Scania annual report 2003

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PRODUCTION Investments for increased capacity Scania develops and manufactures major heavy vehicle components – engines, cabs, gearboxes, axles and frames – under its own auspices. This gives Scania control of quality and cost levels in development and production. Scania has a global production system in which all its production units in the world are integrated. As a result, customers enjoy faster, more reliable deliveries, while Scania gains flexibility and greater efficiency. This is possible because today Scania manufactures identical parts and components at all production units. Due to Scania’s global quality and environmental standards, as well as its shared production system, it is of no significance to the customer where Scania vehicles and components are manufactured. A Scania is always a Scania. During 2003 Scania’s production volume in Latin America rose, since local markets continued to recover as deliveries to other parts of the world rose. Today nearly half the company’s production of vehicles and components in Brazil and Argentina is exported to markets outside Latin America. Capacity increase in Zwolle At the same time, it is important to have enough assembly capacity near customers to be capable of responding quickly to increased demand. Scania’s investment at its assembly in Zwolle, the Netherlands increased the technical capacity of truck assembly lines there by more than 50 percent. Together with concentration of component production to fewer locations, this will enable Scania to respond quickly to a rapid, strong growth in volume. Coordination of trucks and buses The restructuring of the bus and coach operations means that Scania is using the similarities between bus and truck chassis and benefits from existing synergies. Shared components is the basis for this coordination. To take advantage of these synergies between buses and trucks, during 2002 Scania initiated closer coordination of development, procurement, manufacturing and marketing in Södertälje. This helped cut costs and improved competitiveness of Scania’s bus and coach operations. The restructuring of these operations will continue during 2004, when the wholly-owned bus bodybuilding company Omni will concentrate its bodybuilding operations in S upsk, Poland. Preparations for new products During 2003 Scania prepared its production units for the new truck range. Development lines for training and assembly verification were built in chassis assembly, where employees from Södertälje, Zwolle and Angers were trained alongside regular production. Similar development and training lines were built for engine, transmission and cab production. Flexibility Since the heavy truck market varies both seasonally and over longer economic cycles, flexibility is of great importance in production. The flexibility of the Scania Production System (SPS), as well as the global production system, also makes it possible to respond more smoothly to both short- and long-term changes in volume. More efficient suppliers with the Scania Production System By sharing its experience, Scania helps suppliers to become more efficient in such fields as logistics, elimination of waste and quality improvements. This collaboration, which uses the working methods of the Scania Production System as a model, improves the competitiveness of both Scania and its suppliers. The Swedish-based company Swenox AB develops and manufactures complete exhaust and aftertreatment systems for the heavy vehicle industry in Europe. Competition is keen, and to increase its production, Swenox initiated an organised partnership with Scania in order to use Scania’s working methods and tools. Over the past year, the company has conducted training courses and formed pilot teams for improvement efforts. “During the spring of 2003, we began the task of building up a new production line for Scania silencers. We received very valuable help from Scania in doing so,” explains Sten Fredholm, Managing Director of Swenox. To date, improvement efforts have provided a complete analysis of “losses” in the affected production segments. Changeover times in the company’s pilot areas have been reduced by half, and productivity has climbed on those production lines that work on the basis of the Scania Production System. “We are also seeing very good quality and delivery trends. In our most important product for Scania, the main silencer, we now have zero faults and 100 percent delivery precision,” Mr Fredholm continues. The target of continued improvement work at Swenox is that during 2004, all employees should belong to an improvement team. ANNUAL REPORT 2003 30
