Franz Schnabl, VP HR Magna Europe, and Hansjörg Tutner, Global Director HR Magna Steyr, about smart production and industry 4.0.
Smart Factory

“No-compromise standard setter”

Franz Schnabl, VP HR Magna Europe, and Hansjörg Tutner, Global Director HR Magna Steyr, talk to Michael Böhm, T-Systems Global Account Executive, about audited security, how education systems are racing to meet demand for skilled IT workers and how HR serves as the digitization interface between people and machines.
Author: Thomas van Zütphen
Photos: David Payr
Mr. Schabl, Magna is growing both organically and strategically. At the same time, it is changing more and more of its nearly 320 production plants and 102 engineering, product development and sales locations in 29 countries from traditional manufacturing to smart production. How do you set up a state-of-the-art smart factory for automotive manufacturing?
Franz Schnabl: We are 100 % customerdriven, particularly in the implementation of our smart factory strategy. And one of the keys to meeting customers’ growing demands – i.e. to be faster, more efficient, more competitive and more faithful to our quality standards – is innovation. Digitization has picked up so much speed that innovation cycles that once might have lasted 20 years now have to be completed in six months or less. That’s why we focus on setting new standards for advanced production systems and technologies in a way that benefits our customers. This is an area where we definitely don’t like making compromises.
Hansjörg Tutner: That said, digitization is an evolution, not a revolution. We’ve been using robots in production for some time. What has changed now is the sheer quantity and variety of data at our fingertips. In other words, even when we upgrade six production lines for new models and basically rebuild everything from the ground up – like we’re doing in Graz – we may be dealing with a colossal project, but it remains an evolutionary process nonetheless.
“Innovation is the key to being faster, more efficient, more competitive and more faithful to our quality standards.”
FRANZ SCHNABL, VP HR Magna Europe
How do the conversion and set-up requirements differ between these kinds of greenfield and brownfield projects?
Schnabl: It’s obviously easier to digitally plan and flesh out greenfield projects because you start out with a blank slate. The upgrade here in Graz is far more complex because we have to keep delivering our current projects to our customers’ full satisfaction right up to the very last day. We have no choice but to upgrade the factory during regular business operations. With acquisitions, by contrast, we have to take care not to simply force our existing systems on the newest member of the Magna family, but to weigh our options carefully and pick the system that works best for each set of circumstances.
Tutner: There are also huge differences in production cultures between facilities in Asia, the Americas and Europe. What talent do I have to work with? What kind of workers have I got? What training do they have? You have to consider all these things if you expect your employees to do new, different or even more things with each step toward further digitization. In other words, you first have to step back and analyze the human production environment at each site.
Franz Schnabl
Franz Schnabl is convinced that there will never be a factory devoid of people in the automotive industry.
You started building different car models on the same production line as early as in 1999. What has changed since then?
Tutner: In today’s extensively automated whitebody production environment, you’ll find only a handful of highly skilled workers. The humanmachine ratio has changed completely. The story is much the same in paint shops. Auto assembly, by contrast, requires tremendous flexibility that you can still only get from human workers. It would be just plain inefficient to use robots for this kind of work. That’s why we only automate valueadding activities if it makes sense to do so. The art is to strike the right balance between what’s technically possible and what makes economic sense.
Schnabl: And that goes for everything – from mobile production lines and autonomous transportation vehicles to racks that automatically reorder products when stocks are low or robots that learn from people and pass on new knowledge to their “colleagues.” In all our production departments, we find a balance by asking: What do we have to do to improve efficiency by two to twoandahalf percent in vehicle output each year without changing our headcount? That is the bar that our customers have set, and it has driven a shift in jobs in all of our departments.
“Preventive maintenance requires new skills and is an excellent example of a continuous change process.”
HANSJÖRG TUTNER, Global Director HR Magna Steyr
What aspects of digitization play a particularly important role from an HR perspective?
Schnabl: Employees have to familiarize themselves with new technologies and be able to use them competently. That means our error rate shouldn’t rise if certain processes speed up, for example. Around five percent of work hours are spent on training at all Magna departments.
Tutner: Investment in training and education will increase. To remain competitive, we have to stay on top of employee skills. Equipment maintenance is a prime example. If we want to know in advance when a production component has to be upgraded and what kind of upgrade is needed, our employees have to be able to read, interpret and act on information from data and sensor reports. Preventive maintenance requires new skills and is a really excellent example of a continuous change process.
How much longer will people work in digital factories? What will they do?
Schnabl: There won’t ever be factories devoid of people. That’s inconceivable. According to a PwC forecast, we will have five percent fewer direct employees in automotive production in 2030. Jobs will be located elsewhere. Personally, I don’t think we will ever completely eliminate the human element. Industry and business have a political imperative to provide work and employment that gives meaning to people’s lives.
Any attempt to sacrifice this responsibility on the altar of digitization would provoke an immediate backlash against digitization and would be inherently counterproductive.
