Tuesday, January 2, 2001
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Posted on: Tuesday, January 2, 2001

Diverse strategy gives Porsche product development edge

Bloomberg News

What do Porsche AG engineers do when not busy coaxing an extra bit of speed out of the company’s coveted sports cars? They help design Harley-Davidson motorcycles.

They also work on elevators, forklifts, earthmovers and heavy trucks as well as cars for other companies. Porsche engineers have sold their expertise to General Motors Corp., DaimlerChrysler AG, Volkswagen AG and Ford Motor Co.

The engineering unit is Porsche’s secret weapon, enabling it to employ more engineers than if it worked alone, giving it an edge in product development. Porsche will increase its sales by 50 percent when it brings out a sport-utility vehicle, called the Cayenne, designed for itself and VW.

The engineering unit is located outside Weissach, Germany, a small town of 7,000 people, nestled half an hour’s drive northwest of the company’s headquarters and main factory in Stuttgart.

The remote location is intentional: Porsche wants to protect the confidentiality of work it’s doing for other companies as well as the work it’s doing for itself.

The company developed the Carrera GT there, a top-of-the line sports car, which it’s considering putting into production. It would cost at least $330,000.

The entrance to the building where the GT was developed is in a courtyard behind a thick steel sliding door. Walls topped with barbed wire ring the courtyard.

Porsche insists that every visitor to Weissach signs a confidentiality agreement, making them liable if they reveal any secrets they may learn at the facility.

The unit accounts for more than a quarter of Porsche’s 9,300 employees. Two-thirds of the unit’s work is for Porsche and the other third for other companies. A car company dedicating so much of its design staff to outside work is unique in the industry.

Porsche has more than 100 test facilities in Weissach, where experiments can be carried out on anything from engines to noise measurement to simulating a car crashing into a deer. It even rented its wind tunnel to Jack Wolfskin, the German sporting-goods maker, to test the storm resistance of tents.

Doing design work for others taps into a long tradition. Porsche began life doing engineering and design, not building cars. The company founded by Ferdinand Porsche designed the Volkswagen Beetle in the 1930s to fulfill Adolf Hitler’s dream of a people’s car. After World War II, Porsche and his son, Ferry Porsche, turned to sports cars, initially planning to build only 500 a year as an addendum to design work.

The cars were so popular that they became Porsche’s main business, though the company still did other work, designing and building tractors for instance.

To broaden the company’s range beyond Germany, Porsche now also has a design studio in California and an engineering facility in Troy, Mich., close to the big U.S. carmakers. It also has branch offices in Japan and China where it doesn’t do research but keeps contact with clients.

Porsche will do almost any kind of design work for other carmakers, except one. It won’t work on competitors’ sports cars.

Everything else is fair game: vans, sedans, motorcycles, trucks, engines. Porsche officials said the company could design a new small car if asked. They want to expand and plan to hire another 150 engineers. The engineers keep busy — the company has its product line planned out for the next decade.

"We just presented our supervisory board with products for 10 years," Wendelin Wiedeking, Porsche’s chief executive, said. "Not ideas, products."

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