The Ricardo company

[billy walker]

Don't know if this is the appropriate area for this but given the fact this company designs some engine product for BMW I'm hoping it's a fit here. The company's name was mentioned by another individual in the Wethead recall thread if I'm not mistaken. I was aware of a 3rd party being involved in some of the dual-purpose engine builds I think it was. Similar to the outsourcing of product build within the automotive industry. But I never realized the extent of BMW outsourcing in regards to engine design. Maybe. I actually need to read further to know if this is the case. I just assumed BMW had all the prerequisite skills in-house given the fact they are a global company. But we all know what happens when you assume. Please note I am not saying this is a bad thing. Quite the opposite; a compliment for recognizing your weaknesses and taking action to shore up the weakness.

Here's a look at this company's page for the Motorcycle Transportation sector:

http://www.ricardo.com/en-GB/Our-Ma...Transportation/Capabilities-and-Case-Studies/

I remember years ago (decades?) being very surprised at the amount of outsourcing within the automotive industry. The motorcycle industry doesn't begin to have the quantity nor the quality of professional trade publications that the automotive folks have. I wonder if the very same thing is going on within our industry. Putting many diverse heads together should theoretically mean better product. And, there is no doubt today's product is nothing short of amazing stuff. Across all brands today we have quality that just didn't exist that long ago. It's far more about taking care of your customer today then ever before. We have arrived about as close as you're getting to transportation perfection as you're going to get. How cool is that?

 

[36654]

Don't know if this is the appropriate area for this but given the fact this company designs some engine product for BMW I'm hoping it's a fit here. The company's name was mentioned by another individual in the Wethead recall thread if I'm not mistaken. I was aware of a 3rd party being involved in some of the dual-purpose engine builds I think it was. Similar to the outsourcing of product build within the automotive industry. But I never realized the extent of BMW outsourcing in regards to engine design. Maybe. I actually need to read further to know if this is the case. I just assumed BMW had all the prerequisite skills in-house given the fact they are a global company. But we all know what happens when you assume. Please note I am not saying this is a bad thing. Quite the opposite; a compliment for recognizing your weaknesses and taking action to shore up the weakness.

Here's a look at this company's page for the Motorcycle Transportation sector:

http://www.ricardo.com/en-GB/Our-Ma...Transportation/Capabilities-and-Case-Studies/

I remember years ago (decades?) being very surprised at the amount of outsourcing within the automotive industry. The motorcycle industry doesn't begin to have the quantity nor the quality of professional trade publications that the automotive folks have. I wonder if the very same thing is going on within our industry. Putting many diverse heads together should theoretically mean better product. And, there is no doubt today's product is nothing short of amazing stuff. Across all brands today we have quality that just didn't exist that long ago. It's far more about taking care of your customer today then ever before. We have arrived about as close as you're getting to transportation perfection as you're going to get. How cool is that?

IIRC, a Ricardo USA executive is a member of our community and has offered forum input in the past.

However, I am a bit surprised by your discovery. BMW is a relatively small company and has used outside vendors for everything from body design (pinanfarina) to engine components (AC Delco in-tank fuel pumps) to suspension (Showa). Back in the 1980's and 90's, the vertically integrated auto companies like GM and Diamler were regarded as dinosaurs by the MBA mentality. Accordingly, management adopted a philosophy of spinning off component divisions (Rochester, AC Delco/Delphi, Saginaw Screw, etc) and outsourcing component fabrication and design to vendors with no alternate customers. It wasn't pretty for those small guys. Research the story of this guy ...Jose Ignacio Lopez de Arriortua.......and you'll get the picture.

 

[billy walker]

IIRC, a Ricardo USA executive is a member of our community and has offered forum input in the past.

However, I am a bit surprised by your discovery. BMW is a relatively small company and has used outside vendors for everything from body design (pinanfarina) to engine components (AC Delco in-tank fuel pumps) to suspension (Showa). Back in the 1980's and 90's, the vertically integrated auto companies like GM and Diamler were regarded as dinosaurs by the MBA mentality. Accordingly, management adopted a philosophy of spinning off component divisions (Rochester, AC Delco/Delphi, Saginaw Screw, etc) and outsourcing component fabrication and design to vendors with no alternate customers. It wasn't pretty for those small guys. Research the story of this guy ...Jos? Ignacio L?pez de Arriort?a.......and you'll get the picture.

