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Technical Depth, Focus on Innovation To Drive Success this Millennium

13 April 2000

Freudenberg-NOK Chairman & CEO: Technical Depth, Focus on Innovation To Drive Success in New Millennium

           At Automobile Parts Manufacturers Association Conference


    HAMILTON, Ontario, April 12 In the emerging tier structure
of the new millennium, an intense focus on technology, innovation and core
competency may be the only key to success for many automotive suppliers, said
Joseph C. Day, chairman and CEO of Freudenberg-NOK.
    In a keynote speech -- "Tiers and Technology: A Supplier's View" -- given
at the Automobile Parts Manufacturers Association (APMA) Annual Conference and
Exhibition here, Day urged automotive supplier executives to re-evaluate their
companies' positions and strategies, in light of automakers placing more
responsibilities on their suppliers, which has created a new hierarchy and
tier structure.
    "Automakers are looking for suppliers to take the lead ... and to push the
envelope in developing technology that will manifest itself in product or cost
differentiation -- or both," Day said.  "But as the systems integrators and
systems suppliers broaden their responsibilities across a wider range of
products, their concentration on any single technology is greatly diluted."
    That dilution creates significant opportunity for a whole new category of
supplier, the Technology Specialist, who -- like Freudenberg-NOK -- has a
narrow product focus, great technical depth and the ability to provide
innovative products to all levels of the supply chain, he said.  That
technical depth will be rewarded with appropriate profit margins, Day
indicated.
    "The next round of auto industry innovations -- such a new convenience and
info-tainment electronics, steer-by-wire and brake-by-wire systems, new ride
control and vibration control concepts -- will likely come from this new
Technology Specialist tier," Day said.  "We (Technology Specialists) are
obligated -- and expected -- to invest more in research and development to
drive such innovations ... we should be able to achieve somewhat higher
margins because of the unique performance, cost enhancement through warranty
avoidance and product differentiation we can deliver to our customers."
    Laser-sharp technology focus is so important, Day said, that his company
is separating its vibration control operations from its sealing business to
create an entirely separate global entity, Vibracoustic, which will
concentrate on solving automotive NVH problems with new technology.
    A pioneer in the application of lean systems in the North American auto
industry and the current chairman of the U.S.-based Original Equipment
Suppliers Association, Day has presented more than 75 industry speeches,
including presentations at the University of Michigan Automotive Management
Briefing, Harvard University's Manufacturing Leadership Summit, the MIT
Graduate School and DaimlerChrysler Corp. events.  For his leadership efforts,
he has been inducted into the Shingo Prize Academy and the Francis Academy of
Distinguished Engineers at the University of Massachusetts-Lowell.
    In addition to being chairman of the board for Freudenberg-NOK, Day is a
director and former chairman of the board for the Wiremold Co. of West
Hartford, Conn.; a director of A.G. Simpson, Ltd. of Toronto, Canada; and a
director of ASC, Inc. of Southgate, Mich.
    Plymouth, Mich.-based Freudenberg-NOK is part of the Freudenberg and NOK
Group Companies, which have total annual sales around $7 billion.  With global
automotive sales of approximately $4 billion, the Freudenberg and NOK Group
ranks among the world's top 20 automotive suppliers and is one of only eight
in the top 100 that has global balance in each of the three major automotive
markets -- Asia, Europe and North America.
    Through a global network of facilities spanning 27 countries with some
23,000 automotive employees worldwide, the supplier group offers its
automotive customers globally integrated products, including sealing packages
for transmissions, engines, brakes, axles and steering, NVH (noise, vibration
and harshness) components and packages, and all rubber, plastic and PTFE
components for suspension, electrical and fuel systems.
    The Freudenberg and NOK Group also offers an extensive portfolio of
precision-molded products for the aerospace, appliance, business machine,
fluid power, marine, medical, off-highway equipment and recreational vehicle
markets.  For more information, visit the Freudenberg-NOK web site at
http://www.freudenberg-nok.com .