Headstrong Strategy

With its January acquisition of Cosworth Technology Ltd., Mahle Group is pursuing aggressively a strategy to engineer, machine and assemble full cylinder-head modules for global auto makers, the company's chairman says.

Cosworth Technology, which will be renamed Mahle Powertrain Inc. as of July 1, already machines some 100,000 cylinder-head castings annually. Mahle produces camshafts, valves and all components of the valvetrain, with the exception of valve springs, says Heinz Junker, chairman of Mahle's management board.

The German-based supplier does not yet have a contract for a single-sourced cylinder head module, but Junker says auto makers are very interested.

“We do from camshafts to valves, but we had not been able to sell it all as a module,” Junker says. “We needed cast-aluminum machining. Now, we are in a position to do a complete cylinder head.” The strategy does not yet include plans for a production facility, he says.

Junker was in Farmington Hills, MI, recently to dedicate the 28,000-sq.-ft. (2,600-sq.-m) expansion of Mahle's research and development center, which opened in 1999.

Almost universally, auto makers engineer and assemble their own cylinder heads. Still, small-volume cylinder-head contracts occasionally are awarded to suppliers, and the industry has entertained notions for several years of outsourcing more cylinder-head work to suppliers.

In powertrain circles, the concept is somewhat controversial because the cylinder head contributes mightily to an engine's overall performance. OEM powertrain engineers are sure to debate whether they should retain full control of cylinder heads.

For Mahle, an outsourced cylinder head would give the supplier significant added value for an engine program — and could give the supplier much needed leverage in its battles with OEMs over raw-material price increases.

Mahle engineers also are well versed in variable valve timing (VVT), a performance-enhancing technology that is finding its way into most new engine programs. And they are working on several new designs for potential VVT applications, Junker says.

He says he expects the North American auto industry will buy into outsourced cylinder heads sooner than the European or Japanese auto makers.

Mahle was attracted to Cosworth because of its cylinder-head technology and its experience as a contract engine assembler in recent years for Audi AG and Aston Martin Lagonda Ltd. With the Cosworth acquisition, Mahle also gains 400 engineers, as well as technical centers in nearby Novi, MI, and in Northampton, U.K. Cosworth Racing is separate from Cosworth Technology.

Although Mahle has significant engine expertise with its other core products (pistons, connecting rods, bearings, air-intake systems and oil/air filters), Junker says the supplier has no intention of developing its own engine.

In addition to the expanded Farmington Hills facility, Mahle is opening new technical centers in Shanghai and Sao Paulo. The new facilities, however, will provide engineering services for their respective regions and will not be low-cost alternatives to engineering in the U.S. or Germany.

“If you want to keep jobs in the high-cost regions of the world, such as the U.S., we need to be world-class in technology,” Junker says at the dedication. “Only the fittest will be able to survive.”

He says Mahle will achieve $1 billion in U.S. sales this year.