Demand increases for ZF's fuel-efficient transmissions
With Chrysler Group adopting eight- and nine-speed transmissions by ZF Friedrichshafen AG for mass-market models, the German supplier is positioned for big sales gains.
Julio Caspari, 61, president of ZF's North American operations, spelled out his company's growth plans in an interview with News Editor Charles Child and Special Correspondent David Sedgwick.
Q: ZF has introduced eight- and nine-speed transmissions, and other suppliers are promoting dual-clutch transmissions. Will these fuel-efficient gearboxes take over North America?
A: The six-speed automatic still has some life in it. The plants are tooled up. Six-speeds will be the bread-and-butter transmissions in years to come, just as four- and five-speed transmissions were.
VW and Ford have adopted dual-clutch transmissions and ZF has developed a dual-clutch gearbox. Do you expect growing demand?
We think they are very good for sports cars and high-revving engines. The shifts are very quick. And it's a very good product if your plant already manufactures manual transmissions. For Europe, it makes good sense. But for the U.S., maybe less so.
Dual-clutch gearboxes are supposed to be more efficient because they don't need a torque converter.
Today the torque converter is used only to launch the vehicle. It isn't even used for shifting any longer. And Americans like it because you get a good launch and a good boost.
So there's no need to get rid of torque converters.
That's our strategy.
Is it difficult for you to find enough qualified engineers?
It is increasingly difficult -- especially in the Detroit area, where most of the suppliers' technical centers are. [Finding engineers] for a normal transmission is not a problem. But for hybrid transmissions or vehicle electrification, it is very difficult to find experienced people. In this building, we have 30 openings. And in South Carolina, we have lots of openings for manufacturing engineers.
Raw material prices have been volatile, though they have fallen in recent months. How has that affected ZF?
Now, we don't see huge price pressure. Last year and early this year, the pressure was much higher. For us, steel is the No. 1 metal. But it's not the only thing. You have to add certain alloys, and those elements are becoming expensive. Aluminum is the next biggest item, and its price depends on energy costs.
Aside from transmissions, what ZF products generate the most sales growth?
We foresee a complete switch from conventional hydraulic steering to electric power steering. The Detroit 3 are our customers. We have a very good product, and the fuel savings are around 2 percent.
What else is boosting sales?
Four-wheel drive. We are seeing a higher take rate on four-wheel drive, and it's not only in northern states that have bad weather conditions. Obviously when you have four-wheel drive, your fuel consumption goes up. So we are working on a wheel disconnect system [to permit two-wheel drive] so that you are not wasting all that energy.
For all parts, can you meet your customers' production targets in North America?
In the U.S., our business plan was based on 13.5 million units, and we are seeing stronger demand than that. We are installing capacity for future demand. In some cases, demand is even higher than what we can supply.
Are you running around the clock in some plants?
Yes. But my biggest concern is not about our own plants, but our suppliers. We are in a strong [financial] position, and we have a good capital structure. But our lower-tier suppliers have some difficulties. They are willing to grow, but the difficulty is to get capital to fund that growth.
What are you doing about that?
We are trying to find whatever solution is possible. But obviously we won't be funding our suppliers.
Are your suppliers shipping parts from Europe until they can raise enough capital to build factories in North America?
Yes. If Europe is down in demand, ZF may have spare production capacity in Europe to cover us until we can get local capacity [in North America]. The same is true with our suppliers.
You can reach Charles Child at firstname.lastname@example.org.