Preh to Keep Focus on High-End Technologies, Despite Chinese Takeover

The opportunity for global expansion has never been better for Preh, following the recent announcement Joyson Investment Holding, of Ningbo, China, will acquire a 74.9% stake in the German supplier.

But that doesn’t change Preh’s business strategy of providing high-end technologies to upscale vehicles, CEO and President Michael Roesnick says.

“There’s no reason to,” he tells Ward’s in an interview. “We’re happy where we are.”

The supplier breaks down its business into five product groups: climate controls; driver controls; electronic control units and instruments; sensor systems; and “innovative automation.” Its primary customers include General Motors, BMW and Volkswagen.

Preh has experienced rapid growth in recent years, not only weathering the economic recession that gripped the auto industry for the last several years, but achieving 40% growth in automotive sales in 2010.

Preh’s automotive sales in 2003 were E169 million ($249 million). By 2010, that had more than doubled to more than E343 million ($494 million). The objective this year is strong “organic” growth in its key areas of expertise, Roesnick says.

Preh is at the leading edge of several rapidly expanding technologies, including capacitive touch controls, which it supplies for the BMW 7- and 5-Series cars, he adds. The technology, which eliminates mechanical pushbuttons or knobs, consists of a plastic surface with a conductive switch on the underside.

As the user touches the button, it creates a distortion of the part’s electrostatic field, activating the control.

New Preh plant in Monterrey, Mexico, to start operations in June.

Such technology has been made popular by Apple’s iPods and iPhones. However, in automotive applications, “If you have capacitive controls, you also need mechanical knobs, but they have to be in the right combination,” Roesnick says. Mixing the two is essential, because traditional controls are more easily accessible while driving.

Another driver control offered by Preh, which accounts for 37% of its business, is the second-generation iDrive found in new BMWs. Roesnick is quick to point out Preh was not responsible for the first generation, which was panned for being too complicated.

While developing the new version, much attention was paid to making the technology user-friendly by adopting a distinctive sound and tactile feel to the controls that reflect BMW’s DNA, he says.

The BMW X3 cross/utility vehicle is the most recent model to receive the Preh-developed iDrive. The company already supplies the latest iDrive for the BMW 7-, 6- and 5-Series models.

Roesnick says Preh has made great strides in developing its “lenticular” display technology, which transmits an image or icon onto switchgear, allowing for multiple functions for each button or knob, thereby cleaning up the clutter on the instrument panel.

The new technology will debut on a vehicle in the next couple of years, he says, but declines to reveal the OEM customer.

While not expanding its product portfolio, Preh is working on growing its global footprint. The supplier currently has seven locations: one each in the U.S., Mexico, Portugal, Germany and Romania, and two in China.

A new 83,000-sq.-ft. (7,710-sq.-m) plant in Monterrey, Mexico, is nearing completion, with equipment installation scheduled to begin in May and start-up operations beginning by June. The facility will focus on electronic assembly and final-product testing and will be expanded should demand warrant, Preh says.

The majority buyout of Preh by Joyson follows the joint venture established in China last year. The two companies say they now are poised to reinforce market potential in China, Europe and North America, while also strengthening Preh’s balance sheet.

“With our JV, we have gotten to know and respect Preh, and because of Preh’s high-class capabilities, we decided in favor of a majority buyout,” Jeff Wang, chairman of Joyson, says in a statement. “We will offer globally to our joint customers premium-class quality, cost-efficient driver controls and sensor systems.”

A new 80,000-sq.-ft. (7,432-sq.-m) plant in Ningbo already is under construction to produce multifunctional switches and climate control heads. Production is set to begin in June.

“China is a big step for us,” Roesnick says, noting the supplier’s plans for the rapidly expanding Chinese market are very aggressive. “Together with Joyson, Preh will substantially improve its market position and open new market opportunities, particularly in China.”

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