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Motor development international

MDI CONCEPT



MDI: 17 rue des Bains 1212 Luxemburg

Tel. : 00 352 26 26 23 25



CQFD is the French subsidiary of MDI
4
me
avenue - 06510 Carros (France)

Tel. : 00 33 (0) 4 97 10 20 20 / Fax : 00 33 (0) 4 97 10 20 21
Website : www.mdi.lu E-mail : cqfd.ad@mdi.lu
Motor Development International

1

The usual system: a complex and polluting logistics
Activities
Buildings
Means of production
Comparative study
Analysis of the costs
Production concept




Turnkey factories to manufacture and sell locally








Chassis workshop
Bodyworks- and assembly workshop
Painting line
Mechanical machining workshop
Mechanical assembly workshop
Vehicle assembly line
Saddlery upholstery workshop
Tanks workshop



Usual production system




Production of parts and components
Distribution of finished products
The MDI concept simplifies the logistics
Advantages of the MDI concept
- on the ecological level
- on the economical and social levels
- on the quality level
- on the marketing level
- on the costs



The MDI concept reduces the production costs
Amortization







2
2
4
7
8
8
2
15

2

Activities



Turnkey factories to manufacture and sell locally

From 1999, MDI imagined and invented the notion of Dealer / Manufacturer / Associate
by proposing turnkey factories in order to produce and sell locally. Contrary to huge
conventional assembly factories (that are particularly polluting), the MDI concept sets up
numerous production micro-factories spread all over the world.











They are equipped with all the necessary workshops to manufacture 80 % of the vehicles
and to commercialize their products on the spot.




The Dealers / Manufacturers / Associates are distributed on definite marketing zones and
are owners of MDI factories. They carry out :

o the manufacturing of the cars
o the cars sales
o the organization of their after-sales network
o the manufacturing of the spare parts




The factory should be located on a site near a big city, if possible in a commercial estate.
A land of 15 000 m is sufficient to set up a MDI plant.

o Ground surface ... 4 500 m
o Show-room and commercial surface 600 m
o Production area... 4 000 m
o Storage surface .. 1 000 m

Buildings
MDI production concept


3




















































4





The totality of the means and tooling necessary to the manufacturing of the MDI cars is provided
by MDI.
Chassis workshop







Assembly tooling Gluing gauges

Bodyworks- and assembly workshop









Moulding line (MDI patent) Production moulds Injection tooling Foaming moulds Foaming
tooling Laser cutting 5 axis digital trimming Template

Painting line








Preparation Painting cabin Painting robot Drying room

Means of production

5

Mechanical machining workshop









Digital machining centre Specific machines Special tooling Three-dimensional
control material - Metrology

Mechanical assembly









Specific tooling Engine test bench General tooling Gear-box control

Assembly line









Tooling and handling material Subsets assembly benches along assembly line
Storage along assembly line


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Saddlery - upholstery









Necessary means

Tanks workshop









Liners blower Wire coiling machine
Control implements - Drying room

Storage means









Pallets carrier Shelving Fork-lift Handling material



Page 6

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Comparative study


Usual production system

















The conventional production method (practised by the global car makers) is based on a
logistics of assembly and distribution. A giga - assembly factory located on one spot
produces the cars that are then delivered towards several countries, to distributors who
redistribute the cars to the dealers.














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The usual system: a complex and polluting logistics















The supply chain of the present makers is divided into two large sectors:


The production of parts and components



This production phase goes through:


1) The transformation of raw material into unit parts and through the manufacturing of
sub-components by subcontractors (third 3)













VANTAGES OF THE CONCEPT
ACTUAL LOGISTICS
PARTS PRODUCTION FINISHED PRODUCTS
Raw material
Sub-components
suppliers
Components
suppliers
ASSEMBLY
FACTORY
Platforms and
terminals
P
P
T T
Distributors
Dealers
Customers
P
P
T T
P
P
T T
P
P
T T
P
P
T T

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2) The assembly of sub-components at the suppliers (third 2)











3) The manufacturing of main components (either at the suppliers, or in the plants of the
maker's group) (third 1)












4) The final assembly



















All those operations require transportation that increases CO
2
emissions

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The distribution of the finished products

To bring the vehicles to the final customer, it is necessary to :

1) Store finished vehicles on platforms and terminals
















2) Transport them to the importers and distributors in each selling country, who
dispatch them to the dealers (by train, by truck and even by ship)

























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3) Sell them through a dealers' network












4) To finally reach the end user























All the linking means between the participants (in the distribution of the finished
products) require transportation that contributes to the increase of CO
2
emissions.







