Decoma’s president sees pivotal role for supply base

Earlier this year editor Michael LeGault interviewed Decoma president and CEO Al Power as background research for the April cover story on automotive exterior design and trends. In a wide-ranging discussion Power also touched on issues critical to automotive suppliers. Some of these remarks and insights are included below.

On becoming a public company last year

“The idea of Decoma becoming a separate public company is in keeping with the philosophy of Frank Stronach, that over time, as Magna continues to get bigger, successful pieces of Magna will be spun out as successful public companies, all sort of connected through this hub of Magna. This gives you the advantage of having the size that comes with a Magna, with the advantage of being small and flexible, so we can respond quickly to our customers.”

On cost reduction

“Our customers are getting more and more aggressive in terms of their expectations for cost reductions. Every year the bar continues to be raised at all the Big Three. Our philosophy is that we want to work with our customers and suppliers to take true costs out of systems. We’re not interested in taking away margins. Clearly, for us to survive, our suppliers are going to have to deliver.”

On the challenges of being an automotive supplier

“Every year you hear that there’s going to be nothing left to give, and yet the companies that are inclined to wait and deliver, prosper. The companies who aren’t finding a way to deliver are being bought up. In some cases multi-industry companies are getting out of the automotive side cause they feel their returns are better elsewhere.”

Vertical vs. non-vertical companies

“If you look at the industry there’s numerous examples of people who have virtually no vertical integration being successful. The prime example of that is Lear. There are other successful companies that are totally integrated. But I think in the long run there has to be a balance. If you’re not vertically integrated enough, you’re too much at the mercy of the supply base and if you’re too vertically integrated you’re not going to be quick enough; you’re not going to be quick enough to respond to your customer, you’re not going to be able to respond to changing technology.”

On the changing role of Decoma’s suppliers

“We want to be fairly vertically integrated, but we also want to have a strong supply base. We see a growing role for our suppliers, especially as we get more modules, where we might not want to have to manufacture a portion of a module.

What has changed (for us) is that suppliers who aren’t supporting our quality and cost-cutting initiatives are finding their business declining, or in some cases being re-sourced….We still want to work with our suppliers; we want them to work with us to reduce costs. We don’t care if it comes out of what we do or what they do, if they support us they’ll find their business growing.”