Companies serving the off-highway industry face an array of challenges in the current global marketplace. While some regions are experiencing growth and demand for new equipment, other regions continue to face economic headwinds. In addition, technology challenges and regulatory events such as Tier 4 Final make it necessary for companies to be as flexible and responsive as they can to changing market needs.
Manufacturers will often promote new technologies or product updates as the “right way” to solve these challenges. However, product innovation must go hand-in-hand with manufacturing and logistical excellence—because no matter how innovative a product is, it must be manufactured efficiently with the highest quality, and be delivered through flexible, efficient supply chains to achieve success. New product technology may help drive the industry, but manufacturing and logistical excellence make up the engine under the hood.
In the past, many companies chose to increase manufacturing in low-cost countries, then export those products worldwide—in fact, this is a strategy Bosch Rexroth also pursued.
We discovered, however, that much of that capacity was needed for local expansion. As a result, our strategy has changed to something we call “local for local.” We now invest in more complete local manufacturing and support capabilities to match regional demand, with local resources capable of supplying the specific products, R&D, added value, and service that our customers in a given region require.
A good example of this approach is the recently completed expansion of our hydraulics manufacturing campus in Fountain Inn, SC. Earlier this year, we formally inaugurated production in a newly outfitted 260,000-ft² (24,255-m²) manufacturing plant with five assembly lines and multiple state-of-the-art machining centers for the production of our axial piston hydraulic pumps and motors.
The investment required—$80 million over 5 years—was necessary to handle the significant growth in demand in the Americas for Rexroth’s off-highway hydraulics technology—fueled by the growth of OEMs based in the region. The investment was also necessary to provide local engineering and service support as these same OEMs convert to energy-saving hydraulic technologies to meet the diesel emissions reductions specified by the Tier 4 emissions standard.
The expanded Fountain Inn campus more than doubles our manufacturing floor space there, making it our largest hydraulics production facility in the Americas; it also houses added resources for R&D, testing, and service, and puts additional value and performance into our popular GoTo focused delivery program.
The crucial part of this strategy was not just to put innovative products closer to the customer, but rather to combine manufacturing, logistical, and service excellence to create a better customer experience in securing and using those products. For example, by increasing the breadth of our capabilities in North America, we can now tie product design, R&D, and testing more directly to customer requirements across the Americas.
We can leverage our local capabilities as an engine for real progress: An earlier, deeper understanding of customer needs, from initial technical requirements through preferred delivery processes, can fuel both innovation and growth. If OEMs have one point of contact, and the supplier they work with is much closer, together they can react faster to changing needs in the marketplace.
The benefits of this collaboration, of course, will reach far beyond our Fountain Inn campus: Smoothing the global supply chain benefits current customers and helps to develop new opportunities—including the creation of products to meet the unique performance and cost targets of small- and medium-sized off-highway machine builders, who are also pursuing innovation to satisfy changing market and regulatory needs.
There is no question that new and innovative technologies such as ultra-efficient hydraulic pumps and hybrid regenerative hydraulic drives can drive growth for the off-highway industry.
Just as important, however, is maintaining a strong focus on streamlining supply chains and investing in manufacturing excellence to help sustain and enhance the value these innovative technologies offer, as well as ensuring that they are designed, manufactured, and delivered to customers when they need them, where they need them, and how they need them. This is the formula we believe will fuel the local growth that makes a difference in the global results of our customers.
Berend Bracht, President and CEO, Bosch Rexroth Americas, wrote this article for SAE Off-Highway Engineering.