Human Resource Practices in OEM’s

1. INTRODUCTION

An Original Equipment Manufacturer (OEM) is a company that produces parts and

equipment that may be marketed by another manufacturer. For example, Foxconn, a Taiwanese
electronics company, manufactures parts and equipment for OEMs including Apple, Dell, Google,
Huawei and Nintendo.The term is also used in several other ways, which causes ambiguity. It
sometimes means the maker of a system that includes other companies' subsystems, an end-product
producer, an automotive part that is manufactured by the same company that produced the original
part used in the automobile's assembly, or a value-added reseller.

• Origin of OEM’s

1992: Creation of the company OEM industry (Definition: Original Equipment Manufacturer).

Originally OEM INDUSTRY is mainly an engineering company which carries out manufacturing
issues and provides clients prototypes according to customer's specifications.

1994: OEM starts marketing finished products towards a network of qualified subcontractors. The

research department is expanded to carry out the full product testing.

1996: Setting of quality assurance operation.

1998: OEM industry adheres to joint venture and use an anechoic room, while investing in its own
equipment to measure EMC disturbances.

2000: Extension of the buildings in La Chapellle de Guinchay tripling the available surface area.

We consider that every project is unique and requires a specific treatement.

2003: Construction of a second building more adapted to the process of assembling and integration,
functional testing and burn in operation settled under quality insurance representative with key
customers.

2005: Changing to RoHS technology (lead-free).

2006: Enhancing the capacity of functional tests, with acquiring and developing specific tools. The
factory is covered by UL and CSA homologation

2007: Establishment of purchasing facilities in ASIA to meet the needs of our international

customers.

2008: Certification ISO 9001 v.2000.

2009: Preparation and marketing of a range of Led luminaries and innovative security products.
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• Human Resources Functions in OEM’s

In the manufacturing industry, HR typically is a rules-driven, fast-paced, production

floor-intense (versus office) brand of HR that provides the necessary people tools and framework
upon which manufacturers can build a successful business. HR must assemble a skilled workforce
to give manufacturing companies a competitive edge in an ever-changing industry landscape. It
needs to develop well-founded strategies and establish policies, standards and systems, such as
recruitment, on-boarding, training, performance management, mediation, legal compliance, and
compensation administration.

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The most important human resources
functions in manufacturing
companies:

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2.SECTORAL ANALYSIS

2.1 MICRO ANALYSIS of OEMs worldwide

The micro economic factors of the Original Equipment Manufacturing companies in

the international level include the following:

▪ Suppliers
▪ Customers
▪ Shareholders
▪ Employees
▪ Competitors
▪ Media

• Suppliers:

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 First, raw materials are mined or otherwise extracted from the earth. Next, a raw
material production company turns the raw materials into materials auto manufacturers can use in
the production of automobiles, mobile phones and other equipments. Those materials are then sold
to the component manufacturers, who are called as the OEMs.There are a number of raw materials
needed for the manufacture of a component. Considering the components manufactured worldwide,
there are four major raw materials that are mainly supplied by the companies mentioned in the
following paragraphs.

Steel
Produced from mined iron ore (its base raw material), steel is perhaps the most
widely used component in auto manufacturing. It accounts for roughly 80% of the weight of an
average car. Steel is used to construct a car's chassis and body, including the roof, body, door
panels, and the beams between doors. Steel is often used in mufflers and exhaust pipes as well.
Technological advances over the years have enabled auto manufacturers to utilize different types of
steel that have varying levels of rigidity. The major worldwide suppliers of steel are:

• ArcelorMittal SA—96.42 MMT

• China Baowu Steel Group—67.43 MMT

• NSSMC Group—49.22 MMT

• HBIS Group—46.80 MMT

• Tata Steel—27.27 MMT

Plastics
Oil and gas (i.e., petroleum) are the raw material source of the many plastic
components in cars. Chemical companies transform petroleum byproducts into plastic. Plastics are
the challenger to steel for prominence in auto manufacturing. Altogether, plastic comprises roughly
50% of what goes into the manufacture of a new car. Among the countless car parts made from
plastic are door handles, air vents, the dashboard, and airbags. The versatility, durability, and
lightweight character of plastics make them an ideal material for various parts. The following
companies hold the position of major suppliers of plastics for the component manufacturers
worldwide.