I am aware of the outside vendors you mentioned. As I stated I was surprised at the possible degree of outsourcing engine design. Like Porsche designed the V-Rod engine. I can understand Harley needing assistance with a totally new engine design but I would have thought BMW had that type of expertise in-house. Maybe due to the size of the motorcycle division they have not dedicated the resources? Maybe most engines are designed by 3rd parties? I don't know. I'm not familiar with the Ricardo name and it's always possible I may have forgotten but I don't recall anyone ever bringing this company up in any discussion, BMW representatives or otherwise. Not saying this is bad. Again, a compliment for recognizing where weaknesses may lie.

As for component divisions - In all likelihood I don't know enough about this to make an intelligent statement but I seem to recall the OEM's basically forcing the prices on those components to be so low that you couldn't be profitable. And, who knows how many factors are involved in that type of scenario. Long story short a company has certain responsibilities as to containing overhead expense to a reasonable number. 3rd parties forcibly driving the price point to unsustainable levels is typically not beneficial to the customer in the long term. I could be totally off base on this.

I'm sure 3rd party engine development presents its own issues. I have no clue as to how much 3rd party development goes on but it's fair to say the quality of today's vehicles is top notch.

 

[36654]

I have no clue as to how much 3rd party development goes on but it's fair to say the quality of today's vehicles is top notch.

As a case in point, you might find that Corvette engines are actually a Mercury Marine product in terms of design and build.

Today's automotive and motorcycle products are high quality, but understanding the value of that industry to a given community is very tricky. Several decades ago, that industry meant good incomes and a diverse level of employment.....janitors to executives. Today, a production site might just be assemblers, a shipping and receiving department and personnel management. Design and planning of critical product lines are tasks typically done at the home office under oversight of senior management. Accordingly, the value of a modern production site has to be framed in the same way we used to consider off-shore production sites for our domestic companies..........a provider of lower cost or market specific products.

But, as a consumer, you really only care about "bang for the dollar". Which is fine, as long as you have some form of employment which enables you to be a consumer.

 

[EMSimon]

As a case in point, you might find that Corvette engines are actually a Mercury Marine product in terms of design and build.

.

That's only true for about 5,000 Corvette engines and even then only partially correct.
The 32-valve DOHC engine known as LT-5 in the 1990-1996 Corvette ZR1 was designed by Lotus. It was completely different from the L-98 Chevy small block in the stock Corvette. It was built for Chevrolet by Mercury Marine in Stillwater because of their extensive experience in small volume manufacturing and aluminum machining. The contract was signed for 5,000 inital motors. After the 1990 model year, when Chevrolte sold approx 3,000 ZR-1s, the annual production was limited to 250-300 for the next consecutive 5 years thus not exceeding the 5,000 units contracted for. After that the LT-5 was discontinued.
Not other Corvette motors ever had any Mercury involvement. They are all based on the good old pushrod V-8 small block.

 

[ted]

This is the way of the world, and rightfully so. A company finds another that has the expertise and capability of designing and manufacturing a component of higher quality, better design, and at a lower price than could be done in house, passes along specs, then takes the component and uses it to manufacture a product that has higher quality, better design, and because of that is more competitive (aka, better and less expensive to the consumer.). The whole Country is dotted with these small component manufacturers, I stopped in at the Denso plant in Osceola, Arkansas a while back - 225,000 square feet and 450 employees, they supply radiators and HVAC to Toyota, Honda and Catapillar. That is but one of thousands making thousands of things.

BMW (and Toyota, etc.) knows it makes no sense to invest vast sums of money to develop, patent, and build discrete manufacturing for a component where the final product would end up being just equal to, or more possibly not quite as good, as a component that could be just designed, or design built by a company that does nothing or little more but, that already has invested in and owns the IP, has years of experience and the sophisticated design and build capabilities already in place, and has an experienced workforce hired up and ready to go.

