Ai interview with Lawrence A. Drake, CEO, KUKA Systems

Like other automotive industry suppliers worldwide, KUKA Systems Group of Augsburg, Germany, is adjusting to new business opportunities and customer requirements in the wake of the global recession and its aftermath. A leading systems integrator and supplier of automation solutions, KUKA’s business is a reflection of current trends in manufacturing and the changing nature of the vendor interface with the OEM community. The company is offering itself as an operator of complete production units, even assuming ownership of the contract body shop it developed in Toledo, Ohio to build bodies-in-white for Chrysler Group LLC’s Jeep Wrangler. That highly automated shop has built over 500,000 Wrangler bodies since beginning operations in 2006 and is an industry leader in efficiency and product quality.

Historically, the automotive industry has been KUKA Systems’ mainstay. Even with the company’s ongoing diversification into growth sectors like solar energy and aerospace, the automotive sector still provides over 80 percent of its annual turnover. KUKA Systems offers production technologies for laser welding, laser-hybrid-welding, spot, remote and arc welding, laser cutting, bonding, sealing, linking, drilling and riveting. It can automate windshield installation, adhesive applications, engine, axle, transmission, engine and component assembly, the mating of bodies and chassis, interior assembly as well the installation of suspension struts and front end modules. 

As a line designer and builder, KUKA Systems is a pioneer in flexible manufacturing to accommodate the need of automakers to produce multiple variants of one model on the same production line with minimal downtime. With current projects in Europe and North America for automakers like Ford, General Motors-Opel Mercedes-Benz and Volkswagen along with installations in developing markets like Thailand, Mexico and Brazil, KUKA Systems’ global automotive activity has never been more diversified. Worldwide, the company employs over 3,500 and had sales of €615 m in 2009. 

Automotive Industries spoke to Lawrence A. Drake, the first American-born president and CEO of KUKA Systems Group.

AI: It’s been a time of recovery for the global auto industries. As a supplier and technology partner, are you feeling the recovery as well?

Drake: It is clear that all OEM’s are in better financial condition and are planning multiple new programs. For the first time in many years the market has turned positive from a supplier perspective. In North America, we are doing installations for Ford, Chrysler and Volkswagen and bidding on other projects. This resurgence does not alleviate our responsibility to be globally competitive. Rather, it’s pushing us to ready new technologies for wider deployment as the needs for them crystallizes as we envision.

AI: Are companies investing in more automation to improve their productivity or to improve their products?

Drake: Both really. Improving manufacturing productivity is a given, but isn’t the only driver of these investments. The OEMs want to build the best vehicles they’ve ever built with the flexibility to adapt their new models to changing market conditions. There’s also a great deal of concentration on meeting the demand for more fuel efficiency and better vehicle safety which are regulatory concerns, and improved product reliability, durability and affordability, which are consumer concerns.

AI: Do the automation needs differ between carmakers in Europe and North America? Do you see an increased push for particular technologies by your North American and European customers?

Drake: The systems used are very similar and in most cases, OEMs such as Ford are leveraging their global footprint to achieve greater efficiency. The main changes will be in the material used and the joining technologies. Laser welding and brazing, employed first in Europe, finally will gain a foothold in North American production.

AI: US regulators want better rollover protection and better fuel economy, which means stronger, yet lighter vehicles. What technological contributions can KUKA make to achieve that?

Drake: New, stronger materials will be critical to comply with these tougher standards. Joining different metals in a car body is part of our core competence. With our know-how in high strength steel and single-sided joining KUKA can support our North American customers with technology developed in Germany and adapted for US and Canadian production. We’re also expanding our expertise in carbon composites. 

Already an integral part of aerospace manufacturing, composites will have applications in other industries. We have launched a technology lab at our North American headquarters in Michigan to coordinate research on advanced joining technologies with our development labs in Augsburg. As difficult as spending on R&D is during challenging economic times, KUKA has maintained a significant, continuing level of investment in R&D.

AI: What are KUKA strengths in designing fully automated assembly lines?

Drake: Our core competence is our know-how – a great deal of experience taking sophisticated technologies and integrating them optimally. We have the best people in the industry. We are world leaders in flexible manufacturing, and when you combine all that with a leaner process structure we adopted last year, we are in a position to strengthen our market presence in all regions of the globe.

AI: You have talked about a likely shift towards a higher percentage of engineering content in future installations? What do you mean by this?

Drake: The key for our customers is reuse and retooling to minimize capital investments. This means more up front planning and engineering to execute future models with a minimum of disruption. It is critical that we install and debug new models in existing assembly lines without stopping production of current models. Putting a new model into a plant while is running is very complicated. Instead of the traditional 60/40 split between the cost of labor and equipment in a model changeover, the split may be more like 80/20, with the 80% labor component reflecting how we, as an engineering company, manage that added complexity.

AI: Tell us about your recent order from Thailand – what kind of value add will KUKA systems offer to the Ford plant in Rayong in building on the C-car platform?

Drake: KUKA’s role as an Aligned Business Framework supplier to Ford is to bring consistency of process and expertise to all C-car systems globally. KUKA is completing the C-car installation in Ford’s Michigan Assembly Plant for the 2012 Focus, which will help us meet the customer’s requirement that production processes and performance be consistent across different locations.

AI: What makes KUKA’s Toledo body-in-white production unit unique – beside the fact you now own it?

Drake: It’s the tremendous teamwork that Jake Ladouceur has nurtured between the managers and the entire production staff and the positive relationship management has with the local union. Everyone is focused on product quality, which is at industry-leading levels. Everyone has a role in this success as a layered audit process is used to involve all Team members in our success. The operation is the most efficient North American body shop by every available measure, as shown by the multiple Harbor awards for the site. It’s also a good team player with its Toledo industry partners. Together, they are proving the viability of the supplier park concept.

AI: Are there other opportunities, as either owner/operator or just an operator, to run a separate body-in-white facility like Toledo?

Drake: KUKA is currently quoting and reviewing multiple operating contracts globally and expects to land three more operating agreements within the next three years.

AI: Does KUKA Systems’ on-going diversification into fields like aircraft manufacturing and alternative energy show any concern about the future of your automotive business?

Drake: Quite the contrary. It says we have great technology and tremendous expertise and can leverage those strengths to grow our business. Make no mistake, automotive always has been and will continue to be our core market, generating applications and technology we can apply in other industries. When it comes to assembling product, the fundamental needs of a solar panel manufacturer aren’t much different from those of automobile OEMs. It wants the best line speeds and quality – what I call automotive-grade efficiency.

AI: Finally, after a year as an American CEO at a German-based automation supplier, how have you changed KUKA Systems’ approach to the marketplace.

Drake: Our basic values are no different than in the past. We are a customer-focused company at all levels, in sales, project management, and operations, down to the last KUKA person to leave our customer’s site. The one thing I am trying to emphasize from my experience as an American CEO is teamwork and the importance of supporting each other so we can be as assertive and proactive as possible. We must help each other to achieve excellence. That is the measure of our success.