What is true, though, is that digitization has enormous potential to change the hours we work and give us more control over how we live our lives. The art is to meet everyone halfway and accompany them on this journey. That’s a core digitization task for HR that we – and by that I mean all of the company’s stakeholders – take very seriously for our 160,000 employees worldwide as we move ever closer to smart production processes. HR, in other words, is a digitization interface between people and machines. 
Magna’s state-of-the-art factories are packed with technologies that many companies have yet to adopt: IoT, artificial intelligence and augmented reality, to name a few. What’s the next big thing in smart factories?
Schnabl: Our innovation strategy reflects the commandment to “think global, act local” with a focus on customer satisfaction. To put it another way, I don’t think anyone can seriously answer what the next big thing will be.
Hansjörg Tutner
Manufacturers won’t be able to keep up with technological progress without taking over more and more of universities’ responsibilities, believes Hansjörg Tutner.
Tutner: Obviously, that’s partly because there’s another question behind it: what will we be driving in the future? And that’s something no one can answer, either. As an auto parts supplier, our job is to stay at the forefront of our industry. One thing is certain: something will change significantly, especially in car making. Driverless and electric vehicles will have a tremendous impact on us – starting with professional training to the nittygritty of production all the way to organizational design.
Are there any concrete devices, applications or technologies where you think Magna is ahead of its time?
Schnabl: In automotive engineering, I’d point to our innovative hybrid drivetrain that is powered by electric batteries and hydrogen fuel cells. When it comes to our digitization per se, the biggest change is happening in logistics, where we’re phasing in driverless transportation systems. We’re obviously very excited by the prospect of managing our logistics operations on a constantly improving high availability basis. In robotic collaboration, our next step will be to start eliminating the fences that still separate people and robots on many of our production lines.
Tutner: In addition, we’re testing smart glasses in virtual engineering and training. We’ve also been cooperating with the T-Systems Innovation Center in Munich in application scenarios that focus on bringing the right team of specialists into a virtual “situation room” as soon as possible after production or assembly incidents.
Auto parts supplier Magna (photo of its plant in Graz, Austria)
Auto parts supplier Magna (photo of its plant in Graz, Austria) believes new legislation is urgently needed so that companies can protect their intellectual property rights even when drones take aerial photographs of their facilities.
When you were hired, the newspaper headlines proclaimed, “General to be Magna’s security chief.” What role do safety and security play in your current role today?
Schnabl: They play a role at many different levels. First, we start out every production meeting by talking about workplace safety. Our exemplary safety record isn’t an accident, though. Every new piece of knowledge that we squeeze out of big data sets each day opens up new opportunities that we have to be open to. That’s why every site undergoes regular audits and evaluations in order to stay at the cutting edge of workplace safety. Practically speaking, that also means we’re trying to make our European culture and mindset the global standard.
My job also involves product, service and application security as well as external security. Everything that we would classify as innovation protection has been deliberately assigned to risk management, which is responsible for the integrity of our customers’ and our own data, software and intellectual property. This field is growing in importance every single day.
Can you give us an example?
Schnabl: Our industry is discussing all kinds of challenges, from connected cars and driverless vehicles to IoT and much more. But let’s put them all to one side and look at something else entirely: drones. Customers have very clear requirements for how we need to shield certain aspects of our development and production processes from industrial espionage, including aerial surveillance by drones. The industry has even issued specific standards through the German Association of the Auto Industry (VDA). The legislative framework, however, could stand some improvement – for example, when it comes to enforcing a theoretical right to intellectual property and translating it into a reliable compliance framework. Paper tigers don’t help anyone when malicious drones can fly over the factory gates.
Franz Schnabl
Magna’s innovation strategy has to reflect the commandment to “think global, act local”, according to Franz Schnabl.
With its focus on agility, flexibility and integration, Magna is constantly driving digital factories and smart production forward instead of defending them as the status quo. At the same time, your company is constantly striving to speed up the journey from virtual engineering to physical production and shipment to the customer. What kind of help do you expect from IT service providers like T-Systems?
Schnabl: You have to constantly think outside the box so that everyone can contribute to the innovation process. Our partners are expected to engage in a constant interaction process. The third element, pressure from our customers and competitors, powers our daytoday improvement process, which revolves around the question, “Why did we get this contract, but not that one?” In almost all cases, it comes down to innovation and efficiency.
Tutner: That leads to a challenge that intensifies the input that we get from partners like T-Systems in terms of digitization and innovation: at the end of the day, the labor market cannot even come close to supplying all the employees that we need for virtual engineering or smart production. Ultimately, manufacturing enterprises like Magna will have to take over more and more of schools’ and universities’ responsibilities in order to keep up with the technological progress of what is already possible in industrial production.
Schnabl: Our education systems are a brutal showstopper for digitization – there’s just no other way to put it. And that criticism is mainly targeted at our policymakers.