SKF is the world's largest supplier of automotive bearings, but the company is also moving into new areas, such as drive-by-wire technology. Tom Johnstone, SKF executive vice president and president of the automotive division, discussed the Swedish company's initiatives with Automotive News Europe's Edmund Chew.
What are SKF's prospects for 2002?
The market will be lower for us this year, both in Europe and North America. In North America we are a little bit less pessimistic today than we were two or three months ago, but we still believe that vehicle production will be down two or three points. The same will apply to Europe as well.
Do you have any major plans for Japan, or Asia in general?
They are not in our total picture. Japan doesn't look like improving over last year. Asia, excluding Japan, should be slightly better. In India, there is good growth.
What are the big challenges for SKF this year?
In a tough market environment, the big challenges are going to be how we can focus on developing our business profitably and take capital out.
Do you see the consolidation continuing in the bearings industry?
It may come, but I don't see that at the moment.
What is happening on pricing?
The pressure on the cost reduction from automakers is constantly there. Consumers want to buy vehicles with a lot more equipment, and with more advanced technology. We are looking more at cost of systems, and how we do business with the automakers. There is openness about our discussions with the automakers.
Are you going to change the way you do business?
We are moving away from products to asking, for example, if we can integrate the [antilock braking system] function into the bearing for a total cost benefit. We are looking much more at modules, and seeing what added features we can put on our component to cut weight, improve the function and reduce cost.
Where are you in this process?
We are the major supplier of hub-bearing units worldwide and in the last year we announced three big new hub-unit initiatives. One is a joint development with Michelin and [braking systems supplier] Wabco for a tire-air management system, which will allow drivers to change tire pressure even as the vehicle is moving. There are a lot of tire-pressure monitoring systems on vehicles today, but what we want is an active tire-pressure management system. That, of course, requires an ability to take the air through something into the wheel, and we have developed a hub-bearing unit part [to achieves that aim].
When will that reach production?
In three or four years.
What other areas are you working on?
Drive-by-wire. We are doing a lot to bring new development on drive-by-wire to the marketplace. When General Motors launched its Autonomy drive-by-wire vehicle at the Detroit auto show [in January] it selected SKF as the drive-by-wire systems partner. There will be a running prototype by the end of the year.
Have you had to change your skills?
Absolutely. Looking at solutions for the application is a change of mindset. As we move into other areas, we are bringing in new competencies. We are recruiting, but within our company we have increased people working in electronics significantly.
Are the relationships with your customers changing?
Yes, in all sorts of areas. For example, the supply chain -- in terms of deliveries -- is an area where there is still a lot of potential for automakers and us to improve the communications mechanism. Automakers are clearly going to move much more toward making to order. We, as suppliers, have got to be able to support them in doing that, which means that we need to work with them to get more transparency in the system.
Does that require a change of culture?
First, there is the openness you see in partnerships. It's beneficial to developing your business. You don't have to invent everything yourself. We have made that change over the last few years, so we have developed a number of partnerships -- such as with Brembo for brake-by-wire and the alliance with Michelin and Wabco.
What do partnerships require?
First of all, you must be very clear on what you want out of the partnership. When partnerships fail, it is generally because you rush in too quickly without understanding [your] objective clearly. You have to build up levels of commitment and support and trust. A partnership really is like a good marriage -- give and take on both sides.