CEOs in the supplier roundtable talked about how their businesses are changing as a result of stricter U.S. corporate average fuel economy regulations that will kick in beginning in the 2016 model year.
Are the 2016 and 2020 CAFE regulations creating great opportunities for you?
Rosseau: Yes. We're involved in flex-fuel. We're involved in technology for Tetra fuel [vehicles capable of running on four fuels]. We're involved in technology for EVs with the motors that we developed for Formula One.
Are we seeing dramatic weight reductions?
Baird: I don't know if it's dramatic, but it has certainly happened. We're not in the powertrain. But certainly wherever we can replace metal with plastic, wherever you can take weight out of the entire vehicle, is significant. I was at a Toyota supplier awards recognition session in Tokyo not too long ago, and two-thirds of the awards that were given were weight-reduction awards.
Showalter: We're seeing some opportunities from it. Some structures that we tried to sell for the last 10 years, we're starting to see some interest in -- magnesium in particular. We certainly have seen some big structures; one was the PACE Award winner that we had with Ford. [The 2010 Automotive News PACE Award winner was Meridian's Single Piece Cast Magnesium Liftgate Inner Panel.]
If we can take out the weight, they're interested.
How willing are carmakers to pay for it?
Showalter: Well, you still have to be creative in the way you do it, and the way we've done it with magnesium is as a system cost, not just as a component cost.
[The automakers] are very cost-conscious, so you have to be creative in the way that you design these things to take out components and take out other things to get the costs in line with where they need to be.
They understand the value-cost relationship there?
Showalter: I wouldn't say that it is a complete understanding of it. I would say that they're more open to discussing those things today than they were a couple of years ago. They're certainly more focused on the weight and the fuel economy that that gives you.
Tim, you've been marketing this.
Manganello: We built a strategy around better fuel economy, lower emissions and improving performance at the same time. That's been our strategy since I've been in this job.
All of our products are focused on improving emissions and fuel economy. So, we've seen compound annual growth rates of 12.5 percent over the last 15 to 20 years, with the exception of 2009. We're going to see that again as we go forward.
That's why we've grown so much in Europe. Fully 55 percent of our business is in Europe because of their focus on fuel economy and emissions. That took us to China and India and Korea because they all adopted the European emissions standards and the European technology.
So, yeah, it's been great for BorgWarner.
Is that a result of the new fuel economy standards?
Manganello: I think so. I think that gave the OEMs no choice. The good news was Ford was already doing it, GM was already doing it, Chrysler was doing it -- all of them to a lesser degree and all of them at different phases. They're all going toward downsized, turbocharged, fuel-efficient engines.
And those same engines work on hybrids. Most of the hybrids are going to be a traditional start-stop vehicle with traditional transmissions and downsized engines with turbochargers.
We're seeing fewer cylinders.
Manganello: Fewer cylinders but, thank god, I'm not in the piston business.