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12


The MDI concept simplifies the logistics





















o No distributors

o No intermediate stocks

o Less suppliers: 80% of the vehicle are achieved on the spot

o The assembly plant is replaced by several MDI factories

o The suppliers are selected in view of reducing the costs, the logistics and the
transport

o The purchases for all the factories are managed by the MDI Trading Group in order
to derive profit from bulk purchases


Considering the number of MDI factories necessary to the production of the same amount
of cars produced in a conventional plant, the MDI concept enables:

o A reduction of the CO
2
rate caused by the transport of raw material and finished
cars

o A reduction of the logistics costs



Page 10

Page 13
VANTAGES OF THE CONCEPT
MDI CONCEPT SIMPLIFIES LOGISTICS
PARTS PRODUCTION FINISHED PRODUCTS
Raw material
suppliers
Sub-components
suppliers
Components
suppliers
ASSEMBLY PLANT
Platforms and
terminals
P
P
T T
Distributors
Dealers
Customers
P
P
T T
P
P
T T
P
P
T T
X
X
X
X
X
X
X X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X

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Advantages of the MDI concept



By way of example, to produce the same number of cars as a usual maker in his assembly
factory, 50 MDI's concept factories are required, that is to say:



























To sum up, the MDI concept requires (in relation to the usual production mode):













Only 1/3rd of the land surface is necessary with MDI concept
VANTAGES OF THE CONCEPT
Usual plant MDI production concept
Production : 375 000 cars 7 500 cars 375 000 cars
1 PLANT 50 PLANTS
Only 1/4th of the plant surface is necessary with MDI concept
30% more workforce are employed with MDI concept
Only 1/5th of the investment is required with MDI concept
Land surface : 2 370 000 m 15 000 m 750 000 m
Plant surface : 880 000 m 4 350 m 217 500 m
Workforce (2 shifts) : 4 650 - 120 - 6 000 -
1/3
rd
of the land surface
1/4
th
of the built surface
1/5
th
of the investment amount
30 % more labour

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On the ecological level

o Only one third of the ground surface is necessary
o Better distribution of the energy used for production
o No pollution due to the transport of the finished products


On the economic and social levels

o The currency remains in the country no need for change
o Creation of local employment no population transfer
o Sharing out of the knowledge and of the know-how


On the quality level

o A car produced every hour careful production quality
o Use of techniques that are not compatible with mass production


From the marketing point of view

o Customers buy cars that are produced locally (especially public services)
o Reduction of import duties/taxes (very high in some countries)


On the costs

o The MDI plants are small and easy-to-manage infrastructures (SME)
o Logistics expenses are drastically reduced
o No stocks of spare parts. These are manufactured after-time









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15

Analysis of the costs



The MDI concept reduces the production costs

Hereunder, a quick analysis of the costs' distribution on the selling price of a vehicle reveals the
important margin made by a Dealer / Manufacturer / Associate who has acquired an MDI's
concept factory.






















Amortization
(- 2% for the MDI concept)

This is the amortization portion that includes the buying price of the factory, the tooling, the
machines, etc. In the case of a MDI plant, simple manufacturing methods enable to reduce the
impact of that amortization on the selling price.
Purchases
(- 4% for the MDI concept)

The reduction of the percentage concerning the purchases is due to the fact that 80 % of the car
are really produced on the spot. That integration allows reducing the number of intermediate
suppliers. The purchases are made through a MDI Trading Group for all the production factories.



CONVENTIONAL CAR MDI AIR CAR
VANTAGES OF THE CONCEPT
Amortization 4% Amortization 2%
Purchases 32% Purchases 28%
Production costs 11% Production costs 6%
R & D 5% Royalties 10%
Logistics 8% Logistics 1%
Commercial costs 18% Commercial costs 7%
Dealer commission 18%
Overheads 4% Overheads 8%
Gross margin 2% Gross margin
SELLING PRICE / COST ANALYSIS
38%

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Production costs
(- 5% pour the MDI concept)

Those production costs are related to the staff and to the various running charges. Simple
production techniques, as also the use of already existing public services (no need for integrated
services, such as banks, buses, catering, safety, etc.) enable to reduce the production costs by
50 %.

Royalties
(+ 5% for the MDI concept)

Whereas a usual car maker reinvests about 5 % of a car's selling price into the R&D, MDI
deducts 10 % of that selling price as royalties. Those 10 % will be used for the R&D, but also
towards:
o the participation in international motor-shows
o the publicity worldwide
o the commercial and strategic management
o the marketing resources
o the dividends for the shareholders

Logistics
(- 7% for the MDI concept)

Only the transport and delivery of raw materials, as also the transport of the parts that are not
manufactured in the plant, are part of the logistics of the MDI concept.
The suppression of some steps, such as:

o transport of parts and subsets
o cocooning and protection during transport
o storage
o transport of the cars to the terminals
o transport of the cars to the dealers
o preparation of the cars before selling
o reparation of damages caused during transport (10% of the total production)

allows reducing the logistics costs by about 7 %.





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Commercial costs
(- 11% for the MDI concept)

In this item, only the wages of the salespeople, the commissions and the local publicities play a
part in the MDI concept. Whereas in the case of the usual car makers, the international motor-
shows, the publicity worldwide, the commercial and strategic offices, as also the marketing
resources are counted.


Dealers' commission
(- 18% for the MDI concept)

No commission for dealers, since the MDI production unit itself is the dealer.

Charges
(+ 6% for the MDI concept)

Since the production factory is a SME, it will not be able to negotiate the charges (social or for
electricity supply, for example) to the same extent as the big car makers.



This analysis of costs allows calculating the important margin that a Dealer / Manufacturer
/ Associate can get, thanks to the MDI production concept.