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Business review, Major challenge and issues November 10 , 201 1 PowerPoint Presentation
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Business review, Major challenge and issues November 10 , 201 1

Business review, Major challenge and issues November 10 , 201 1

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Business review, Major challenge and issues November 10 , 201 1

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  1. Business review, Major challenge and issues November10, 2011 Metaldyne Korea

  2. Plant Overview

  3. Plant Location Korea North Seoul Incheon Pyungtaek 70Km far from Seoul Daejeon Daegu Busan Kwangju Jejudo

  4. Brief History May 1999 Established a Korea Office in Fukoku Korea Nov 2000 Received LOI for BSM development from HMC Jun 2001 Supplied twenty numbers of BSM pilot samples to HMC Jul 2002 Received LOI for mass production of BSM from HMC Aug 2002 Established Metaldyne Korea Oct 2003 Machining and assembly machine installation at Fremont plant Jan 2004 Received LOI for timing chain cover of new Tau-engine (V-8) from HMC Jul 2004 Completed building construction of Pyeongtaekplant Oct 2004 Started mass production for BSM Apr 2005 Grand opening ceremony Sep 2005 Received a prize in “Appreciation of Contribution” from HMC Nov 2005 Acquired Certification of TS-16949 Apr 2006 Received LOI for R-BSM development from HMC Sep 2006 Acquired Certification of ISO 14001 Jun 2008 Started mass production for Tau FEMA Apr 2009 Started mass production for R-BSM Mar 2011 Over 60,000 BSM production for Theta engine Aug 2011 Highest record for Theta BSM production (63,915 BSM) Sep 2011 Received LOI for Balance Shaft Ass’y from HMC

  5. Plant view Soccer field R-BSM Front Front

  6. Plant Lay-out W S N E Theta BSM #1 line Theta BSM #2 line Office R-BSM line FEMA Line R-BSM Utility Room 유틸리티 및 자재창고

  7. Customer and Auto maker locations in Korea Bupyeong plant HQ, Purchasing, Sales R&D center Seoul Incheon R-BSM Theta BSM Pyeongtaek plant Hwasung plant Theta BSM Asan plant FEMA, R-BSM, IP Ulsan plant Busan Euro-5 BSM Gunsan plant IP Damper Changwon plant Jejudo

  8. Communication & Employees activities 조회사진 등산사진 체육대회 축구

  9. EHS activities 체조사진 건강검진사진 화재예방교육사진 안전/노사 협의회 사진

  10. Plant Objectives

  11. Business Target in 2011

  12. Human Resource

  13. Plant Org. Chart Representative Director Bob DeFauw Director of MKL operation HS Yoon Finance Anthony Seo HR Ken Lee Quality Daniel Lee Manufacturing Jonnny Kang CSE Michalel Chai Purchasing MS Han Sales Brian Choi Production SY Ahn Matl&Logis. Jake Kim Maintenance John Lee M.E James Yoon

  14. Safety • Date of last lost time incident occurred are 606 as of Oct 31,2011.

  15. Headcount Hourly composition Average Headcount

  16. Turn over Turn over trend from 2006 for MKL empl. BSM deletion for Theta 2.0 Merged with Asahitec Bankruptcy No. of outsourcing employees who left the company Up to Oct

  17. Labor cost & Productivity In thousand Won Annual Labor Cost including Salaried Empl.

  18. Salaried headcount comparison with local companies As of Oct, 2011

  19. Challenge & Issues Minimize turnover rate including outsourced employees to increase quality, safety and productivity level. • Switching over to regular employees through rating (service period, attendance, attitude, diligence) • Enforce employee participation activities  Spring picnic, Sport activities, Workshop and others. • Explain Incentive program to all employees • Encourage club activities. Keep union free company → Multiple trade union • Open communication with Labor Management Members. • Hold LMC meeting quarterly base and all employee meeting by months. • More communication with shop floor employees. • Regular sports activities such as soccer every Wednesday and foot ball tennis during lunch time. • Multiple trade union issues Preparation for retaining core employees • More communication with employees. • Keep 75 of percentile salary level (More than average) • Outside training for all salaried employee using government subsidy program Strengthen Health & Safety activities • Strengthen employee safety training and 5-S activities. • Run safety committee quarterly base.

  20. Sales

  21. Sales by products (in 2010)

  22. Sales trend overview [Unit : In thousand USD] 21

  23. Long term sales forecast by products [Unit: pcs] 22

  24. Challenge & Issues Cost negotiation • Theta Hybrid engine BSM → HDD type design change model • R engine BSM → Vehicle code ‘DM’ design change model Potential dispute • Theta2 GDI BSM Air freight cost • HMC internal audit result → Exchange rate adjustment with LDC rate • Annual Cost Reduction proposal New business plan • Theta-i FR engine BSM → Program sourcing in September (SOP : Jan 2014) • BSM for Ssangyong Motor Company → Chasing • Theta-i VDOP BSM → MyunghwaBSM

  25. Finance

  26. Key Index

  27. Internal Audit Remediation

  28. Manufacturing (Production, Manufacturing, Maintenance, Materials & Logistics)

  29. Production (by calendar) Quantity 531,300 Production Trend from Jan 2010. QPPLH Trend from Jan 2010.

  30. Material & Logistics Delivery Issue on Theta BSM into HMMA • A/F delivery to HMMA ended in June. • Back order quantity has been decreased by the end of October.

