Graham Bell has his work cut out for him as Delphi Automotive Systems' marketing and operations planning director in Europe.
Delphi hopes to expand its business outside GM's North American operations by more than 10 percent over four years, and Bell's bosses in Detroit expect Europe to play a key role. He spoke with Automotive News reporter Aaron Robinson last month in Paris.
What's the status of Delphi's non-GM sales in Europe?
On a global basis today, we're at about 35 percent non-NAO (North American Operations), and we're shooting to be more than 50 percent by 2002. We're on track to be there. Without Opel and Vauxhall, it's 33 percent or 34 percent.
In Europe, we're about 50-50 between GM Europe and the non-GM customers, so we're a little ahead here. But that's not surprising as we've made some significant acquisitions over the years. Those acquisitions brought major non-GM business with them.
Do Europe's traditionally close ties between manufacturers and suppliers make that hard?
We've gone from national suppliers with national customers to regional suppliers with regional customers, now to global suppliers with global customers. But it's all built on human relationships.
The fact that Valeo has a good relationship with Renault, or Siemens with BMW, or Bosch with Mercedes, has a lot to do with the fact that they're in the same town, they go to the same football matches and they're probably intermarried. You can have great strategies, but you've got the human aspect at the end of the day.
The key is to make yourself look like a German company, or a French company, or an Italian company. If you come to impart yourself as a little colony of where you came from, you aren't going to be very successful.
Is Delphi still interested in acquisitions?
The business we're in is really integrated mechanical systems, integrated hydraulic systems and especially integrated electronics systems.
For sure, we recognize that we need to make other acquisitions, and there are several reasons for doing that.
One is market access. Our share in certain markets in Europe is not where it needs to be, and one way of doing that is obviously through acquisition.
Where does it need to be?
In Europe, we would be shooting for something like 60 percent outside, 40 percent with GM.
So in what areas would Delphi benefit most from acquisitions?
I would be arrogant if I said that we have control of all the technology that is going, and so there are certainly areas where we are going to need partners to get that technology and other areas where we may have the central technology, but we don't have peripheral technology.
So we need to make alliances, joint ventures, acquisitions - whichever is appropriate at the time - to fill those technology gaps.
Wiring and steering systems are the bulk of your business with non-GM customers. What about brakes and interiors?
It's true to say that our brake business and airbag business have not developed with outside customers at the rate we would have liked them to. Nor at the rate we've been able to develop our wiring business, our electronics business and our steering business.
The base brake business of boosters, master cylinders and calipers is a commodity business. Even ABS is a commodity business. To break into that business means you've got to have a much cheaper product or a much better mousetrap. So you've got to work out how you're going to leapfrog to the next level of technology.
If you look at brake-by-wire systems, you can see that they are going to obsolete the boosters and master cylinders. With interior systems, the same thing applies. The airbag itself is going to become a commodity. The clever stuff is going to be integrating that with the electronic architecture.
Doesn't the recent sale of Delphi's seat business hurt the effort to become a systems supplier in Europe?
We've obviously opted out of that particular race to become a full interior supplier. But the clever stuff in the cockpit is the mechanical and electronic integration under the fascia. Today we're supplying Fiat, Volkswagen and Mercedes with cockpits.
We have what you call a trust continuum, where you assemble parts from what they give you, then you take some responsibility for sourcing the parts, then take some responsibility for engineering the whole. We're not there with anyone, but we're gradually moving along this trust continuum.
Why go after products like common-rail injection where your competitors are already strong and have development contracts with automakers?
I've seen some companies in Europe that have come out with a big bang on a particular system, but when you start to scrape below the surface, they ain't got nothing there. When you look at the expertise that's behind our multimedia, brake-by-wire and electric steering, we've got a lot of depth in technology that other companies are going to have trouble meeting.