James Verrier, BorgWarner Inc. CEO since January 2013, is working to double the size of the U.S.-based supplier to $15 billion by 2020.
The company, which counts on Europe for 48 percent of its annual sales, makes most of its money from its turbocharger and transmission parts businesses. As fuel economy standards tighten, causing automakers to add more turbos and more speeds to transmissions, BorgWarner expects to see revenues increase, despite tougher competition.
Verrier, 51, recently spoke with Automotive News Europe sister publication Automotive New in Detroit.
Automakers would love for turbochargers to become another commodity item, like spark plugs and fan belts. What is BorgWarner doing to keep turbos a premium component when there are more suppliers now offering turbos?
Let’s talk a little about the competitive landscape. If we go back a number of years, there were only four suppliers, BorgWarner, Honeywell and two Japanese companies.
The OEMs saw the trajectory of the growth and penetration of turbos and understandably felt a little uncomfortable with just four incumbents. That made sense; the volume of growth is huge. We’ve seen Bosch and Continental enter that space. And that’s healthy. We welcome competition. It’s really OK.
We have about one-third of the market share today. You don’t have one-third without two fundamental things: You have to have an incredibly strong portfolio of technology across all of the products -- which we do -- and then you need to be very competitive from a manufacturing perspective and a design perspective. Simply put, our plan is to continue that momentum.
We’ve seen turbochargers evolve and become quite complex. What’s next for the turbo?
We’ve got a two-stage turbo, a three-stage turbo and a variable geometry turbo on the diesel side. I don’t think that’s going to slow down. I see continued opportunities for continued innovation around the aerodynamics of the product. I see a lot of opportunity in the materials used. We are going to see more and more electrified turbochargers, electrically assisted or electrically driven. That’s going to change the game a little bit.
You’ve made recruiting engineers a priority. If I am an engineering student, why should I come to work for BorgWarner to work on cam phasers and clutch packs when I can go to Tesla or Google?
The quick answer is: Come to BorgWarner! Come to the auto industry first. For me, every engineer we can get … into the auto industry is a win.
The reason I feel passionately about that is that I tell people all the time, the auto industry has constant growth year after year, unlike other industries, it is one of the most global industries on the planet, and it has more technology than any other industry than I know of.
Where does most innovation come from, automakers or from BorgWarner’s investments in r&d?
It’s a little bit of both. But the vast majority of the innovation occurs in the company’s business units. What they’re generally doing is next or a couple of generations of today’s products. … Our corporate r&d team around the world is charged with looking beyond the portfolio today and looking much further out in terms of what may be a natural migration for BorgWarner to move towards.
If there is a breakthrough in materials or some kind of new invention, can BorgWarner move quickly to develop it?
We have a venture capital fund, so to speak. We recognize that during the year, someone could come up with something that we really want to do. If that occurs, we have money aside, and we put people to work on it. It gives us a chance to react quickly. It gives us a chance to fund products that run across different business units. What we never want to allow to happen is for those great ideas, that a lack of money is an excuse.
Your goal is to continue to grow revenue at 10 percent a year. How will you achieve that?
It’s all about product lines. We’ve learned that if you have the best technology, you’re generally going to win. Not all the time, but generally. You’ve got to put yourself in a leadership position from technology and innovation perspective. And that’s the laser focus we have. We work very collaboratively with our customers and bring the very best technology possible that you can.