  31. Manufacturing Engineering Issues • Install two centrifuge oil remover for theta line #1 & #2. • Line try out for the Theta HDD Results • Installed two centrifuge oil remover for theta line #1 & #2 in Oct,2011. There is no complaint from customer and MKL reduced one worker whose jobs are just to clean BSM. • Applied Theta HDD Module on Theta #2 Line in May,2011. KPI (Tool and Oil price per piece) TOOL(\) OIL(\) TOOL(\) OIL(\) target 368 target 438 target 406 target 407 THETA ENG BSM R - ENG BSM

  32. Maintenance Issues • MKL doesn’t have enough time for thepreventive maintenance due to busy production schedule. • Some (manufactured in 2002) of machines are too old that causes a lot of problems. -It makes hard to keep proper spare inventory because some machine parts are not produced any more. - Low machine efficiency and many machines are needed overhaul. • U axis of SW machine on the second Theta line should be repaired but MKL can not make a plan for it due to increased volume. Failure rate Trend (Theta line)

  33. Plan for R-BSM Capacity increase 1. Customer plan 2. Machining Capa. against HMC requirement 21 Hr/day * 22 Days/Month * 0.85%

  34. 3. Plan to meet HMC requirement Plan #1 Housing & Oil Pump 접합부 가공(Seg #1) 외주화 -. M15-1 Upp/Lower 조립, M15-2 M8 bolt 조립 공정 및 접합부 가공 → 외주 업체로 이관. -. 가공 설비, Jig, Tool 등은 해당 업체에서 개발하고 조립 설비(2대)는 당사 조립기 이관. -. 가공 완료품 당사 M20 Laser Marking 부터 투입. -. 가공 MCT에서는 Full Ass’y 가공(Seg #2)만 실시. -. Full Ass’y만 가공할 경우 가공 약 일 1,200 대 (년간 317,000 대) 생산가능. -. 가공 방법 변경에 따른 유효성 확인 필요. 33

  35. 외주 입고품 투입 Seg #1 접합면 가공 외주화 Full Ass’y 만 가공 M15-1, M15-2 외주화 Seg #1 접합면 가공 외주화 Full Ass’y 만 가공 34

  36. Plan #2 SW #3 MCT Overhaul -. 현재 미국 본사에 있는 SW #3 호기 Overhaul 실시 후 당사로 이관. (약 6 개월 소요) -. SW #3 용 가공 Jig 점검, 보수 및 가공 Tool 신규 발주. -. Overhaul 완료 시점(‘2012년 5~6월) 까지 특근, 잔업 근무 실시. -. Overhaul 완료 후 Line 투입시 가공 약 일 1,070 대 (년간 282,500 대) 생산 가능. 35

  37. SW #3 Overhaul 후 Line 투입 36

  38. Plan #3 특근, 잔업 등 추가 근무 실시 -. 현재 가공 C/T 90 sec로 일 714대 생산 가능하며, 정상 작업(22일*21hr)시 년간188,500 대 가능-. 매월 27일 *21 hr 근무시 년간 231,336 대 생산 가능함. -. 생산 장비 고장 등으로 가동율 저하시 고객 라인 결품 가능성 높음. 37

  39. Quality

  40. Supply Quality Main reasons

  41. Assembly PPM [PPM] [PPM] Rejected % of Theta BSM Rejected % of R- BSM • To improve the NVH problem, DIC(Local gear supplier) changed the material of brush tool from wire to ceramic coating on May 18th. • Got a big NVH failure for R BSM in Sep due to cleanliness issue of test oil

  42. Customer Quality [PPM] [PPM] Main reasons

  43. Quality 5star Improvement plan and Target • Customer ppm was getting worse for the changing rating criteria of HMMA from the 2nd half of 2010

  44. Challenge & Issues Timing chain cover Improvement (Tau Engine) • HM - FEMA was common used with VI in order to prevent oil leakage.(May 2010) • GDI TCC was common used with MPI to get better porosity issue and leakage issue (May 2011) Nut loosening is occurring at China and HMC salvage (Theta Engine) • The root cause has not been found yet. • MKL is considering to implement bolt type instead of current nut type. Engine Oil pressure issue (Theta Engine) • Oil pressure High and Low problem was occurred due to FCV stuck at the FCV bore. • FCV stuck could not be detected 100% at MKL EOL test. • MKL is trying to find inspection method to detect this problem 100% at MKL process Input shaft stuck (Theta Engine) • MKL improved rough machining tool of input bore in order to minimize the burr. • MKL will implement de-burring process to eliminate burr at oil hole on Dec 1st. • MKL will change oil filter of EOL tester to prevent BSM damage by foreign material in the test oil. 43

  45. Hyundai Quality 5-Stars

  46. Purchasing

  47. Supplier status (Up to the end of Oct, 2011)

  48. Gear Localization Status

  49. Challenges & Goals for Year 2012 • Stabilize Material Supply for Theta & R • Cost Reduction through Diversification & Cost Analysis • Establish Strong Relationship with Tau Casting Supplier • Complete Localization for Gear and Gerotor

  50. CSE