Dow Automotive isn't ready to close up shop. If your company is involved in the automotive end of the rubber industry-and most rubber companies are-you should feel the same way.
There's probably no tougher customer than the automotive original equipment manufacturer. When times are good, there's plenty of volume, but many strings attached. ``Give me more, I'll pay you less'' has been the model from some (as in Detroit-based) auto makers throughout history.
And that's in the good times.
When demand in the cyclical auto business heads downhill, such as it has done in the past two years and is likely to in 2008, the auto OEMs want even more. Lower sales and OEM financial results dripping in red are directly related to the pain an auto maker will bestow on its suppliers.
What's an automotive supplier to do?
Dow Automotive has one interesting approach, as presented at the Adhesives and Sealant Council conference in Miami. Steve Henderson, Dow Automotive president of the Americas, said the auto makers want suppliers to help reduce costs, solve technological problems or help increase sales. Companies in the adhesive sector typically focused on the first two aspects, working to reduce mass, improve fuel efficiency or lower costs. But not the third.
Dow Automotive decided to find out just what it could do to help make its customers' products more valuable to consumers. It started a ``human element campaign'' of workshops and study, trying to ascertain how auto buyers view technology, what kind of cars they buy and why they buy them.
The company took the information it gathered and developed adhesives that helped fit the criteria consumers were seeking. Ultimately, it should help the OEMs sell more vehicles, which makes everyone happy.
These are not easy times for anyone in the automotive sector. Banks are expected to tighten their lending practices for everything, including new cars, as a result of the subprime mortgage-spawned financial crisis. Recession, slowdown or whatever you want to call it means people will be holding onto their cash, driving that car longer before seeking a replacement.
Rubber companies with any involvement in the sector need to prove their value to an OEM more than ever. Trying a creative approach, as Dow Automotive has done, is the order of the day.