An Industry in Dramatic Change
The global automotive industry has recovered from the economic crisis, but profits and sales growth show a much different geographic mix than before. These changes affect not only the automotive companies themselves, but their suppliers as well.
According to a recent McKinsey report, industry profit was approximately 54 billion Euros in 2012. This represents a dramatic recovery from 2008, where industry profit was only 2 billion Euros. The report shows that sales growth in BRIC (Brazil, Russia, India and China) and RoW (rest-of-the-world) outpaced North America, Japan, Europe and South Korea with “more than half of this growth... from China.”
According to McKinsey, the share of global profits attributable to BRIC/RoW was 65% in 2012, as compared with 30% in 2007. In the future:
“Global sales share of established markets will decline from 50 percent in 2012 to 40 percent in 2020; these will account for only about 25 percent of future volume growth. The premium segment will account for more than half of future profit growth.”
A Premium Automotive Supplier Meeting this Change
Which brings us to Eagle Ottawa. This leading automotive interiors firm designs and develops premium leather interiors for automotive industry partners including Land Rover, Mercedes, Lexus, Lincoln, Cadillac and BMW. The company’s nimble strategies enabled it to benefit from this rapidly shifting market and expand geographically with global customers.
The firm has a strong reputation for design and operational excellence. According to CEO Jerry Sumpter, it’s this operational excellence that provided the foundation for Eagle Ottawa’s expansion:
“With all of our customers, we must prove the reliability and quality of our products. Our customers are very, very brand conscious. We need to deliver the [same] level of quality in China as we do in North America. If they have a global supplier, they expect to get the same product quality and services anywhere in the world. As of 2013, 26% of our sales and production are in Asia and that’s up from 13% in 2007.”
Through its operational excellence, Eagle Ottawa has been able to execute nimble and timely strategies. In 2012, the company was challenged by a leading branded customer to open a new sewing plant in Northern China within a short six months. As Jerry explains:
“We had to do this very quickly with global project management and expert local resources. This required customer support, where we moved in lock step each step of the way, as everything was faster than the normal process.”
He goes on to say that by meeting this challenging (some might say unreasonable) timeline, Eagle Ottawa won the customer’s trust and ultimately more business. “It was a huge strategic thing to do. They wanted it done-- as fast as we did and with the requisite quality.”
Even throughout the recession, Eagle Ottawa remained committed to smart strategy. Amid plummeting revenues in 2008, the company made the decision to protect and retain the firm’s differentiating competencies, including technical leather managers, leather purchasing experts and leather design staff. Keeping these capabilities strong was an important factor that enabled today’s growth.
Moving forward, Eagle Ottawa will continue this operational excellence and dedication to nimble strategy, while providing additional services to achieve its vision: “To be the most respected automotive leather company in the world.”