• Dow Chemical

• Hanwool Corporation

• Lyondellbasell

• Ihen & Tesch GmbH

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 • Exxonmobil

Aluminum
Aluminum, primarily because of its malleability and lightweight nature, is being
increasingly used in car manufacturing. Aluminum has progressed from accounting for just 2% of
the weight of an average car in 1970 to nearly 15%. Wheels are commonly made of aluminum, and
it has replaced steel and iron in the construction of many critical auto parts, such as engine blocks.
The major suppliers of aluminium for the worldwide component manufacturers are:

• BHP Group - Australia

• Aluminum Corporation of China

• Norsk Hydro ASA- Norway

• Hindalco- India

• Vedanta- UK

Rubber
Rubber is essential for cars, and the auto industry is essential to the rubber industry.
Tires are one of the most important parts of a car. In addition to tires, rubber is also used for making
numerous belts, hoses, and seals critical to the functioning of a car's engine. Like plastic, rubber is
durable and easily molded into different shapes. In all, the demand for rubber that comes from the
auto industry accounts for approximately 80% of the world's total rubber production. The major
rubber suppliers are:

• Sinochem.
• Sri Trang Agro-Industry
• China Hainan Rubber
• Von Bundit.
• Thai Rubber Latex

• Customers:

The customers of the original equipment manufacturing industries involve a number

of world’s largest manufacturers. The major customers and manufacturers of the world industry
include,

• Volkswagen Group

• Toyota Group

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 • Apple

• Samsung Electronics

• Daimler

• General Motors

• Ford

• Hon Hai Precision Industry

• Honda

• Cardinal Health

• Shareholders:

The shareholders play a major role in a company’s lifetime. They are the reason for
the survival and sustainability of the company. The funds are mainly earned by the company
through the shareholders who are also the owners of the company. The OEMs in the international
level also have its own shareholders who are mainly its customers at large. The larger part of the
shares of the original equipment manufacturing companies is held by the companies of the
manufacturing sector like General Motors, Ford, Apple, Samsung Electronics, LG etc.

• Employees:

There are a number of employees involved in the manufacturing of original

equipments to various other manufacturing companies. The employee crowd includes skilled, semi-
skilled as well as unskilled workers. Around 4% of the world population is involved in the original
equipment manufacturing industry. They contribute a lot to the manufacturing and trade of the
globe at large.

• Competitors:

The companies themselves are the competitors to one another. But that differs
according to the components they manufacture. For example, if we take the automobile component
manufacturers, the competitors in the country of Japan are Auto Moto Japan, Auto parts Okinawa,
Valeo Japan Company limited and any others. The manufacturers select their suppliers, who are
these component manufacturers based on the quality, size, design, and many other relevant features.

• Media:
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 Media plays a major role on any company to flourish in the modern business era.
Each and every company has their own websites where they put up their information regarding
various matters and get connected with the suppliers, customers and many others through
electronics mails and website conversations. It also helps them in advertising their products and stay
in connection with the world.

2.2 MACRO ANALYSIS of OEMs worldwide

SWOT Analysis:

• Strengths:

The strengths of the manufacturing industry are that it is relatively stable. Although
the demand for manufacturing tends to fluctuate with the ups and downs of the economy, it is
characterized by regular periods of recovery following any downturns. Additionally, manufacturing
has become highly efficient over the last century, with the ability to maximize both the productivity
of the workers and machines to maximize profits. World manufacturing industry has world-class
infrastructure, exciting innovation, research and development capabilities and an established
manufacturing base. It is actively involved in the development and roll-out of new green
technologies and industries, creating new and sustainable jobs in the process and reducing
environmental impact. 

• Weaknesses:

A weakness of the manufacturing industry is that much of it is built on the

production of non-essential goods. This means that a severe downturn in the economy can have a
crippling effect on it.  Another weakness is that it is a mature industry. This means that there is
heavy competition and little room for growth. As a result, the manufacturing industry can be a cash-
cow for those who are already in it but may be unattractive to new entrants. 

Set prices that affect the economy, such as electricity tariffs and petrol prices, form part of the
macro policies that need to be reviewed to enable the manufacturing sector to work efficiently and
affect the economy positively. As this is a national challenge, government should play an

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enablement role and not an intervention role. An adversarial relationship between government,
labour and business severely hampers a coordinated approach for the good of the sector. 

