Safelite, Fuyao & OEM vs Aftermarket Autoglass : Supply Chain, Quality & Manufacturing

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I talked to Safelite experts before, and they told me about the company's history. Safelite used to manufacture glass back in the day. They had manufacturing plants in the US and realized over time that auto glass was getting more sophisticated. It was also cheaper to manufacture in China and ship to the US rather than produce in the US. But the story you're telling me seems to be the opposite. A Chinese company wanting to buy PGW in the US and manufacture in the US. I'm curious about why they would do that. Why go the opposite direction?

The Fuyao story was driven more by the OEMs than the aftermarket. Safelite is all aftermarket, which is a different business. The OEMs are trying to supply their production lines in the US and found it difficult and risky to supply from China. They have parts coming from everywhere, but a car production line operates 24/7, producing car after car. If the glass piece isn't available or right, it can cause the production line to go down, costing anywhere from $10,000 to $100,000 per minute. OEMs are extremely risk-averse. As glass technology became more sophisticated, dealing with quality issues and ensuring they had the necessary parts at the required quality level led them to want at least a segment of their supply base in North America, not China.

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For glass specifically?

When producing a part for a General Motors factory, for example, the dimensions must be exact. It's not just about the glass; it's about all the additional components that make it challenging. For instance, a windshield supplied to General Motors or any OEM has alignment pins and a rubber seal. If these aren't precisely placed, it could potentially halt the production line. The effort to ensure quality for an OEM part is significantly greater than for an aftermarket part. Aftermarket parts might not even have alignment pins and are installed by a technician, making it more of a custom job. The precision required isn't the same as in automated production. The quality checks for aftermarket parts, which go from the glass supplier to a warehouse and then to a technician, aren't as rigorous as those for automotive OEM plants. OEM representatives monitor the production line, and any issues require immediate attention. In contrast, the aftermarket side is more relaxed. The quality specifications and requirements aren't as stringent.

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