August 27, 2018 13:43 CET
The industry’s technological revolution will affect the interior of the vehicle as much as its mechanical features and performance. Autonomous driving and connectivity will add sensors and instruments, freeing the driver and occupants to perform other activities. Spain’s Grupo Antolin is one of the leading suppliers of interior equipment to automakers with revenue of 5 billion euros in 2017 – enough for a place in the top 50 in the latest Automotive News Europe global ranking – and more than 150 plants worldwide. CEO Jesus Pascual talked about Grupo Antolin’s strategy and the short-term challenges with Automotive News Europe Correspondent Andrea Malan.
How does Grupo Antolin plan to leverage the industry’s big trends, from connectivity to autonomous driving?
The changes underway will bring a lot of opportunities for our interiors business. Future cars will have a lot of cameras and sensors. We believe we can introduce and connect all these parts in our products. We call ourselves a “smart integrator,” and we believe this is the future of the industry. We are having lots of cooperation with electronics suppliers, as we believe every component must be integrated and not simply added — for example, to the cockpit. We are currently running 53 projects. That mainly affects cockpits and door panels. While as far as headliners are concerned, we are working on the lighting consoles. We believe the lighting console will become an electronic part with microphones and cameras.
How will interiors change with the move to self-driving?
When it comes to self-driving cars, we see a change mainly in the interior-lighting business, which will become more integrated and functional. One example is lights that will have to alert occupants in case of danger.
Does Grupo Antolin supply complete cockpits or just parts?
It depends on the strategy of the customer. We produce whole cockpits for Jaguar in Europe and also for General Motors and Chrysler in the United States. For BMW, we produce parts that they integrate in the cockpits in their plants.
How much work does Grupo Antolin do to develop new products? Do you have a role in design?
Yes. For example, we have a new program with Jaguar where we actively participate in design. Some subparts come from the customer, but we have to integrate them in the design of the cockpit because of safety reasons. We have more than 400 engineers, and in Germany we have a department specifically working on instrument panels and cockpits.
How much does Grupo Antolin invest as a percentage of sales?
This year we are investing 360 million euros, which is a bit more than 7 percent of sales. In the years between 2017 and 2019, we will invest more than 900 million, which is approximately 6 percent of our sales. Our target for the coming years is to invest 6 percent of sales.
What are you investing in?
We are building new plants in China, the U.S. and Mexico. In addition, every year we need to renew our product portfolio.
Will Grupo Antolin try to grow through acquisitions?
We do not plan to grow externally in a big way. There is excess capacity in the market. The companies active in the interiors business are not very profitable. We could make some small acquisitions in the technology of plastic parts.
Is there any customer to which you provide all the elements of the interiors you produce: cockpit, roof, doors, lighting?
There are some cases. For Jaguar we produce cockpits, door panels, sun visors, pillars, headliners — basically all the interior except the seats, which we don’t make.
In the U.S., models are often changed every year. How does that affect your products?
In the interiors business, the automakers change only small details such as fabrics. A big change would be too expensive for them, so we work with them to reduce the cost of changes. We do plan in advance for these small modifications. This is particularly relevant for instrument panels, as in that case five years is a lot of time for the technology.
Cockpits have changed a lot in the last 10 to 15 years. Have they become costlier to produce?
Yes, but our target is to reduce costs through higher integration. We are trying hard to reduce weight and complexity. For example, we believe in the very near future, the physical buttons will disappear and will be grouped in one screen. The trend toward price reduction is inevitable, as is a reduction of weight.
So when designing a new product, do you also receive targets in terms of weight reduction?
We have targets in terms of weight, and in some cases we are subject to price penalties if we don’t achieve that target. But normally, when we quote a price for a part, we are pretty confident we can achieve the weight target.
Meet the boss
NAME: Jesus Pascual
TITLE: Grupo Antolin CEO
MAIN CHALLENGE: Managing increased integration of interior components while reducing weight and costs as required by automakers.
One of Grupo Antolin’s business areas is interior lighting. Might you want to expand into exterior lighting?
We do produce some exterior lighting resulting from an acquisition, but the two sectors are very different. It is true that in some cases – for example, in China – customers are asking for some exterior lighting, like the logo, which has interior-lighting technology. We can do this kind of exterior lighting. Besides, we see interior lighting as an integrated part of the interior of the car. We want to be able to offer an integrated interior, as bundling enables us to offer our customers a better price.
What is your forecast on the global car market?
We think in 2018 the market will grow by 1 percent, despite a small reduction in the first quarter. In the U.S., we anticipate a flat market. In Europe, we see it flat or slightly positive, while China could grow by 3 percent to 4 percent. The same trend will continue next year. We forecast 1 percent to 1.5 percent growth.
How will Grupo Antolin perform?
We expect to grow a little more than the market. Our advantage is that we are growing significantly in markets where we have a small presence, such as China. Last year we grew 10 percent there. This year, we will post an increase of close to 7 percent. We are completing two new factories that will enable us to take market share. The same is true in the United States. We are completing a new factory in Michigan that will allow us to produce all the door panels for the Ram pickup. Our new plant in Alabama will supply components to Mercedes’ plant in the state. Our new factory in Mexico will work with BMW.
What challenges does Grupo Antolin face for the rest of 2018 and 2019?
The main risk this year is the price of the commodities. We see oil prices growing this year. And if oil goes up, all raw materials prices increase. Eighty percent of our raw materials are oil-related, from plastic to foam to fabrics. Given the pressure on our selling prices, we are not always able to transfer commodity price increases to our customers. This forces us to look for more productivity actions to reduce our fixed costs. Steel has no big impact, as we use only a small amount in the window regulators, and we are switching to plastics. Forex is also important. When I speak of growth, I’m talking about constant exchange rates. We are relatively insulated from fluctuations. In dollar markets, we buy and sell in dollars, and the same is true for the euro; so the only impact is through consolidation of the various results. The only exception is the UK, where some customers pay us in pounds while our costs are in euros. That is the main forex risk for us.
Grupo Antolin has a significant presence in the U.S.: are you worried about a trade war?
Currently, we have very little cross-Atlantic shipments. More than 95 percent of the supplies for our U.S. plants come from the U.S. This is a general decision we took some years ago to reduce the effect of foreign exchange.
Would tariffs affect your Mexican plants if they export to the U.S.?
Our Mexican plants are producing for the Mexican factories of our customers. Our parts are heavy and expensive to move, so as a general strategy, we are located near our customers’ plants.
What if some of your customers in Mexico cave in to political pressures and move their plants back to the U.S.?
If you look at the figures, Mexican car production is going up while U.S. production is stable or even slightly down. It’s true that some automakers have moved production to the U.S., but they have also put new models in Mexico. The Mexican factories are full, and we forecast that this situation will continue for the next few years. Our plants work at full capacity now, and we would need to make more investments to increase capacity. It is true that due to these rumors of trade frictions, we are maybe a bit more cautious.
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You can reach Andrea Malan at firstname.lastname@example.org.