• Opportunities:

Opportunities in the manufacturing industry are in the technology and bio-

technology areas. These are growing market segments with higher profit margins. Foreign markets
with a growing middle class are providing opportunities for technology and bio-technology
manufacturers to increase their profitability through exports. The future of manufacturing in world
lies in the country’s ability to become a stable business destination, globally competitive and
beneficiate locally produced products. 

• Threats:

By contrast, electricity costs have been raised immensely all over, and this is
predicted to continue to escalate at more than double the forecasted inflation rate. The largest
threats to the manufacturing industry today are from low-wage high-productivity nations like China,
India and Brazil. India, for example, has the ability to supply highly educated workers at low wages
to fill roles in the high-tech manufacturing market segment. There is a need to review the bulk
infrastructure pertaining to the reliability of water and electricity supply that allows for
manufacturing to take place. 

2.3 Analysis of OEMs India

Overall the industry is segmented by the type of vehicles; Motorcycles 5.8%,

Passengers cars 69.5% and light truck 24.7%. The faces tough competition with Daimler, Chryster
AG, Fiat, General Motor, Honda, Nissan, Mitsubishi, Toyota, Suzuki. In which Ford motor
company has the market share of 9.4% (datamonitor, 2009). The industry fluctuated over 2004-
2007 affected by global economic downturn and declined in 2008. However, the performance is
predicted to accelerate with compound annual growth rate of 4.4% for 5 yr period of 2008-2013 to a
value of $1,831 billion by end of 2013.

A. PEST Analysis:

• Political:

The Company has to go with rules and regulations formulated by the government
such as CO2 Tailpipe Regulation. Companies get respect from government for powered IWO
wheelers. Ford has to go through the European Union vehicle approval.
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• Economic:

Depression hits the Automobile industry. Ford, GM and Chrysler face problem in
this situation. Factors such as Central London congestion charge, call to become all gas guzzlers ,
European union reduced pollution certificate and London low emission zone affect the
manufacturing of the Ford cars.

• Social:

There has been growth in road traffic slowing. Society is concerned with ‘more
green cars to be sold’. Road safety for everyone should be considered by Ford.

• Technology:

New technologies like using bio-fuels and digital radio should be considered.
Similarly, Ford also invested in CO2 reducing technology.

B. SWOT Analysis:

• Strengths:

The sector has a strong brand portfolio and engineering capabilities. it has wide
network of distributors and dealers and high employee productivity. And its operates in an industry
which has customer who highly value brands who believe strong portfolio of established brand
gives competitive advantage which helps in brand equity. This helps in launching new product
range and penetrating in new automobile markets.

• Weaknesses:

The continued decline in market share in US from 20.5 % in 2003 to 15.6% in 2007
similarly in UK 19.5% (0.3% down from previous year in 2006). This was due to increased
competition, industry moving away from traditionally stronger segment, reduced vehicle sales, daily
rental companies, and discontinuation of company’s vehicle lines. Likewise Ford got 3 complaints
on leaking fuel or oil ignition. Several product recalls inadequate quality assurance and quality
control system and declining operating efficiency and weak returns (datamonitor).

• Opportunities:

Company has the opportunity to expand in India and China. Company launches new
models often now and then according to the choices of customers. They can produce hybrid
vehicles. They face increasing demand of dual fuel vehicle.

• Threats:

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 The profitability of the business relies on performance of the economy in which the
company operates. If EU and US shows economic slowdown continuously the company’s business
will face negative impact. Similarly, sluggish light vehicle produced in the developed market also
acts as a threat. The company also need to consider EU vehicle regulations.