 

[billy walker]

That's only true for about 5,000 Corvette engines and even then only partially correct.
The 32-valve DOHC engine known as LT-5 in the 1990-1996 Corvette ZR1 was designed by Lotus. It was completely different from the L-98 Chevy small block in the stock Corvette. It was built for Chevrolet by Mercury Marine in Stillwater because of their extensive experience in small volume manufacturing and aluminum machining. The contract was signed for 5,000 inital motors. After the 1990 model year, when Chevrolte sold approx 3,000 ZR-1s, the annual production was limited to 250-300 for the next consecutive 5 years thus not exceeding the 5,000 units contracted for. After that the LT-5 was discontinued.
Not other Corvette motors ever had any Mercury involvement. They are all based on the good old pushrod V-8 small block.

Interesting history.

 

[lkchris]

It can easily be put to BMW being "busy" with car engines. Lots more economy and emissions regulations coming up fast for cars and likely enough to keep most internal talent busy there.

Our club has an annual event at Glenwood, NM, and this year a Ricardo employee (friend of a member) attended, as he was out from Michigan to buy an R1200R for sale near Silver City. This to supplement his Airhead ... which I bet doesn't get ridden much after this. He was already raving about the brakes. He got to do AZ 191.

And, "some engine product" is a bit of an understatement as an accomplishment listed at Ricardo's Wikipedia entry is

Executing the complete design of the six cylinder motor for the BMW Motorrad K1600GT and K1600GTL, and the design and manufacture of its transmission, under contract to BMW.

If I were BMW, I'd put more priority on the new boxer in any event.

 

[EMSimon]

). The whole Country is dotted with these small component manufacturers, I stopped in at the Denso plant in Osceola, Arkansas a while back - 225,000 square feet and 450 employees, they supply radiators and HVAC to Toyota, Honda and Catapillar. That is but one of thousands making thousands of things.

.

That's sort of funny how you describe this, considering that Denso is one of the largest automotive component manufacturers in the world, definitely THE largest when it comes to vehicle a/c. (Denso, btw, is majority owned by Totyota)
But in essence that is where the automotive industry has moved to: Parts, modules and systems used in cars are being designed developped and manufactured by suppliers, who are highly specialized. The OEM (vehicle manufacturer) does not have the resources to employ vast departments of engineering specialists to design these systems. Engineers at OEMs are mainly doing product integration and confirmation tests and leave the design to the specialists. Engines are the only area where most OEMs rely on in-house design, but this is going to change also. As it has already in the transmission segment. The fact that Ford and GM collaborate in a joint development program for 10-speed automatic transmissions is a last ditch effort to keep up with the progress the competition has made by letting transmission suppliers design and manufatcure 8- and 9-speed automatics.

 

[ted]

"small component manufacturering facilities"

Fixed for posterity's sake

 

[brisco]

"small component manufacturering facilities"

Fixed for posterity's sake

Fixed again for ya; "small component manufacturing facilities"
No "e"

 

[36654]

So, when the consumer buys a product from company XYZ that's a compendium of parts from suppliers A, B & C does he or she really understand that you're possibly just talking about a variance in QA/QC standards applied to the same product produced on the same assembly line? In addition, when the number of suppliers of a given component become fewer than the number of car companies, doesn't differentiating between car companies become silly?

Once the market understands that you're just offering a different combination of parts that the other guy could have chosen to purchase, you've pretty lost any brand appeal.

 

[billy walker]

So, when the consumer buys a product from company XYZ that's a compendium of parts from suppliers A, B & C does he or she really understand that you're possibly just talking about a variance in QA/QC standards applied to the same product produced on the same assembly line? In addition, when the number of suppliers of a given component become fewer than the number of car companies, doesn't differentiating between car companies become silly?

Once the market understands that you're just offering a different combination of parts that the other guy could have chosen to purchase, you've pretty lost any brand appeal.

That's when the magic of marketing takes place. Perceived quality at a different price point with a different corporate name. The human ego is more impressed with the name Audi or Benz or BMW than Chevy, Ford or Chrysler. And that drive to differentiate oneself is worth all kinds of money.

