C.E. Niehoff & Co. as a job shop manufacturer of OEM brushless alternators to the heavy truck market faces the following internal forces:

Supplier Power:

  • Rising costs of materials.
  • Casting suppliers routinely pass along to C.E. Niehoff & Co. metal and energy surcharges. They are fully aware that they can do this as there is a limited pool of sand and die casting suppliers.
  • Rising labor costs

Buyer Power:

  • Many precision machining, hardware distributors and anodizing shops are available with excess capacity to service on a short lead-time.

Entrance Requirements:

  • The high output off road vehicle brushless alternator business is a mature market which is 99.9% dominated by C.E. Niehoff & Co. who has recently been awarded multiple contracts from 9 major heavy truck manufacturers to provide alternators for the MRAP (Mine Resistant Ambush Protection) vehicles. Large capital investments, industry seasoned engineers and designers, skilled assembly employees and specialized tooling, fixturing and materials are needed to compete in the brushless alternator business.

Substitutes:

  • As of the release of this document, there are not any substitutes for the C.E. Niehoff & Co. brushless alternators in the heavy truck off-road market. These alternators are specified on the truck builders engineering drawings. Any changes to existing product or process must go through vigorous and stringent testing before the device is re-approved for use.

Rivalry among Existing Firms:

  • None. C.E. Niehoff & Co. dominates this market.

And the following external forces:

  • Low cost foreign competition
  • Increased customer demands for superior quality and on-time delivery.

Reman Holdings L.L.C., commercially known as Delco-Remy is also a company in the high output brushless alternator business. They have successfully employed strategies and tactics to navigate their way past the internal and external forces previously mentioned by utilizing an “operating strategy which is designed to improve manufacturing efficiency, reduce costs and increase productivity while continuing to achieve the highest levels of product quality.” (Edgar-online) In marketing, we would define this strategy as a blend or hybrid as it interweaves portions of other strategies (cost, differentiation and price.)

In the midst of increasing materials costs the company is “utilizing its international ventures to develop new, lower cost sources of materials and demanding that their suppliers provide technologically advanced product lines, greater systems engineering support and management capabilities, just-in-time sequenced delivery and lower system costs.” (Edgar-online) To improve production efficiencies and control labor costs, production operations are being shifted from “old, vertically-integrated manufacturing plants” (Edgar-online) with a “bias toward in-house manufacturing “ Panchak, Patricia 9/01/03 ) “to new, smaller and more efficient “focus” factories…which generally produce one product line in a plant designed to facilitate lean manufacturing techniques” (Edgar-online) with a strong emphasis on team-work. The benefits that the company believes they have realized with a focus factory environment include “reduced overhead costs” (Edgar-online) as some self directed work teams will require little or no supervision, and “enhanced productivity” (Edgar-online) as workers will have a passion for the work that they perform.

Since 1997, in an effort to ward off low cost foreign competition, Delco Remy has partnered with major automotive manufacturers in Europe, Brazil and India which has supported their global strategy of growth through strategic alliances and has also established “an infrastructure for their aftermarket business.” (Edgar-online) To address customer’s increased demand for quality products, Delco Remy has achieved ISO90002 certification and offers a “full line of alternators, some of which utilize premium design features that yield increased durability and a longer service life.” (Edgar-online)

What does this mean for C.E. Niehoff & Co.? It means that based on this benchmark; there is work to be done towards developing a stronger supplier base, a practical application of teamwork in their manufacturing plant and a greater emphasis on a global presence to Latin America and Asia.

Edgar Online. Retrieved March 7, 2007, Web site: http://sec.edgar-online.com/1997/12/10/09/0000950109-97-007390/Section10.asp

Panchak, Patricia (9/21/2003). Best Practices-The Virtues of Vertical Integration. Retrieved March 7, 2007, from Industry Week Web site: http://www.industryweek.com/ReadArticle.aspx?ArticleID=1310

Author Bio:
Bill Mokrzycki is an established supply chain professional with more than 15 years of experience team building his supplier base, delivering significant cost savings regarding materials and contracted processing, and coaching junior buyers. He holds an MBA from the University of Phoenix and is CPIM certified through APICS. He previously earned his Bachelor’s degree in Psychology at MacMurray College in Jacksonville, IL. The son of a steelworker, Bill has spent a lifetime allied with the manufacturing business. In pursuit of excellence in his speaking abilities, Bi

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