Under German CEO, Calsonic acquires Magneti

November 20, 2018 06:01 CET

If you really want to transform a company, hire a foreigner to run it.

After eight months on the job, Calsonic Kansei CEO Beda Bolzenius, a native of Germany, is working to diminish his Japanese company’s heavy reliance on its biggest customer, Nissan.

His big move came Oct. 22, when Calsonic announced the $7.1 billion acquisition of Fiat Chrysler Automobiles’ in-house supplier, Magneti Marelli.

Bolzenius and his team have hired 10 executives to help transform the newly united company, which is expected to have $17.1 billion in global sales. The new team plans to exploit Calsonic’s expertise in cockpit displays and thermal management to meet demand for infotainment and electric vehicle components.

“We have 10 people who can really make a difference,” Bolzenius told Automotive News, a sister publication of Automotive News Europe. “We have a full basket of projects that will improve our market position.”

To be clear, Calsonic is not in turnaround mode. Under former CEO Hiroshi Moriya, the Japanese supplier’s profits were strong, but Calsonic had to reinvent itself as cost-conscious Nissan dismantled its old keiretsu network of affiliated suppliers.

In 2016, Nissan sold its 41 percent share of Calsonic to the giant American investment house KKR & Co. for $4.5 billion. Moriya vowed to find new customers, and he began to hire more non-Japanese executives.

Sales rose to an estimated $9.1 billion in fiscal 2017, but it took time to diversify the customer base. Last year, Nissan still accounted for 85 percent of Calsonic sales.

In March this year, Calsonic picked up the pace when it hired Bolzenius as CEO and named Moriya chairman.

Bolzenius, who once ran Johnson Controls’ $20 billion seat division, has made use of his JCI connections. In July, he hired Volker Krebs, former CFO of JCI’s automotive division, to be Calsonic’s chief transformation officer, a new position.

And in September, he hired former JCI purchasing executive Andy Koehler to be Calsonic’s chief procurement officer.

Both executives will play key roles in the new organization. According to Bolzenius, Krebs is launching 20 projects to reorganize Calsonic. And Koehler will oversee efforts to mesh Calsonic’s supplier network with that of Magneti Marelli.

EVs and infotainment

The acquisition of Magneti Marelli will not be completed until next year, so it’s too early to speculate how the two companies will combine. But Bolzenius dropped hints. The two companies will merge operations in three key product categories: EV components, infotainment and exhausts, he said.

“These businesses have a direct overlap,” Bolzenius said. “Calsonic and Magneti can help each other with engineering and customer support. It would be wrong not to leverage that.”

Bolzenius is especially bullish on growth prospects for EV components. Calsonic produces inverters and battery management systems for the Nissan Leaf, while Magneti Marelli makes powertrain components for electrified vehicles.

“Both companies have a full line of components that we can leverage in the future,” Bolzenius said. “It’s a fast-growing part of the business.”

While the industry’s infotainment sector is dominated by Panasonic, Samsung and LG Electronics, Bolzenius sees opportunity there, too. Calsonic makes cockpit displays, while Magneti produces displays, electronic control units and telematics parts.

Together, they account for 12 percent of global display production, ranking third behind Samsung and Panasonic.

Which HQ?

Bolzenius has not yet decided where to base his infotainment, EV and exhaust divisions. Magneti is based in Milan, while Calsonic is headquartered in Saitama, Japan. The headquarters locations of the new company’s various divisions will be announced after the acquisition is completed next year.

The fusion of Calsonic and Magneti also will allow the companies to share customers. Magneti can help Calsonic gain new business with FCA as well as Volkswagen, BMW and Daimler. Likewise, Calsonic will help Magneti find customers in Japan and Korea.

With these initiatives underway, Bolzenius expects to reduce his reliance on Nissan. By 2021, the automaker is expected to account for 70 percent of Calsonic sales.

Bolzenius cautions that Calsonic and Magneti will need time sort out their consolidation.

“We need to sit down with our partners in Magneti Marelli,” he said. “We need to learn a little bit more about each other.”

You can reach David Sedgwick at dsedgwick@crain.com.

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