KIRCHHOFF Automotive: The Structure of Integrity

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Whether corporate or environmental, sustainability is a key precept at KIRCHHOFF Automotive

“A truly stable system expects the unexpected, is prepared to be disrupted, waits to be transformed.” When author Tom Robbins penned that observation nearly 50 years ago, he was opining about existential matters far removed from industry. While unintentional, he also described a fundamental challenge for modern manufacturers working to thrive in an environment of constant change.

In the case of KIRCHHOFF Automotive, a pioneering developer and builder of sophisticated metal and hybrid skeletal systems and other components essential to vehicle stability, drivability, and passenger safety, their approach to business longevity is reflected in the structures they manufacture. That robustness is inextricably linked to sustainability in terms of corporate structure, talent development, and environmental responsibility.

The preservation of organizational integrity has long been a mandate for the 238-year-old firm, whose flat management framework supports the transparency, collaboration, and forward-thinking necessary to remain a resilient and robust industry leader. The company’s pillars of sustainability include the cultivation of a workforce committed to doing what's best for KIRCHHOFF Automotive’s internal and external stakeholders. That includes vigilance around issues of environmental preservation, such as making choices that narrow their carbon footprint and reducing waste.

Josh Forquer

For Josh Forquer, EVP of Sales and Technical Development at KIRCHHOFF Automotive, waste reduction is just one focus. "It's directly related to our carbon footprint, but it's also related to the sustainability of our workforce," he recently told BOSS. "The supply chains in our industry are also at risk if there's a shortage of labor or a shortage of skilled labor, so we need to be sustainable in those areas as well. Otherwise, we're creating waste if we don't have a solid supply chain through a stronger community."

Material and skilled labor shortages can also put supply chains in what he calls "expedite mode.” Under that pressure, there can be over-deliveries or extra labor hours - factors that directly impact environmental health and the bottom line. Shareholders and board members like Forquer must meet KPIs designed to keep sustainability in mind as they drive the business forward.

Sumit Dutta

“Like many OEMs in Europe that have already implemented sustainability initiatives, North American OEMs will soon be doing the same, in anticipation of CO2 reduction goals in our supply chains. We have started to collect/measure the CO2 emission level of various types of purchased parts and service suppliers, and started to develop the roadmap to reducing CO2 emission levels in the next two to three years’ timeframe,” said Sumit Dutta, VP of procurement for North America.

Their participation in OEM supplier councils reaps valuable feedback on industry issues and provides opportunities for change and growth for manufacturers and customers in the exchange of ideas. “Having that level of transparency with our customer is something that definitely is different than what many automotive suppliers have had in the past. The transparency prevents waste.”

In the integrated automotive manufacturing ecosystem it’s particularly critical for everyone along the chain to align and share their priorities. “Without everyone pulling in the same direction it's hard to build a car,” he added. “That’s a huge step forward for organizations. You have to trust that your customer is going to keep the entire supply chain including yourself in mind, and will use the information being shared appropriately. We've had very good success with that.”

Sustainable measures are not limited to protecting the environment. Due to a strong push from European governments mandating corporations to practice due diligence in preventing human rights violations in supply chains, KIRCHHOFF Automotive’s procurement department has proactively started to deploy a roadmap to measure, analyze, deploy, and track suppliers’ compliance to the company’s Code of Conduct for Corporate Social Responsibility (CSR).

Putting the KAPS on Manufacturing

KIRCHHOFF Automotive’s manufacturing processes and process management methods are audited and evaluated regularly and improved continuously, using benchmarks based on the KIRCHHOFF Automotive Production System (KAPS). As the market needs change, the skill sets required to meet those challenges are routinely assessed, and the company’s comprehensive educational and training resources keep workers on point and support them in furthering their careers with the company.

“We have internal training programs and we've partnered with organizations like the Precision Metalforming Association for certain external training programs,” Forquer said. Workers are encouraged to explore their interests and move within the company in an effort to keep more talent in the manufacturing environment. The efforts are supported by formal mentorship programs, college graduate rotation programs, and skilled trade educational support.

KAPS is a boots-on-the-ground approach to improvement and continued innovation. Depending on the particular need, teams of specialists are available to meet manufacturing challenges on the shop floor. There are team members focused on supply chain resiliency and sustainability that look for ways to improve processes to lower the carbon footprint while increasing efficiency.

The supply chain disruptions of the past few years have revealed a number of weaknesses that could easily have a negative effect on manufacturing production. Because the automotive industry buys small subcomponents from industries that are not automotive, some of these suppliers don't connect with the complexity of the automotive supply chain.

“They don't understand that not shipping that box of widgets is shutting down an entire car line,” he noted. “As an industry we need to continue to evolve and understand where that widget is that could shut us all down, and then put resiliency plans in place.”

“What sets us apart from our customers and competitors is that we are willing to dedicate the resources necessary to address a particular need for the most efficient benefit for our customer,” he concluded. “That's something that we take a lot of pride in. By having those teams in place, we can show our customers the improvements that we make and the things that we're striving for.”

Dutta further explained that supply chain interruptions caused by COVID shutdowns presented a challenge in getting parts on time in 2020-21, particularly from Asia and Europe due to port congestions and a lack of containers and manpower. This forced them to look at bringing sourcing markets closer to manufacturing locations, and ramping up localization efforts in the North American region. The geo-political tensions in Europe (Ukraine-Russia war) and China–U.S. trade relations further solidified this strategy.

“We now have realized that we need to reduce our dependence on offshore sourcing markets and reduce the supply chain to avoid interruptions in supply. 2020-21 were years of COVID, and 2022 and beyond are going to be years of higher prices due to inflation,” he said. “Commodity costs have escalated to exponential levels, making it challenging to control cost of our purchased products and services. A successful procurement strategy will now depend on how we can leverage our volumes with a smaller consolidated supply base, and develop suppliers with a competitive cost structure.”