Schaeffler Sticks to Its Guns Amid Mobility Uproar

DETROIT – In an era when every company wants to be the next Google or Microsoft, global supplier Schaeffler is sticking to its guns as an old-fashion bearing company.

“We will not become a software company,” Schaeffler CEO Klaus Rosenfeld proclaims at the opening press conference of the 2018 North American International Auto Show, an exhibit that also has chased the glamour of Silicon Valley with a newly added, emerging-tech conference.

Schaeffler, an industrial company with €14 billion ($17.2 billion) in annual sales, instead will continue to focus on hardware, Rosenfeld says.

“We are the German masters of manufacturing steel,” Rosenfeld says of the supplier, which traces its roots to 1800s Bavaria. “And steel goes into everything.”

At the same time, however, the owner of mega-auto-supplier Continental plans to be a major player in the mobility revolution by providing OEMs with next-generation parts and components such as advanced thermal-management systems, electric camshaft adjusters, electric axles and 48V hybrid units.

As Rosenfeld says, Schaeffler will play not only at the heart of the automotive market, where electrification and mobility services are rapidly changing the industry, but also on its edges from energy production to recycling. Its stake in the future of automotive, which comprises more than 75% of its business including the aftermarket, is exemplified in Schaeffler’s role as a leading sponsor of the Formula E Championship electric racing series.

Schaeffler must accelerate industry’s transformation, Rosenfeld says.

“The (automotive) market is changing fast,” he says. “We feel we need to accelerate that transformation.”

That means a new Silicon Valley office in California opening in the spring, not to blow its horn as a new-fangled technology company, but rather to listen to its customers with larger operations there.

“It is to have our eyes on the road and our hands on the wheel. Nothing spectacular but a nice step,” Rosenfeld says. “We need to extend our capabilities, but we are going to approach it from a hardware perspective.”

For example, Schaeffler will continue to integrate software into its main bearing business, which as the central piece of any machine it is uniquely positioned to harvest important data such as speed, friction and temperature.

“The bearing will work as a sensor,” Rosenfeld says.

Schaeffler will restructure its business slightly in 2018 by breaking out an e-Mobility segment from its OEM division with a leader to be named later. The company will not pursue a full-blown overhaul as Continental is exploring, however.

Continental says it may break up its powertrain business and perhaps create a holding company to publicly list its more profitable units focused on electronics. Rival Delphi did that last year.

“We are not going to break up,” Rosenfeld says. Nor will Schaeffler pursue an acquisition or merger to enhance its position in future mobility, as ZF did two years ago with its blockbuster purchase of TRW.

“Maybe something small, but we are not going elephant hunting,” Rosenfeld says.

Rosenfeld expects a flat market this year in North America, the supplier’s No.2 sales region, but sees Schaeffler again outperforming the market in China. The supplier’s business grew 24% there last year.

Schaeffler’s global 2017 revenue of €14 billion was up 5.9% from 2016 and exceeded the company’s forecast of 4%-5% growth. Rosenfeld expects Schaeffler will outperform the market again this year. 

[email protected]