Three words may be key to Detroit automakers' survival

This month, the North American International Auto Show in Detroit marks its 100th anniversary and the celebration will be highlighted by the introduction of more than 45 new products by automakers from around the world including – for the first time at this show – from China.

Quite an evolution for an event first conceived and launched in 1907 as the Detroit Auto Show by Detroit's Big Three automakers to highlight their products – both current and future. As this year's event opens, analysts predict that, by 2009, fewer than half of all vehicles sold in the United States will be made by Detroit's Big Three. Further, by 2011, foreign-owned automakers will build more cars in the United States than domestic automakers, according to the Ann Arbor, Mich., based Center for Automotive Research.

Some, including much of the media, see these projections as failure and/or bad news for the domestic carmakers. I disagree. Having a smaller market share and building fewer units can be a sign of success and, in fact, good news – if the products introduced are right for the market and profitable for the automaker.

The right product at the right time doesn't happen by accident, nor is it simply a result of visionary design, mixed with just the right amount of "car guy" intuition. The right product – or products – results from successful application of Product Lifecycle Management (PLM).

Product Lifecycle Management is a business approach which deploys different technologies to the creation, and to the entire life cycle, of a company's products. Companies that understand and deploy this approach correctly are able to repurpose existing designs better, recognize problems with components and assemblies faster and integrate focus groups and suppliers much tighter in the development process. As a result, they lower their development costs and are able to get new products to market much faster. And getting more "hits" from the development budget is the key to any automakers' success in a crowded and cutthroat market.

PLM is an approach utilized by all leading product-centric companies. It is, to some extent, used everywhere in the auto industry – by the global OEMs and throughout the supply chain – but it is seldom acknowledged and certainly never celebrated as the key to lasting market success.

For every automaker, everywhere in the world, product is king. It is the goal of every automaker to have the next aspiration "hit" model for which consumers clamor. Achieving this goal once makes an impact. Achieving this goal several times makes an impact and makes news. Achieving this goal consistently does all that and secures market share as well as ensures the sustained viability and profitability of the organization.

Even if Detroit's Big Three evolve to become simply "Detroit's Three," as some analysts predict, through effective use of PLM, they will stabilize their place in the world market and secure and sustain their profitability. By those important measures, they'll still be the "Big Three."

About the author
Ulrich Herter earned a B.A. in Economics at the University of Freiburg. He moved to the United States to obtain an M.B.A. at Wayne State University in Detroit. From 1977 to 1987, he worked for a national appliance retail chain, as director of operations. From 1988 to 1989, he served as VP of operations at O/E Systems, a computer reseller in Troy, Mich. Herter co-founded Integrated Systems Technologies (IST) in 1989, serving as its chairman and CEO through its merger with INCAT Ltd. in May 2000. He continued as CEO of the combined organization through its IPO in 2004 and has remained CEO through the acquisition of INCAT by Tata Technologies in 2005. He is based at the INCAT North American headquarters in metro Detroit and is a keen observer of the worldwide automotive industry.

About INCAT
INCAT is a Tata Technologies company. Founded in 1989, the company is a leading independent international provider of engineering and design (E&D) services to the world's largest automotive, aerospace and durable goods manufacturers. INCAT is focused on services and solutions for Product Lifecycle Management (PLM) and Information Lifecycle Management (ILM), creating value for its clients through its unique-in-the-industry Global Delivery Model, its state-of-the-art technology and a pragmatic approach to engineering and manufacturing processes that reduces costs and time to market; and helps clients realize superior products. INCAT is headquartered in the United States (Novi, Mich.) and Germany (Stuttgart). Tata Technologies is headquartered in Pune, India. INCAT has a combined global work force of more than 3,000 employees serving clients worldwide from facilities in North America, Europe and the Asia-Pacific region.

The INCAT "Essential Guide to PLM"
To learn more about the history of PLM, its ongoing evolution and its application across industries, request a copy of the INCAT "Essential Guide to PLM," either in booklet form or as a PDF by visiting www.incat.com/plmguide.