BorgWarner is a global product leader in
powertrain solutions. The company focuses on developing leading powertrain
technologies that improve fuel economy, emissions and performance. Its
facilities are located across the globe to provide local support to its diverse
The company operates in two groups: The
Engine Group develops air management strategies and products to optimise
engines for fuel efficiency, reduced emissions and enhanced performance.
BorgWarner’s expertise includes engine timing systems, boosting systems,
ignition systems, air and noise management, cooling and controls. The
Drivetrain Group harnesses a legacy of more than 100 years as an industry
innovator in transmission and all-wheel drive technology. The group leverages
this understanding of powertrain clutching technology to develop interactive
control systems and strategies for all types of torque management.
What are your plans for India and how do
you perceive the growth in this part of the world?
stated goal laid out in 2013 is for the company to become a US$ 15 billion
enterprise by 2020. It implies doubling the company in seven years which is
roughly a 10 pc growth rate. The way we plan to do that is to stay focused as a
powertrain leader and a technology leading company which is focused on
drivetrain and engine products and all products which we have or will have that
all enable the auto makers to achieve fuel economy, emission standards and the
driving performance they require. Where does India fit into that picture? Well in
the last few years the company is spread out half in Europe and the other half
split equally between the Americas and Asia. Over the next five years that will
change. We will become 40 pc in Europe, 30 pc in Asia and 30 pc in the
Americas. What that tells you is that the growth is still there in Europe but
is slowing down. That is because the vehicle growth is slow in Europe and we
have a very high saturation in all of our technology today. The two big growth
sectors are Asia and the Americas. In Asia we are basically focused on China
and India. We expect India to be a major contributor to that growth. BorgWarner
will be growing at the rate of 10 pc. I will expect the same for India as well.
We will surely look for more investment in India. When I look at the growth we
have in India, we will have to invest more in capital equipment and support the
programmes we have been awarded. I think you will see continued investment
around technical infrastructure capability. You will certainly see it on
production equipment to support the growth and in terms of new buildings we
will see how that plays over time but we will keep investing in India.
When you talked of saturation in the
European market, saturation in what sense? Is it in terms of market growth or
I said earlier is that BorgWarner has always grown much faster than the market
growth because of the adoption of our products. Europe has been part of that
growth when we have had very strong growth. What you see is that a lot of the
adoption of our product is much more main stream in Europe. For example, all
diesel passenger vehicles in Europe have turbochargers on them. Even the petrol
vehicles have turbochargers on them. If you contrast that on petrol turbochargers
for other parts of the world that penetration is very low. The reason is that
the emissions and fuel economy standards in Europe are tighter. A lot of our
products have been adopted and applied to the products in Europe but it will be
at a lower rate from what we have historically done, largely driven by a large
amount of our products which have penetrated into that space to help them meet
fuel economy and emission standards. The good news is that the technologies
applied in Europe over the last few years for emissions and regulations is
going to be the same technology being brought to India and China, so that is
going to be a great benefit to these countries.
What are the different kinds of new product
development that BorgWarner is currently working on?
constantly look to be inventing new products and technologies. The way we generally
think about it is that BorgWarner has always had innovation and technology for
the current products and we have to get them to the next level. Today we
produce a lot of technology for transmissions, 6-speed, and 7-speed and now you
probably know 9 and 10-speed transmissions. We have to develop and make sure we
have that. Long ago there were engines with one turbo, then two and now three
may be four who knows. There is always invention of new products to get to the
next level. BorgWarner has always been looking for brand new products, so as an
example in the last year or two we launched in the US market a product to work
with transmissions used in stop/start technology for automatic transmissions. We
launched the stop / start accumulator. What it does is it helps the
transmission function better for the driver when it goes into stop and start
mode. That is an example of what we have not done before. The other aspect of
next gen products are products that we bring into the portfolio through
acquisition as well. A very good example is the acquisition of Gustav Wahler
GmbH. That brought products like thermostats which was a brand new product for
BorgWarner. We will be making that here in India. There are multiple sources but
the way to think of it is that it is all going to be around powertrain, things
like thermal management products, valve train products, air management products,
etc. So it is exciting and that is why we spend a lot of money on R&D and
it is good for us.
How do you see India as an export hub of
sorts feeding the European and North American markets?
a BorgWarner perspective our strategy is to invest in the region, produce in
the region and engineer products in the region where it is consumed. That’s our
primary strategy, so we do very little of what I call export of finished goods.
The real strategy for India as an example is, we want to be able to do
engineering and manufacture of products to serve the local Indian markets. We
don’t do a lot of export of turbochargers or transmission products from India.
I would never say we never do because there is always a small example. Where I
see the opportunity in India is, we find component supply and support very
strong in India. In BorgWarner we buy a lot of components from India that we
use in Europe or North America and that will continue from a component supply
point of view. For example, we may source housings for turbochargers or similar
type of components. That is a strong element we will continue to use. One of the
things which help us a lot is the strong team we have on ground in India and as
those guys develop their local suppliers for India we also have the opportunity
then to use that same tier II supplier to supply other parts of BorgWarner
around the world.
You are also focusing a lot on R&D in
the Indian context. Do you see India becoming a strategic hub for BorgWarner
globally for any particular range of products or technologies?
I mentioned earlier, a lot of what we are going to be launching in India over
the next three years are derivatives of products existing in Europe. The base design
is already established and in production in Europe. What we are doing is
building local application engineering and designing, as well as testing and
validation work here. They can take accountability and responsibility to do
that locally with the customer. They can take a turbocharger in production in Europe
and adopt and modify it, adjust it and fit it for a local Indian customer.
Because they do that locally, they can also do it quickly and are very
responsive and can do the tests. That is what I think the next few years look
like. Would I see a possibility that we would do core research and development work
in India at the time? I would say that is possible. I think that is the next
step. The Indian team is busy with a lot of new products to launch, so we want
to walk before we run. But in the long haul, I think the engineering talent in
India is outstanding and can be utilised.
Are you developing some new products for
the diesel engine market from your turbocharger division in terms of below
1000cc engines which are coming in now?
work with everything from 15 L and 18 L engines for big trucks all the way down
to the 660cc engines. What we see is a very strong trend of downsized engines
is very much a theme and also boosting those engines. We provide products to
very small engines as well as large engines. It is not just turbochargers, we
make small engines for coolers and we provide timing drive products for 660cc
engines in Japan. The customer and the OEM will decide what engine optimisation
they want, whether they want to be at 660cc, 900cc or 1200cc. The customer
specifies the capacity and we tell them how we can optimise the engine or
transmission by showcasing products which can be applied.
You said India is important in the global
context for BorgWarner. What is going to be the strategy for your growth in
India? Is it going to be organic or inorganic?
think the majority of our growth will be organic. When I look at the products
we have today in our portfolio we have a lot of really great stuff and that is
going to drive the growth we need. As I said earlier we completed the
acquisition of Gustav Wahler GmbH last year and that is an immediate benefit
for India with some of those products applying here in India. I think it will
be a mix of organic and some acquisition along the way. We have a lot of good
products right now. A company has to bring in technology for us to acquire it. We
are looking for technology. What is interesting is when I look at Wahler and
other such acquisitions, they were privately owned by families in Europe and the
reason why they sold to BorgWarner was that they were under pressure from their
customers to go global.
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