Procurement Scania’s procurement operations are based on long-term, open relationships with suppliers. Key suppliers join the development and production process at an early stage and participate in operations in the same way as Scania’s own units. Many of these belong to a network that supplies all of Scania’s production units with components. This is possible because Scania has a global quality, environmental and production standard. In recent years, automotive industry suppliers have increasingly evolved into large systems suppliers with a global presence. Scania primarily wishes to work with small and medium-sized suppliers who focus on their core competency and develop specialized knowledge in delivering to the heavy vehicle industry. Smaller suppliers also have the advantage of being able to react faster and more flexibly to customer wishes. At the end of 2003, Scania had more than 600 suppliers of direct material. The task of expanding and integrating the supplier network is continuing. New procurement offices opened in Poland, the Czech Republic and Russia to further penetrate these markets. By also integrating Scania’s sales and service organisation into the procurement system, purchases can be coordinated using common agreements, which yields additional economies of scale. Production in figures During 2003 Scania produced a total of 51,276 (45,145) vehicles, of which 45,985 (41,433) were trucks and 5,291 (3,712) were buses. Productivity, measured as the number of trucks manufactured divided by the number of production employees, rose to 4.6 (4.3) units. The percentage of employees on shortterm contracts decreased during the year. The pay level rose by 4.3 percent in Sweden, compared to 4.9 percent in the Netherlands, 3.6 percent in France, 34 percent in Brazil and 12 percent in Argentina, calculated in local currency. Quality and business ethics Quality and delivery assurance are fundamental factors in choosing suppliers. During 2003 Scania trained a large number of suppliers in the QS 9000 quality programme. Scania’s procurement rules also specify standards of business ethics and social commitment. Ethical behaviour is a requirement in all relationships with Scania’s suppliers. Scania must always aim at the highest quality and integrity. If business activities are not covered by specific laws and rules, fairness, honesty and respect for others must permeate Scania’s behaviour. 31 ANNUAL REPORT 2003
Page 1 and 2: ANNUAL REPORT 2003
Page 3 and 4: NOMINEE SHARES To be entitled to pa
Page 5 and 6: Deliveries by market area, 2003 THE
Page 7: Road safety conference in Brussels.
Page 10 and 11: STATEMENT OF THE PRESIDENT AND CEO
Page 12 and 13: THE WORK OF THE BOARD The Board and
Page 14 and 15: GOALS AND STRATEGIES Strategy for p
Page 16 and 17: EMPLOYEES Scania grows with its emp
Page 18 and 19: SCANIA’S ROLE IN SOCIETY Long-ter
Page 20 and 21: CUSTOMERS Customer demands shape ne
Page 22 and 23: CUTOMERS AND PRODUCTS Tailor-made v
Page 24 and 25: CUSTOMERS AND SERVICE Maximum uptim
Page 26 and 27: RESEARCH AND DEVELOPMENT The art of
Page 28 and 29: DEVELOPMENT OF TESTING METHODS Incr
Page 30 and 31: DEVELOPMENT OF A NEW TRUCK A truck
Page 34 and 35: THE PRODUCTION SYSTEM The same work
Page 36 and 37: TRENDS AND INDUSTRY DEVELOPMENTS Ec
Page 38 and 39: EUROPE Strong sales in several mark
Page 40 and 41: Deliveries of Scania trucks in west
Page 42 and 43: OTHER MARKETS Record sales in sever
Page 44 and 45: REGISTRATIONS OF TRUCKS above 16 to
Page 46 and 47: ENVIRONMENTAL WORK Integrated envir
Page 48 and 49: ENVIRONMENT AND ECONOMICS Scania’
Page 50 and 51: SCANIA SHARE DATA Continued low tra
Page 52 and 53: FINANCIAL REPORT Financial review R
Page 54 and 55: Interest rate risk Scania’s polic
Page 56 and 57: Consolidated balance sheet 31 Decem
Page 58 and 59: Parent Company financial statements
Page 60 and 61: value, the recoverable amount of th
Page 62 and 63: NOTE 1 Segment reporting BUSINESS S
Page 64 and 65: Note 4, continued Financial receiva
Page 66 and 67: NOTE 9 Tangible fixed assets Machin
Page 68 and 69: NOTE 17 Other provisions During 200
Page 70 and 71: NOTE 26 Wages, salaries and other r
Page 72 and 73: Note 28 continued The other members
Page 74 and 75: Note 33 continued Interest rate ref
Page 76 and 77: LIST OF SUBSIDIARIES Corporate ID n
Page 78 and 79: Notes - Parent Company All amounts
Page 80: Auditors’ report To the Annual Ge
Page 83 and 84:
Key financial ratios 1 and definiti
Page 85 and 86:
2003 2002 2001 2000 1999 1998 1997
Page 87 and 88:
Leif Östling Born 1945. Member sin
Page 89 and 90:
Corporate Units 7. Håkan Ericsson
Page 91 and 92:
Scania Romania S.R.L. Alfred Bussma
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Scania annual report 2003

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