Down-Under and Back Again
The Italian aluminium wheel brand, OZ, is known worldwide for its involvement in motorsports. It is equally well known in the aftermarket because of its good reputation. But, in recent times there have been many fears that Italian companies couldn’t compete in European market, where high quality and low prices are paramount. Now, at thirty years old, the company has experienced the sharpest turnaround in its history. A turnaround that the management believes has a lot to do with its acceptance of Japanese Kaizen Philosophy
As leaders of a progressive company, OZ’s management do not sit back on their laurels. Rather they are always questioning how they can improve the company’s business and production processes. The result is that the manufacturer has turned all expectations on their heads and has come out on top, even strengthened by the process.
Currently, there is suspicion in the air, that the 20 per cent shareholder Enkei, number three in the aluminium wheel casting world behind Superior and Hayes Lemmerz, has made its influence known. And so surely the Japanese partners will try to translate their “think lean” philosophy as well. Not at all, says company president Claudio Bernoni. Instead an Enkei delegation, which visited the plant in the spring were surprised by how well the Italian company had put the Kaizen model to use. The Italian company’s acceptance of the method is not that surprising. Centuries ago Venetian shipbuilders used a similar method of consistent linear production.
One of the most significant changes of the last two years is that the separate OZ racing plant, which used to be a few kilometres away, has now been integrated into the parent plant. The external producer, who manufactured exclusively for OZ, must now look around for new customers. And the mountains of semi-finished and even finished wheels that used to lie in the grounds of the San Lupari factory have now disappeared.
In the past things were less organised, but now order prevails. The company is even going as far as planning for the inclusion of more production machinery. Rather than having a space of 200 metres between production stages, there are plans to reduce the gap to 20. In addition, production managers are looking for ways to make the gap even shorter. All these changes led to the development of a completely new factory layout, a transition that took place without any significant production losses. OZ now employs 360 people working a three-shift operation instead of the 450 who worked at the factory in 2002.
The factory still outputs roughly the same as it did before introducing Kaizen, but there are significantly less wheels in production, or ‘wip’ as OZ says. Now the staff are trained to be more versatile than before which leads to a substantially more flexible production process.
There are two different manufacturing methods are used by the company. 10 machines utilise the low-pressure process and ALSi 7Mg alloy. In this part of the process all wheels are manufactured in low-pressure casting before they are submitted to a thermal treatment.
In order to optimise the mechanical characteristics of the products, the wheel maker produces an equal amount of original equipment wheels and those destined for the tuning segment and aftermarket. In this way Claudio Bernoni can select the relevant procedure for the project (OZ’s partner, Enkei exclusively uses gravity).
In the future, Mr Bernoni explains, both procedures will continue to be used because they both have their pros and cons, but the investments over the last few years have been biased towards low-pressure equipment.
OZ has also taken responsibility for its own tool construction. This means that 80 per cent of the necessary moulds were made in-house. So far, there is no ‘special machine’ for producing moulds, so by making its own moulds, the company believes it provides products that are genuinely unique.
Claudio Bernoni believes that Kaizen principles have improved his business and as a result he publicises the ideas whenever he can. But in addition he recognises: “It was not at all so difficult to improve within our range of machines. The question we must ask ourselves is, ‘why haven’t we done this before?’ With people it is always more difficult to change.”
Not all employees saw the positive impacts of the recent changes, so some decided to leave of their own accord. Others were so used to the old structures that they were locked into that kind of thinking. In some of these instances OZ had to let people go. In addition, a few new positions were created. As a result Dr Annalisa Dissengna leads the ‘Kaizen’ team, which decided all these changes, and enjoys the full support of the management. Of course nobody knows whether following the Kaizen principles will mean that the factory will still be better in five years time, but Kaizen has to be understood as an unending series of improvements.
There is always something to optimise. New machines permit faster cycle times. So, where there is now the notorious bottleneck in production, tomorrow there could be a larger production capacity.
‘Kaizen’ does not only refer to production, but also to the administration. Instead of using single offices, where employees can ‘hide away’ everyone sits closer together. It is not only the wheels that have had their working processes optimised, the administration departments’ bureaucracy has also been minimised.
Mr Bernoni, who together with Isnardo Carta holds 65 per cent of OZ shares, sees himself as a “man of the factory.” When it comes to answering questions about sales figures, customers and marketing strategies he points you in the direction of his management, who are without exception, young and engaged managers who have had nothing to do with OZ in the past.
A specialist for small series
Currently the plant produces 120 wheels an hour, more than 700,000 units annually. It is worth mentioning that OZ generally produces 14 to 22 inch road wheels and even some three-part wheels up to 24 inches. When mentioning that some 13 inch wheels are still manufactured, Mr Bernoni looks pleased because he is referring to wheels, which are used in motorsport.
The manufacturer is not a mass producer and it’s not likely that it will become one. Instead the company specialises in particularly sophisticated projects. For example, OZ produces the wheels for the McLaren Mercedes. The front and rear axles of the this super-car require different size wheels and because of vehicle’s turbo look the wheels are directional. This means four different wheels on each vehicle. Another example is the 1001 horsepower Bugatti Veyron that can reach speeds of 400 km/h. For this car Michelin will supply PAX system tyres and OZ will provide the light alloy wheels. Otherwise it is largely uninvolved in the OE business, was recommended for the project due to its reputation as a strong supplier of wheels for motorsport.
