Everyone in the automotive industry is looking to add more electrical engineers. How is the search going at Delphi?
The reality is that we still don't have enough of those kinds of engineers. Everyone's out there trying to hire them in the transportation industry. But when you have several folks competing over the same resource it becomes a challenge. You also are competing with the Panasonics, Microsofts and Googles in the consumer electronics industry. They are looking for people with similar skills. Given what the auto industry went through in the last three to four years, those folks are saying 'I'm not sure I want to work in the transportation industry. I want to go over here and create the next BlackBerry or iPad.' It is a real challenge. We are out there every day trying to get the kinds of resources we think we need.
Are there too many mechanical engineers in the automotive industry right now and if so what is being done to address this?
What you are seeing now is re-training efforts to take mechanical engineers and give them an appropriate knowledge around electrical and electronic engineering. This is an exciting time for the industry because we are going through a classic transformation where the mechanical engineer dominated and now with the electrification of the powertrain and the emergence of the importance of software we see the need for more and more electrical/electronic engineers.
What other specialists do you need?
We need more chemical engineers because of the batteries. It is more than just assembling a few cells. You have to worry about the chemistry of the battery. Not all lithium chemistry is the same. You can have lithium based on iron, lithium based on manganese; there are a lot of variables.
Why is this so crucial?
One chemistry might give you the range but another will give you the power and torque you would need if pulling something heavy like a boat. If you don't understand that, you will mis-design your vehicle.
You need a chemical engineer who understands that. You need an electrical engineer who understands the software, the controls, the integration philosophies, and you still need the mechanical engineers who understand the actuation, design and performance of the product.
What challenges do you face when you present your products to automakers that do not have as much electrical expertise as Delphi?
There is a need to educate our customers on what these technologies mean. Even today, there are automakers that really are fundamentally dependent on their suppliers for these technologies. They don't have it in-house because they are still predominately mechanical (-engineering driven). You find that in many of the Chinese manufacturers. They are trying to do hybrids and EVs and they understand the components but they don't have the in-house skills around the power electronics and connectivity. They will come to Delphi and ask for help. That is where we can help them differentiate themselves.
What about when dealing with established automakers?
It depends on their need, capability and experience. I won't name names but a couple OEMs decided to bring this responsibility in-house and they are finding they don't have the capability in-house so they are coming back to Delphi and saying, 'Help us. You have the power electronics and more experience in these areas.'
Have automakers underestimated the complexity of this area?
When you get down to the subsystem, the component level and the technology level and get to the fundamental questions you find that you don't have all the answers. And those are very important answers that you need.
Is that when your phone starts ringing again?
What happens next?
They will say, 'We saw this or that at the Geneva auto show that you had displayed. Could you come in and talk to us about that technology?'
They ask in a way so that it doesn't indict their own in-house capability.
Clearly what the message is that they are struggling.
What is the outlook for the future? Are we on the verge of a real and sustainable global turn around?
I think prudence is the word of the day. Yes, we should be encouraged by the improvement and the opportunities in the marketplace and the improvement in our prospects. But we need to be careful in how we ramp up to meet our customers' expectations. Folks ask, 'Why aren't you ramping up to produce more subsystems for hybrids and EVs?' We say, 'Remember that this is a small percentage of the market.' The consumer has yet to totally embrace the technology so you could get yourself into difficulty by ramping up too fast.
So being prudent is the guideline, but you must also have plans in place so that
if those demands do come you have the ability to ramp up and be responsive.
Is it easier to be prudent especially considering the four years Delphi spent in bankruptcy?
That's true to a certain extent. But I think that across the industry we all had pain. It is better that we take a go-slow-to-go-fast approach then to start to ramp up and incur costs and make plans for a market that might not totally be there.
How are supplier-OEM relations?
They are improving because both sides realize that innovation is the differentiator and not all the innovation is going to come from the OEM. I think the industry recognizes that most of the innovation is going to come from the Tier 1 suppliers. If you are an OEM, you want to be the company they bring that technology to first. If you are the Tier 1 supplier, you want to be in a favored position because you are creating a product that is a differentiator for the OEM. I think both parties realize it is in there best interest to collaborate.