Johnson Controls benefits from industry efforts to cut seat costs
BEDA BOLZENIUS: The frame is a critical safety system. Automakers love to change the seat’s outer appearance, what the customer sees, touches and sits on. But they hate to make changes in the frame. From a safety standpoint, it’s risky.
To cut costs, automakers are asking seat makers to standardize their seat components for use by different car platforms, brands and even automakers.
The trend favors Johnson Controls Inc., one of a handful of global seat makers with the resources to design common components and produce them anywhere in the world.
Beda Bolzenius, 56, president of automotive experience in Johnson Controls' interiors division, described this trend in an interview with Special Correspondent David Sedgwick.
Q: What are the big seating trends?
A: Everybody has switched to component sourcing. The automakers give you a separate purchase order for trim, one for foam, one for the seat frame and one for the seat. They want to buy standardized components -- not only across car lines but across brands. They've even started to buy [standardized parts] with other automakers.
Which automakers are doing it?
It's all over the place. All customers started about two or three years ago. The last company switching is Toyota. Everybody else has switched.
Name two automakers that buy the same components.
A good example is Mercedes and BMW. In this case, it's the complete frame, including the components that sit on those frames. And JCI designs a standardized frame, so your customers can get a lower price. Yes, [the lower price] is based on a lower cost of production.
How common is this?
About three years ago, 80 to 90 percent of our orders were for complete seat systems. And now it's 80 to 90 percent component sourcing.
So automakers prefer to improve a seat's look and feel without changing the frame?
Absolutely. It's a quality gain, it's a safety gain, and at the end of the day, it's a cost gain.
What other automakers use common seat frames?
Renault and Nissan obviously do it, and also the different brands within the Volkswagen Group. There are other companies that work closely together, but I would not want to identify them.
How does Johnson Controls profit from the trend?
I think it gives us an advantage. The technology innovation for seats occurs at the component level. It's a business with high barriers. It's a business where technology matters, and it's a business where the number of global players is extremely limited.
So if you want to be a player, you must be a global company with the engineering resources to back it up.
Exactly.
Are other seat components standardized, too?
Foam has a standardized chemistry and manufacturing process. We can run foam for every customer on all our production lines. That gives us high flexibility.
You've acquired several seat makers in recent years. Will you make more acquisitions?
Not in the area of seating.
Will you acquire any producers of electronics or instrument panels?
No. I don't think there will be a major investment in the next couple of years.
In the wake of your acquisitions, are you downsizing your supplier network?
Yes, it's part of our strategy. We bought some companies, and each partner had its own suppliers. We have an opportunity to adjust, and we have an additional opportunity to move our supply volumes from high-cost countries to low-cost countries.
How many suppliers do you have?
About 3,000 companies.
Where do you expect to end up?
Our target in metal components is a reduction of 50 percent.
How long will this take?
We have certain areas where we really must move quickly. We will see a significant impact in 2013, but at the end of the day, it will be a three-year program.
Will most of your supplier consolidation occur in Europe?
I think it will be Europe, and next will be North America.