3. LIST OF TOP 10 OEM COMPANIES WORLDWIDE

Company Name Address Products

1.  Robert Bosch Postfach 106050 Powertrain solutions; chassis

Stuttgart, D-70049, Germany. systems controls; electrical
(49) 711-811-0; bosch.com drives, car multimedia,
electronics, steering systems &
battery technology

2.  Denso Corp. 1-1 Showo-cho Thermal, powertrain control,

Kariya-Aichi, 448-8661, Japan. electronic & electric systems,
(81) 566-25-5511; denso.com small motors,
telecommunications

3.  Magna International Inc. 337 Magna Drive Body exteriors & structures;
Aurora, Ontario, L4G 7K1, power & vision technologies,
Canada.(905) 726-2462; seating systems & complete
magna.com vehicle solutions

4. Continental Vahrenwalder Strasse 9 Advanced driver assistance

Hanover, 30165, Germany. systems, electronic brakes;
(49) 511-938-01; stability management, tires,
continental.com foundation brakes, chassis
systems, safety electronics,
telematics, powertrain
electronics, injection systems
& turbochargers

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5.  ZF Friedrichshafen Graf-von-Soden-Platz 1,
Friedrichshafen, Baden-
Wuerttemberg, 88046,
Germany.(49) 7541-77-0;
zf.com
6.  Aisin Seiki Co. 2-1 Asahi-Machi
Kariya, Aichi, 448-8650,
Japan.(81) 566-24-8441;
aisin.co.jp
7. Hyundai Mobis 203 Teheran-ro, Gangnam-gu
Seoul, 06141, Korea.(82) 2-
2018-5114; mobis.co.kr
8.  Lear Corp. 21557 Telegraph Road
Southfield, MI 48033, USA.
(248) 447-1500; lear.com
9.  Faurecia 2 Rue Hennape Nanterre,
92735, France.(33) 1-72-36-
70-00; faurecia.com
10.  Valeo 43 Rue Bayen
Paris, 75017, France.(33) 1-40- electrical & electronic systems,
55-20-20; valeo.com
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Transmissions, chassis
components & systems,
steering systems, braking
systems, clutches, dampers,
active & passive safety
systems, driver assist systems
including camera, radar & lidar
Body, brake & chassis systems,
electronics, drivetrain & engine
components
Automotive electronics,
infotainment, ADAS, EV
systems, module systems,
lighting, airbags & brakes
Seating & electrical systems
(E-Systems)
Faurecia seating & interiors;
Faurecia Clarion Electronics &
Faurecia clean mobility
Micro hybrid systems,
thermal systems, transmissions,
wiper systems, camera/sensor
technology, security systems,
interior controls
4. LIST OF TOP 10 OEM COMPANIES IN INDIA

Company Name Address Products

1. Asia Motor Works AMW Motors Limited · Commercial Vehicles

Ltd (AMW) InterMESH Ltd. 6th floor,
Tower 2, Assotech Business
Cresterra, Plot No. 22, Sec 135,
Noida-201305, Uttar
Pradesh, India.
· Auto Components
· Road Safety Solutions
· Forgings

2.  Bajaj Auto Limited  C36, Talegaon-Chakan Rd,

Mahalunge, Maharashtra Motorcycles and three-wheeler
410505 vehicles

3.  Eicher Motors Limited Eicher Demm Premises,

(EML) . Chittalsar, Manpada, S. V Commercial vehicles, engines
Road, Thane West, Manpada,
Thane, 400607

4. Foton Flat No 14 Sub Plot No 3 Manufacture of motor vehicles

Solitaire, Off Nagar Road,
Yerawada, Pune - 411006,
Kalyani Nagar,, Aga Khan
Palace

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5.  Hyundai Motor Company
6.  MAN Industries India Ltd
7. Ashok Leyland
8.  Kamaz India
9.  Tata Marcopolo Motors Ltd. Dharwad, Karnataka , India
10.  Atul Auto Ltd
Plot No, H-1, Sipcot Industrial
Park, Irrungattukottai, Automobiles
Sriperumbudur, Tamil Nadu Luxury cars
602105 Commercial vehicles
Engines
Man Industries (India) Ltd LSAW
Man House, 101, S.V. HSAW
Road,Vile Parle (W), Coating
Mumbai - 400 056. INDIA
Ashok Leyland Ltd., Light and Heavy vehicles
No.1, Sardar Patel Road,
Guindy,
Chennai - 600 032,
India.
No: 7 & 8 Sipcot, Phase 1, Trucks and buses
Hosur-635126 (Tamil Nadu),
India, Titan Road, Sipcot Ph. I,
Chinnaelsagiri, Tamil Nadu
635126
Fully built buses and coaches
8-B, National Highway, Nr. Three-Wheeler
Microwave Tower, Vehicles,Tuktuk
Shapar (Veraval),
District: Rajkot - 360024
Gujarat, INDIA
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