Resource: Case Studies: Wealdstone Engineering (CAT Group)
Wealdstone is one of the oldest UK remanufacturers, producing engines and transmissions for the automotive industry which are updated to modern standards.
Friday, 17th November 2006
About Wealdstone Engineering
Wealdstone is a privately owned company specialising in the remanufacture of engines and transmissions on behalf of branded vehicle producers (BVPs). This accounts for around 90% of business, the remaining 10% being attributable to own-brand remanufacture for the coach engine market and for the MOD. At the Rushden site approximately 105 people are employed, handling around 12,000 engines per year. Special Features of Wealdstone's Operations Wealdstone is one of the oldest UK remanufacturers in an industry that is well suited to the practice. A complex and comprehensive set of relationships covers the new market, OEM supplies, after-market, after-market support, contracted and independent remanufacture, and grey market activities. The core items for remanufacture come from the OEMs via their dealer networks as a result of the warranty and parts replacement programmes. This is subject to exclusive contracts, and prices based on negotiation with the BVPs. These are essentially 'cost plus', based on historic knowledge of the complexity of any particular job. An important part of remanufacture is upgrading. Every engine that leaves is specified to modern standards of, for example, emissions. Wealdstone operates a classic remanufacturing process with an extreme emphasis on quality typical of top class auto manufacture. Distribution of remanufactured engines is strictly through the dealer networks. Quality is controlled rigidly to OEM standards, specifically enforced by the presence of BVP QA personnel on site. This market is supported and endorsed by the BVPs, but is therefore limited to whatever the BVPs are willing to consign to the remanufacturers. Remanufacturers such as Wealdstone are continually pushing for increased volumes of and ranges of models.
Special Features of the Sector
There is a highly integrated relationship with the OEMs for contracts, scheduling and standards. However, like most modern automotive supply relationships, there is strong pressure from the OEM to reduce costs through competitive tendering. Remanufacturing is seen as a cost-effective solution to a business problem. Generally, technology does not form a barrier to remanufacture except in the sense that global BVPs demand extremely high quality control. This demands large capital investment, and significant maintenance spend. This does not prevent independents from remanufacturing, but means they cannot obtain direct endorsement of their products. Although core engine technology remains unchanged, the product form continues to evolve. Materials enhancements have required more demanding tooling operations, as has a general tightening of tolerances in manufacture. Engines themselves are more compact, more highly stressed, and surrounded by sophisticated electronic systems for control and diagnosis. The cores are obtained through the BVPs, who set targets for remanufacture with their dealer network. However, dealers can obtain cheaper and inferior remanufactured units from the grey market, and replace their quotas with recovered scrap engines. Many of these are clearly old technology, more expensive to remanufacture, or even un-recoverable. Increasingly, previously unusable items are made recoverable through new techniques. In general, engines are an item well suited to remanufacture, being highly componentized, with strong component supplier after-markets for critical items. From the perspective of the customer, the unit is no different from new, and attracts the same manufacturers' guarantees. Engine remanufacture clearly prevents the return of highly engineered products to their most basic metallic form and as such is an extremely effective value preservation tool.