Audi plans to reduce spending by $2.5b
Giant automaker Audi plans to reign in spending by 2 billion euro a year to offset surging spending on new technology, according to reports.
It is thought the world’s second-largest maker of luxury cars will seek to limit expenditure growth in areas such as development, purchasing and manufacturing to safeguard profit margins.
Audi CEO Rupert Stadler outlined a ‘fitness program’ in July, stating the company must brace for the increasing cost of developing electric vehicles, self-driving and communications features and new plants.
Audi is introducing 17 new models to market in 2014 and have plans to develop an electric version of its luxury R8 sports car.
Audi has a 22 billion euro investment budget for the next five years, with 70 percent of the spending going toward new products and technology. Most of the rest is allocated to expanding manufacturing capacity, including new plants in Brazil and Mexico.
The reason behind Audi’s proposed cut back may lie in its need to compete with BMW. BMW retained the top spot in global luxury car sales for the ninth year in a row in 2013, followed by Audi and Mercedes-Benz in third place. It’s thought Audi is determined to ramp up efforts to knock BMW off the top spot by the end of the decade. The world’s three biggest premium-vehicle manufacturers posted sales records last year and expect demand to rise further in 2014, fueled by growth in China and North America.
Audi is a cornerstone of Volkswagen’s strategy (VW is the parent company to Audi) to take the global auto industry’s top sales spot from Japanese carmaker Toyota by 2018. Audi plans to sell more than 1.7 million cars this year for the first time, helped by models including the compact A3 sedan and a revamped version of the TT sports car. Targets this year also include a revenue increase and maintaining operating profit within a long-term corridor of 8 percent to 10 percent of sales. The six-month margin was at the top end of the range at 10 percent.
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.