BorgWarner Expects Growth, Not Contraction In A Tight Market

Key parts suppliers to the auto industry have been battered all year as automakers cut back on their orders and seek to squeeze improved savings from makers of transmissions, turbos, and other components large and small. Just as Chrysler, Ford, and General Motors are experiencing their own challenges, many suppliers are also fighting to live another day.

BorgWarner, a leader in transmission technology as well as an important supplier of turbochargers and four wheel drive systems, is one of the few companies weathering the current crisis fairly well. Thanks to its innovative work which includes environmentally friendly technologies such as gasoline and diesel turbochargers and dual-clutch transmission technology, the company has forecast that its powertrain technology business will increase by 8% over the 2009-2011 time period.

“While the current economic crisis is expected to slow near-term global auto sales, climate change and fuel economy remain major issues that auto makers around the world continue to address,” said Timothy M. Manganello, Chairman and Chief Executive Officer. “With an expanding global customer base, BorgWarner is uniquely positioned among vehicle suppliers to deliver powertrain technologies in a broad range of products that address these needs. Over the next three years, we believe our fuel-efficient technology will be a strong growth catalyst as the industry recovers and increases the number of more efficient vehicles available in every region of the world.”

80% of BorgWarner’s business is expected to come from engine-related products such as turbochargers, ignition systems, emissions products, engine timing systems, variable cam timing modules and thermal systems. The remaining 20% should come from drivetrain-related products including the company’s fuel-efficient DualTronic(R) transmission technology and its traditional automatic transmission and all-wheel drive technologies.

“We have outpaced the growth of the industry by developing and launching products with customers in those regions of the world that are adopting fuel-efficient technologies,” Manganello continued. “The European market remains the leader in new powertrain technology and Europe accounts for 50% of our expected new business. As our expansion in Asia continues, new business sales are expected to account for about 30% of the total in that region by the end of the period. China represents about half of that new business. North America is approximately 20% of the anticipated new business over the three years and includes new domestic engine programs aimed at improving fuel efficiency.”

35% of the company’s new business comes from turbochargers developed for advanced diesel and gasoline direct injected (GDI) engines. Although the European market has the highest demand for this technology, BorgWarner is seeing an increase from the North American market as well. Another 16% of the company’s new business is related to BorgWarner’s dual-clutch technology. The technology provides the fuel-efficiency and fun-to-drive characteristics of a manual transmission with the convenience and smooth shifting of an automatic. The number of dual-clutch transmissions in the market is expected to grow ten-fold by 2013 to about 5 million units.

Clearly, the auto industry is experiencing unprecedented challenges as gyrating fuel prices, a tight global economy, and financial pressures weigh in. Meeting these challenges head on is critical to the success of any organization, including those companies tasked with providing key automotive components.

(Source: BorgWarner Inc.)