Automotive expansion ahead for Schott

As it invests millions in research, glass producer wants to double its automotive business within five years

Mainz, Germany. The Schott Group intends to expand its automotive business in a big way.

"In the last fiscal year, we brought in revenues of nearly 150 million euros (about $184.3 million at current exchange rates) in the sector," said CEO Udo Ungeheuer. "We want to double this business by 2010."

The glass firm is expecting a 20-percent rise for the fiscal year ending Sept. 30.

Though he wouldn't disclose profits for Schott's auto business, Ungeheuer said, "We are achieving positive results here as well."

The overall company, which is owned by the Carl Zeiss Foundation, earned a profit of 46 million euros, or $56.5 million, on revenues of more than 2 billion euros, or $2.45 billion.

More than 80 percent of new vehicles worldwide are equipped with Schott components. They include optical filters in sensors, glass-metal components for airbag activators and seat-belt tensioners, and optical fibers in headlights.

"Glass is, in fact, more expensive than plastic, but is more reliable and longer lasting for the money," Ungeheuer said.

Schott sales are climbing with the rising share of electronics within vehicles. The Tier 2 supplier is hoping that the innovations that so far have been reserved for luxury models will penetrate the market.

"Strands of cabling as big as your upper arm in premium cars will be a thing of the past when manufacturers switch to data transfer with fiber optic cables," Ungeheuer said.

A German luxury manufacturer will shortly convert its infotainment system to this technology, he said. "Even driver assistance systems are placing new requirements on sensor technology and optoelectronics, which we are fulfilling."

A leading technological role

More than half of Schott's automotive revenues come from products built into cars made by German carmakers. The company's largest customers include Robert Bosch GmbH, Hella KG Heuck & Co., Siemens VDO Automotive are among the company's largest customers.

Ungeheuer isn't entertaining any thought of moving up to Tier 1 status.

"We see ourselves as a specialist, not as a system provider," said Ungeheuer. "No other glass producer is as well positioned as we are globally."

The company, which has about 17,000 employees, has been active in the auto industry for more than two decades. But it doesn't have a separate automotive unit. Instead, automotive parts come under nine large business units, such as electronic packaging and fiber optics.

"The synergies with other markets and product groups are still too great," Ungeheuer said. For example, sunroofs for luxury cars are sold by Schott's solar division.

Schott has been investing 120 million euros a year, or about $147.5 million, in research and development recently. The company won't put a figure on the amount going into the automotive field.

"But the investment amounts are set in such a way that we will maintain a leading technological position here in the future as well," Ungeheuer said.

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