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159 7 Seat Supplier Right Next Door Automakers encouraged Tier 1s to get big enough to handle the outsourcing of big chunks of the vehicle, but then reversed course and reassumed some of those responsibilities (Sherefkin 2006b) . The previous chapter showed that three-fourths of parts plants are located within a one-day drive of the final assembly plants, but only a few were within a one-hour drive. Invariably, one of the handful of parts plants within the one-hour radius of the assembly plant is a seat supplier. Finding seat suppliers very near final assembly plants derives in part from the economic geography of seat production. A vehicle seat comprises three principal components. The frame, which is mainly metal, provides the basic skeleton for the seat and transfers the load to the body of the vehicle. The padding is primarily polyurethane foam molded to shape. The external skin is cut from fabric, leather, or vinyl and sewn to shape. A finished seat occupies a much greater volume than the sum of these individual inputs. Thus, like other bulk-gaining products, seats will normally be produced most efficiently near the customer. A seat is fragile as well as bulky, and it comes in a rather large number of varieties for a given model. So long-distance shipping of a finished seat is much more difficult and expensive than long-distance shipping of the constituent parts of a seat. The distinctive organization of this sector of the auto industry has also favored especially tight colocation with final assembly. A low value-added component that was considered peripheral to the vehicle’s performance or profit, the seat was one of the first parts that the Detroit 3 carmakers outsourced to independent suppliers and placed on JIT delivery to final assembly plants. Clearing out the massive inventory of cushions, frames, and covers from Detroit 3 final assembly plants was 160 Klier and Rubenstein the most visible harbinger of JIT delivery during the 1980s. Japaneseowned carmakers in the United States outsourced seats from the start. Also contributing to the distinctive geography of seat production has been the consolidation of the sector into a handful of major suppliers . An assembly plant obtains most if not all its seats from a single source, and the supplier in turn typically dedicates a single facility to producing seats for that assembly plant. The fate of an assembly plant determines the fate of a seat plant. For example, assembly plant closures by GM in Atlanta and by Chrysler in Newark, Delaware, resulted in the closure of nearby Lear seat-making plants. By the same token, to support Honda’s assembly plant in Greensburg, Indiana, which opened in 2008, TS Tech, Honda’s primary seat supplier in North America, opened a new plant in 2008, just 45 miles away in New Castle, Indiana. This colocation recalls the pattern used during the era of vertical integration, when the Detroit 3 carmakers typically located a stamping facility near each assembly plant to supply it with bodies (see Chapter 4). The seat may play a less central role than other systems in vehicle performance, but the powertrain, chassis, and electronics perform their functions largely unseen, and the exterior catches the eye of motorists only fleetingly as they get in and out of the vehicle. It is while sitting in the interior that the driver most experiences the convenience of a modern vehicle, and the passenger experiences its comfort. In addition the interior is one of the most self-contained parts of the vehicle, so it is relatively easy to isolate it for outsourcing. As a result, the interior has been the portion of the vehicle where producer–supplier relations have been most transformed. “The process of outsourcing entire modules to Tier 1 suppliers and delegating responsibility for the design and subcontracting has probably gone furthest in interiors and seats” (Van Biesebroeck 2006, p. 209). A handful of companies stand ready, willing, and able to supply carmakers with entire interiors ready to snap into place on the final assembly line. Other interior suppliers, including some of the industry’s largest, have been relegated to Tier 2 status, shipping much of their output to the three interior suppliers rather than directly to carmakers. Consequently, the interior has been the most rationalized sector of the auto supplier industry. It is also the least globalized—both of the leading interior suppliers in the United States are U.S.-based. Seat Supplier Right Next Door 161 IT...


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