Delphi is entering a challenging period as an independent company. Without the restrictions imposed by General Motors ownership, Delphi is determined to expand with other automakers. Hans Weiser, president of Delphi Europe, spoke with Staff Reporter Diana T. Kurylko about new technology, new alliances and new ways of working inside the world's largest auto supplier.
How will the initial public offering of Delphi shares affect your operations in Europe?
Our European customers now feel free to do business with us. Previously, they felt that we didn't give them the best technology, although this was not true, and some tried to avoid giving us too much business. Now those fears are gone. We are now open for business, and we are growing.
How fast do you aim to grow?
Our goal is to reach 10 percent growth per year. Although this was our average growth rate in the past, we had reached a limit due to being owned by GM.
The corporate target is to achieve a 5 percent profit margin. How far away from that goal is Delphi Europe?
We are at 3.5 percent worldwide. We don't publish regional figures. Globally we had 3.8 percent for the first quarter. That was an increase of 0.5 percent from last year.
Is Europe one of the better-performing units on a regional basis?
On a regional basis we don't look bad. We had a sales volume of $5 billion last year - 90 percent of that is manufactured here. We have a good portfolio. Fifty percent is electrical and electronic - that business will grow in the future.
What kind of products?
Wiring, body electronics, mechanical and electronic antennae, audio and video that can link up to multimedia systems in the car. We see a big future in these areas.
And your other businesses?
About 20 percent of our business is handling and ride. Here also the technology driver is electronics and sensors. About 10 percent is our thermal business - heating, cooling, ventilation, radiators and compressors. This business will grow in the future. We have a leading-edge engine management business, with direct-ignition systems for gasoline, diesel and fuel-cell units. We are looking to take advantage of the trend to move toward 42-volt and dual-voltage systems in the car. In the aftermarket we are relatively small, about $250 million turnover a year. This will be an area of growth for us, rising to $1 billion a year by 2005.
What percentage of your business is with GM in Europe?
Forty-seven or 48 percent. It was about 55 percent five years ago.
Who are your biggest customers in Europe?
Besides GM, the biggest is Fiat with about $450 million. Then comes VW with $380 million, Renault with $350 million and BMW/Rover with $280 million. The rest are between $150 million and $200 million a year.
What demands are carmakers making on suppliers these days?
They want to integrate mechanical components into systems. Nowadays, everything has to be cheaper than before. This gives us a real advantage in the market because we are strong in electronics - and you need electronics for systems integration. We have a technical center in Wuppertal, Germany, where we have placed our electronic system and module operations.
Are you looking for acquisitions?
Yes - in such areas as the aftermarket, where we have pretty good products but not a strong distribution channel. We are also looking for companies with leading-edge technologies in electronics and multimedia.
You have become more active in cockpit modules. Do you see this as a growth area?
We sell cockpits to DaimlerChrysler in the United States for the M class, and we have developed them for other European customers. We have three or four cockpit customers.
How bad is the price pressure?
It continues to be very bad. We had an overall price reduction of 2.6 percent last year. We see a reduction of 1.5 to 2 percent in the future. To achieve this, we plan to bring down purchasing prices from our suppliers by 3 percent. We also plan to reduce our manufacturing costs by between 2 and 3 percent per year.