 

[EMSimon]

You guys are basically hitting the nail right on the head. Looks may be the only thing that is really different.

 

[36654]

You guys are basically hitting the nail right on the head. Looks may be the only thing that is really different.

And, thus, why one should not pay one cent more than is necessary at the Hyundai or Kia dealer.........

Or, conversely, how foolish we must be......

 

[mika]

What level of integration (vertical, horizontal, diagonal or any other direction) is required for a company to call a product its own?

No matter the integration, in their rawest form form the mines, chemicals etc, all manufacturers start with the same raw materials and combine them in various ways. If they are "all the same" why did Yugo fail and Bently continues?

From its perspective BMW outsourced the design and construction of fuselages that it attached its engines to in the beginning of companies history. The Dixie, BMW's first venture into automobiles in the 30s was a design it licensed and put its engines into. In the 50s the licensed Isetta was powered by a BMW engine and helped train a workforce to build cars in the future. Their first venture into modern scooters with the C1 used a drive train built by Rotax. The F twin was a Rotax engine. Lacking a European manufacturer the G450 went to KYMCO. Ricardo was involved in the design and development of the drive trains for the new scooters.

American manufacturers (and others) have tried vertical integration form the mining pit to the showroom before. In the short run their were profits to be made but cumbersome companies that could not react to changes in technology and markets were often the result.

What level of integration (vertical, horizontal, diagonal or any other direction) is required for a company to call a product its own?

 

[dukekaboom]

IIRC, a Ricardo USA executive is a member of our community and has offered forum input in the past.

You'd be surprised the amount of OEM outsourcing that takes place including in the powertrain space. Understand that very little of this is ever black box which means that they dump a specification in your lap and you show up in 18 months with a clean sheet engine -- the client is always heavily involved and is clearly project managing the whole of the vehicle program (since there's lots of other moving pieces and not just the engine design and development work).

This is now public knowledge (though not broadly advertised by BMW) so I can tell you that Ricardo had a heavy hand in the development of the K1300S engine, the K1600S engine and the C650 engine. You can read detailed articles on the development process which the company talks about in their publication Ricardo Quarterly. The latest speaks to their work on the scooter and past articles speak to the other two bikes. To the best of my knowledge, Ricardo was not involved in the development of the new water-cooled boxer or the S1000RR engine -- that was supported by another German boutique engineering firm but I can't remember the name (not FEV).

Kent

 

[jpdicarlo]

You guys are basically hitting the nail right on the head. Looks may be the only thing that is really different.

Bare in mind that the design process is also often outsourced. At least by the smaller guys. I believe BMW did with the R90S and the R65LS (Hans Muth, not sure if he was an employee or a contractor).
The auto guys do it all the time when they need a high-profile design which they figure can't be done by in-house staff, or the department is too overworked. BMW M1.

 

[jpdicarlo]

What level of integration (vertical, horizontal, diagonal or any other direction) is required for a company to call a product its own?

It's not black and white. The vast majority of components in cars are purchased from outside suppliers. We are talking from 60-80%. Then their are "badge engineered" products in which everything but the nameplate is made by someone else.

The public rarely knows and seldom cares. It probably differs some when you get into prestige products, as buyers are lead to believe the premium price is justified by some levels of superior engineering, design, and "handcrafted" assembly. Unfortunately, most of that is marketing hype.

 

[36654]

What level of integration (vertical, horizontal, diagonal or any other direction) is required for a company to call a product its own?

It's not black and white. The vast majority of components in cars are purchased from outside suppliers. We are talking from 60-80%. Then their are "badge engineered" products in which everything but the nameplate is made by someone else.

The public rarely knows and seldom cares. It probably differs some when you get into prestige products, as buyers are lead to believe the premium price is justified by some levels of superior engineering, design, and "handcrafted" assembly. Unfortunately, most of that is marketing hype.

OK, so if Honda and Yamaha trim some weight from their sports touring bikes, I would be a fool to spend the money on a more expensive brand.

I really hope someone in Japan and Germany is listening..........