Car makers’ design teams are facing increasing pressure. Ever more stringent environmental and safety legislation has to be complied with, while customers expect ever more varied models, meaning a wider variety of low-volume niche vehicles are being spun off any given car platform.
To cope, big car makers are increasingly turning to consultants, an area where the UK remains a world leader. Where once they might just have sought help with the powertrain or suspension system, today they contract out anything up to and including the development of a complete vehicle.
Over the past year leading consultants have been positioning themselves to take advantage of the trend. Among the leading lights are a number of firms who first made their names in motorsport.
TWR – formerly Tom Walkinshaw Racing – acquired the former UK design centre of Daewoo, while Prodrive bought Tickford. Ricardo, the longest-established consultant, has established a new vehicle engineering division capable of undertaking all aspects of vehicle design.
A recent report by Dresdner Kleinwort Benson estimates that the market for outsourced engineering services is e4bn (£2.5bn) worldwide and that the vehicle engineering sector is set to grow by 15 per cent annually over the next few years. TWR’s acquisition of the Worthing design centre after Daewoo’s financial collapse is perhaps the most ambitious move. According to TWR Group engineering director Phil Harding, this addition to TWR’s existing design centre at Leafield in Oxfordshire makes the company ‘the most capable consultant in the UK’.
Daewoo had bought consultant IAD in Worthing in 1995, and invested £85m in new premises and test cells. Having ended a collaboration with GM it needed to redesign its range from scratch. To equip Worthing to handle half its new model programme, with the rest undertaken in Korea, Daewoo installed over 400 Catia seats, a prototype assembly area, equipment for rapid prototyping, test rigs for body and suspension systems, environmental chambers – in fact the capability for just about every aspect of vehicle development except crash testing.
TWR Engineering already has a track record of engineering specialist and low-volume vehicles, including the Renaultsport Clio V6 24v, the Volvo C70 coupÃ© and convertible, and the Aston Martin DB7.
Given that the firm already had design capabilities and some test facilities, including a virtual reality suite, at Leafield, why did it need Worthing? ‘It gives us facilities and people that fitted with our business plan: experienced engineers on international programmes whose talent we thought was complementary to TWR,’ says Harding.’We also spent a fair amount of money annually outsourcing work we can now do in Worthing: testing, rapid prototyping, machining. More importantly, we can do the whole thing in secret within one company and can often be quicker than having to subcontract the work out.’
TWR does not expect ever to need all the rig testing capability, but will contract this out as a separate business.
‘Car makers are increasingly wanting to contract out not just niche vehicles. When there’s a capacity constraint internally they want someone to do a complete job,’ Harding says. A current project is ‘a sub-£10,000 family car – we’re managing the whole thing’.
‘One of the attractions of Worthing was that, with Daewoo, the team knows how to handle the supply base in the Far East. Under Daewoo Worthing was also a pioneer in doing things quicker.’ It designed the Matiz car in 30 months, and had been progressively reducing the number of prototypes needed.
Prodrive, meanwhile, has grown rapidly over the past 10 years. It runs the Subaru World Rally Team and Ferrari’s GT racing car project. More recently it had developed increasingly into performance-oriented road car work, such as MG Rover’s rear wheel drive, Ford V8 engined MG ZT 385.
But, says group managing director Nick Fry, it faced the choice of whether to try to continue to expand in motorsport or to go more into mainstream car technology. After looking for acquisitions in both areas, last year it bought automotive engineer Tickford to create a group with a turnover of £100m with a workforce of nearly 900. There were a lot of potential acquisitions in the motorsport world, says Fry, but the great beauty of Tickford is that it has a strong management team who were already running a good business.’
Tickford was also a good fit. Prodrive had bought a former TRW facility near Warwick a year earlier, which provided it with a considerable amount of workshop space and a 4km test track, but still left it short of mainstream engine testing facilities.’Tickford had great facilities as well as experience,’ says Fry. It has 25 engine test cells in Milton Keynes and another 12, with space for more, in Detroit.
It also provides ‘instant geographic spread’. Prodrive was mainly UK-based. Tickford has a substantial presence in Detroit, and in Australia, where Tickford Vehicle Engineering is a joint venture with Ford, producing performance versions of mainstream Ford models in an analogous operation to TWR and GM’s Holden Special Vehicles. It builds 13,000 vehicles annually, while its UK site at Daventry builds 1,000 to 1,500 vehicles which in the past included Ford’s Racing Puma, and LPG conversions of mainstream models.
Fry believes the new group will be different from its competitors because of the racing skills and mindset Prodrive brings to bear: ‘We would like to think we employ significant amounts of motorsport-style innovation and different thinking.’ In particular he believes there is a lot of potential in Prodrive’s in-house developed Proteus engine management system and the related suite of software for controlling engine and chassis systems.
Ricardo has adopted a somewhat different strategy from what it sees as the market’s needs. Founded in 1917, it specialised in engine design for over 70 years until it bought FFD in the early 1990s to give it powertrain and chassis capability. The company has diversified in the opposite direction, starting in mainstream vehicle engineering and adding motorsport later. A recent success was supplying the transmission for the Audi R8, which won Le Mans two years in succession. Audi took the first three places in 2000, its second year of competing, and the first two last year.
Over the past year, Ricardo has launched a vehicle engineering division, with the ability to design and project-manage whole vehicle programmes, and a motorsport division.
‘The market splits into three roughly equal segments: powertrain, vehicle engineering and styling and design,’ says vehicle engineering division managing director Dr Clive Hickman. ‘By establishing the vehicle engineering business we are now able to work in two-thirds of that market, which represents a big growth opportunity.’
Ricardo was able to do this, he says, because it had developed skills in its existing divisions which are transferable. ‘For the engine we developed skills in NVH (noise, vibration and harshness), structural engineering and thermal systems. Over the past three years we stretched those skills from being just engine-based to being vehicle-based. On the transmission side, we developed skills in chassis engineering and packaging. If you link these together you get vehicle systems integration.’
Reduced development costs
And systems integration and programme management are vital elements in the new division, says Hickman, whose aim will be to produce new models faster and with reduced development costs.
The philosophy is this: customers want a car they see as distinct from everyone else’s, forcing car makers to produce more niche models. But niche vehicles, such as coupÃ©s and cabriolets, tend to age quickly.
‘If a company is going to make 20,000 vehicles a year, with a life expectancy of three years before the product is out of date, you have a maximum 60,000 vehicles you can make. If you launch three months late, you lose 5,000 units in the first year. If the vehicle sells for £20,000 you have potentially lost £100m in sales,’ says Hickman.
So it can be worth a lot of money to a manufacturer to contract out a development programme if this improves its chance of getting the project completed on time.Hickman expects the vehicle engineering division to grow from 120, out of a total at Ricardo of approaching 1,500, to around 300 in three years’ time. ‘The Ricardo Vehicle Engineering focus will be programme management and design and analysis,’ he says.
This suggests competition for outsourced engineering services will intensify. But as Prodrive’s Fry says, this is not such a major concern: ‘The market is set to grow at 15 per cent compound. There’s a real explosion of different types of vehicle demanded by the market, and the workload is increasing because of environmental and safety legislation.’ In other words, there is likely to be more than enough work to go round.