Chairman Tom Walkinshaw’s name is well known, especially in racing circles. His reputation has helped bring to prominence TWR’s engineering abilities with the RenaultSport Clio V6 and Volvo C70. The company also played a central role in the creation of the Aston Martin DB7. But TWR knows it can be a bigger player in the mass market.
TWR, which had sales of $452.8 million last year, wants to expand its success. The acquisition in April of bankrupt Daewoo Motor’s Worthing Technical Center on England’s south coast, formerly the IAD technical center, allows TWR to extend its reach and expand its capacity. TWR also has developed a world-class virtual reality center to test computer-model prototypes, and has opened new offices in Detroit and China.
Sitting in a Worthing studio that still has Daewoo stickers on the conference chairs, Managing Director Craig Wilson spoke with Staff Reporter Mark Rechtin about TWR’s future.
What does acquiring Worthing bring to TWR?It gives us things we didn’t have access to before. Daewoo made an extensive investment of $78 million in machining, rapid prototype manufacturing, design facilities, as well as milling capabilities that we didn’t have before. We also added a dimension in staffing because we took on over 200 people as well. They have a wealth of high-volume product experience and geographic experience.
What did it cost you to get Worthing?We’re paying a mix of the running cost of the center as well as capital costs, but we signed an agreement with the Korean receivers not to disclose the amount until Daewoo is acquired by GM. It wasn’t $78 million, I can tell you that.
Why should an automaker go with a company such as TWR rather than do the job in-house?Why our business continues is that there are more products to be developed than there are engineers. The trend is to do things faster, and to do niche vehicles as soon as the opportunity presents itself. Businesses recognize their own organization works in a different process and with a different decision-making procedure.
We also can bring in our own DNA to a particular product, like we did with the RenaultSport Clio. We had a brief of things from Renault that we couldn’t do, like sacrificing it being safe and or losing its neutral handling.
But when you take the engine out of the front, you have to put some mass in there to deal with the crash loads. In an ideal world we wouldn’t have done that, for weight reasons, but Renault said we had to do that. And we did it in 16 months.
How does an engineering consultancy handle an economy in recession?That was one consideration behind buying the Worthing center, because it puts us into new fields. We also have businesses in Australia building cars and in Sweden building trucks and buses. Seven years ago we were more exposed because we worked with one manufacturer at a time and put all our eggs in one basket. Now we have Chinese walls to keep our business units separate.
How does TWR fare in a world where automakers are increasingly asking suppliers to design-in their parts?There is clearly a trend of outsourcing development costs, putting it out into the future and paying for it on a unit price. You don’t get a quick return on your investment in the auto industry.
But there is a big element of risk sharing if the product is not successful or if the market disappears. Engineering, manufacturing and supply, the industrial part, is where the high risk is.
We are doing a full interior program for one of the large suppliers who didn’t have the resources and ability to do it in time. We are doing a fair amount of test work on rigs for Tier 1 suppliers.
One of the biggest issues for manufacturers is that they know their suppliers are outsourcing the development, but they don’t always know where the real work is being done. There is a lot of cloak-and-dagger stuff going on. I’d say about 60 percent of product development work is being done at a Tier 1 supplier level or by companies like us, and not the core automaker.