Once known as a source for steering mechanisms, axles, gears and transmissions, the German industrial company has seen the light of a new day. The old products are not gone — at least not yet — but ZF CEO Stefan Sommer is leading the company to a new realm of products centered around advanced safety, electronics and autonomous-drive technologies.
Three or four years ago, ZF was focused on a family of eight-speed transmissions and a new nine-speed. Today, the company is at work on camera systems that will warn an active suspension to automatically avoid a pothole ahead, on radar technology that will detect pedestrians for a vehicle, on cloud-based information sharing of road conditions and on automated vehicle parking features.
The product transformation is rippling through the global supplier industry.
Companies including Delphi, Johnson Controls, Denso, Continental, Faurecia, Bosch, Aisin and Panasonic are re-examining who they are, in several cases splitting themselves in two to separate the current market from the future market.
Johnson Controls has separated its battery business from its seating operations, now called Adient. Its stated intent was to free up funding to dive deep into a rapidly approaching reality in which drivers of autonomous vehicles will not be fixed to the steering wheel, and passengers can move their seats around to enjoy a more loungelike interior.
Delphi is spinning off its electronics business, to be called Aptiv, in hopes of capitalizing on a future in which automakers will make warranty repairs and vehicle upgrades electronically and over the air.
Such reimaginings are not easy and are not free.
To prepare for its more advanced future, ZF had to shift capital assets. It began by exiting a 15-year-old global steering partnership it had with Robert Bosch GmbH, ZF Lenksysteme, and spending $12.4 billion to acquire the U.S. safety and vehicle controls business TRW Automotive.
The union with TRW took ZF deeper into advanced safety and control technologies. But the new direction is also requiring ZF to take on new people costs. This year, it opened a technology center in Hyderabad, India, that hired 1,000 software engineers, who are critically needed to make its new products work. ZF says the center eventually will employ 2,500.
The company also has opened a lab in Silicon Valley to foster partnerships with high-tech innovators who can help ZF position itself for the era of self-driving cars.
At the same time, ZF and the French interiors supplier Faurecia this year announced a partnership for the autonomous era. The companies will develop vehicle interiors that combine future cabin design needs with ZF safety solutions that are only now becoming possible.