Beside these exclusive OE customers, sales and marketing manager, Antonio Mandruzzato, lists Suzuki Hungary (OE) and accessories, (Germany), Renault Accessories, Volkswagen RS, Votex, Seat Sport (Spain) and Toyota (TMME/Brussels). As the list suggests, the company is often involved with smaller projects with the exception of its co-operation with Alfa for the 156. As a result of these contracts OZ is planning to construct its own OE line in the factory, although this line will be limited to a capacity of 120,000 units annually. Also, around five years ago, the company began manufacturing aluminium wheels for motorcycles and can name Aprilia, Bimota and Benelli as customers.
The only downside to producing such sophisticated wheels is the fact that they do not carry a logo publicising the company name. The same applies to the wheels OZ produces for the tuning guild, which naturally expects to see its own names of the hubcap. Today OZ produces for Hamann, MAE, Abt, FAB, MKB, Arden, SOR, Pro Drive (a British Subaru tuner), Junction (Japan), Lotus and Ascari.
In the past OZ may have been a little bit jealous of the tuning guild, who only owe at least part of their success to OZ’s developments and production know-how.
As a consequence OZ developed its own tuning system, which has the task of creating its own trends in the market. Therefore the manufacturer makes every effort to avoid copying the designs of Brabus, Lorinser etc and especially its own customers. Instead it produces tuning wheels with its own label. For a creative company this is a pleasure as it is a challenge.
In motorsport OZ is the largest competitor of BBS and regards the commitment as quite a “strategic“ move, Mandruzzato says. The Italian manufacturer does not only equip several Formula 1 teams with forged light alloy wheels, but is dominant after the retreat of Speedline from rally sport. The list of racing customers is long and includes Peugeot/Citroen, BMW Formula Junior, Indy 500 (where is has a 90 per cent share), Le Mans Series (Audi) and in the future, Fiat (rally sport).
Clearly the company’s motorsport activities also support its marketing. But do any of the teams get wheels free of charge? Racing wheels can often be a door opener for other projects, says Mr Mandruzzato.
“From Racing Track To The Road“ is an OZ slogan and shows that the company is not only engaged in Formula 1 but is also successful in many other motorsport series. In this respect the Italians have the whole technical spectrum. Whether the wheels are made from magnesium or aluminium, whether they are forged or casted, one-piece or multi-piece, this enormous variety can, naturally, be used for commercial success: In many markets OZ is positioned as a high-priced and exclusive brand.
In the past this placing has not always been appropriate as MSW, OZ’s second brand, demonstrates. This range was targeted at a clientele of drivers who are enthusiastic about OZ but whose wallets are not big enough for the main products. The second brand never really took off and in the next few months MSW will finally run out. MSW suffered from a simple lack of brand awareness – low-priced brands need investment as well.
MSW aside, the company is focusing on its recognisable name. Under this brand the marketing development departments have been creating “wheel families.“ The “Commodity Line“, for example (so far just MSW) will be known as “OZ Easy Line” in the future.
The brand’s status will be used to lead young and not so rich customers to other OZ product families. Further lines to be marketed under the company name will include “Prestige” (luxury cars), “All Terrain” (MPV and SUVs), “Classic” (referring to elevated middle class models) and of course the already popular OZ Racing. OZ Racing wheels will be reserved for Coupés, Roadsters, Cabriolets and Sports cars.
One consequence of the re-organisation of the wheel families is that some of the older designs are removed while others have been expanded. In the days leading up to T&A’s visit the OZ management was pleased to hear that the company’s Superturismo, a bestseller in many markets, had received an unexpected acknowledgement. Formula 1 driver, Juan Pablo Montoya ordered the 18-inch wheel in white for his private Mini Cooper. Immediately production levels increased and now the Superturismo GT with its 16 filigree spokes and the black OZ racing logo is available in 8×19 inches for many cars such as the Golf V or A3.
New designs will, in the future, carry the names of personalities from Italian history like Michelangelo, Giotto or Palladio. One of the company’s marketing strategies is to move end users more into the centre of its activities. In a reflection of this policy the company wants to be represented at end user shows like the Motor Show in Essen or Tuning World Bodensee instead of trade exhibitions like the Automechanika.
One indication of how seriously the company takes this goal is that it is debuting one of its new designs at the Rimini “My Special Car“ show in the spring of 2005. Journalists and possible marketers must wait until then before they can see the product for themselves.
Some changes in market responsibilities
One of the manufacturer’s distribution wings, OZ Germany GmbH, is now an Italian company. OZ Italy bought the shares from the German managing director, who will continue to hold this position in future.
The move comes as a signal that OZ wants to strengthen the German company, which will take responsibility for the entire region north of the Alps, excluding France. The reorganisation is intended to help the company back onto the road to aftermarket success, from which the company has wandered a little bit in the last two or three years. In relation to this OZ appointed Dr Michele Peretti as area manager to support the German subsidiary.
OZ has divided the world into four core markets and has transferred appropriate management responsibilities. The core markets are America, Asia, South Europe (inclusive France) and North/Central Europe. Some manufacturers from Italy, the traditional wheel country, came under pressure and some have fallen into lethargy. Not so with OZ, perhaps as a result of implementing “Kaizen” principles, the company thinks more and more on a strategic level fighting not only for survival but also for a brilliant future.
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