that firms with peculiar needs of information integration might have a better attitude towards KM activities. Therefore, we selected five successful firms whose exclusive knowledge act as key-factor. Managers see the development of KM as a necessary step to improve and/or maintain competitive advantage, and are aware of the significant difference existing between Information Management and KM. Consequently, KM projects are often supported by learning activities.

Fiat Group Automobiles - An Arabian Phoenix in the International Auto Industry

Fiat Group Automobiles,1 the group that controls automotive manufacturing activities within Gruppo Fiat SpA, has gone through many crises in more than a century of existence. The crisis that arose dramatically in 2002, albeit rooted in the previous decade, presents however some peculiar aspects. On the one hand it was certainly the most serious ever, since only the support by other Fiat Group businesses and a team of banks has prevented the ‘virtual bankruptcy’ of Fiat Automobiles turning into an actual one. On the other hand, however, the crisis has been followed by a recovery that has astonished scholars and observers for the speed and character of the turnaround. We could liken the recovery to a ‘rebirth’ from the ashes like the Arabian phoenix, given the many elements of novelty and change that the management of Sergio Marchionne, CEO of Fiat Group, has achieved since 2004. To describe and to interpret the new strategic trajectory requires, considering its peculiarities, outlining the situation facing Fiat Automobiles in 2004, after a long stage of managerial and competitive involution.2

Competitive assembly: brown or green field site - conventional or flexible plant - what's the best?

The automobile industry has long been undergoing a profound industrial and competitive reorganisation process that manifests itself both on the demand and on the supply side. To respond to this situation automakers (traditionally called Original Equipment Manufacturers – OEMs) are developing new globalisation strategies that include among other things: a marked outsourcing of component production (that were formerly developed internally), the reduction in the number of first-tier suppliers (original equipment suppliers – OESs), the creation of new assembly plants (green field) in areas with low labour costs as opposed to the adaptation of existing plants (brown field), the fine-tuning of more flexible assembly processes capable of coping with short term changes in both volume and in product mix. This essay carries out a simulation, based upon quantitative hypotheses drawn from real situations aimed at comparing the attractiveness of the different solutions. The results confirm some of the theses currently brought forward, but fail to confirm some others.