And here he comes now, I’ll go over and meet him.

Hello Dr. Kroos.

Hello Mr. Ettwig.

Thanks for making time for us.

I’m looking forward to talking to you!

Dr. Kroos, Automotive Technology, for many of our colleagues that probably sounds like engines, gasoline, horsepower. We both know of course that that’s a very basic description, but before we go into more detail maybe you can sum up in a few words what Automotive Technology does and why customers can’t do without you?

Of course. Cars are an emotional product, I think that’s partly what you’re addressing with your question. But they’re about innovation as well, and above all they offer enormous business potential. Cars are also a very big industry especially in our country. We play an active role in this. We deliver products for the chassis, the powertrain, the car body. And we do so based on decades of experience. Backed by a wealth of expertise, we currently generate sales of around five billion euros a year with twenty thousand employees at 50 sites around the world which we have built up mainly from scratch in recent years. That means we’re using innovation to build our competitive brand, which will carry us forward into the future.

Like many other industries, the automotive sector is in a state of transformation. We read everywhere that the end of the internal combustion engine is approaching, be it diesel or gas. Electric vehicles, like this one here, are the big thing now. How do you see this? Is it something you view with suspicion or how do you rate it?

E-mobility is politically desirable. It’s also desirable for society and is currently really taking off. It will play a role in decarbonization. That will happen when the corresponding renewable energy sources are available and the infrastructure has been built. And with this growth in e-mobility, we want to grow too. We’re already involved in electric vehicle platforms now coming onto the market or already on the market. These include the Tesla, the Audi e-tron, the Volkswagen ID.4, the Daimler EQS. But I will say just as clearly that at the minute our combustion engine activities, which we have operated and developed very successfully for many years, are needed to aid the transition with their innovations in order to fund this transformation.

I see. Thank you for that. I think we need some shade from the sun. Shall we go in?

Yes, let’s go.

A change of scenery and a new question regarding another megatrend, autonomous driving. A subject many find fascinating but at the same time also a little scary, because it means you’re no longer at the steering wheel of your own vehicle. How do you see this, what impact will it have on the business of Automotive?

Well it’s true that autonomous driving is another fascinating new technology alongside e-mobility that will find its way into vehicles in the next few years. Autonomous driving is expected to make another significant contribution to making driving virtually accident-free. Again, we want to play a key role in this too. With our activities particularly in steering systems we are one of the major players in this sector today. And the next generation of our current electric steering systems, so-called steer-by-wire steering systems, offer opportunities for us to help drive this technology. But personally I believe that the industry will need another five to ten years to fully meet the technical requirements for this and really make it safe. The conditions are being put in place and this area will be hugely relevant to us.

Let’s take a brief look at the topic of marketing. Many of the companies in the field of e-mobility are advertising very offensively, even aggressively. Everything is super smart, super innovative, super Apple, super sexy. Where would you place Automotive Technology in this?

We also have a great passion for the product. But we focus it more on innovation, costs and quality. Because what matters to us? We have maybe fifteen customers worldwide that we have to convince of our capabilities. The companies you mentioned, who have large marketing budgets, they have to address millions of customers in the B2C, the business-to-customer sector. We are in the B2B, the business-to-business market and we have to focus on the functional benefits and competitive advantages of our products. One small exception is the aftermarket business at our shock absorber manufacturer Bilstein – which is also a very strong brand serving end customers in the tuning sector and with spare parts. They have a respectable marketing budget that they use to generate customer enthusiasm for the product and the brand, in addition to personal enthusiasm.

Higher, faster, stronger has always been the driver of technological progress. Everything is becoming smarter, more digital. What opportunities does this present for you?

Digitization is not a buzzword for us. It’s absolute reality. For us, digitization is very relevant in the production process. It’s highly relevant for the product and it’s relevant for new business models. In the production process, digitization helps us make quality processes much faster in order to reduce quality costs. In terms of products, it’s mainly about the further development of our electromechanical automotive products. I’ve already mentioned our steering systems, they’re one example. But there’s also the active and semi-active dampers at our subsidiary Bilstein. And in the third area, new business models, we’re operating like a start-up. Incidentally, we’re also putting a great deal of enthusiasm and passion into developing an app to help fleet operators and car-sharing providers carry out damage detection quickly and in a targeted, user-oriented manner. It’s been very well received, the first orders are coming in, it’s a lot of fun, and it’s very capital-extensive, unlike the other business. And for us, therefore, it’s an interesting field for the future.

From a slightly different perspective now, from the viewpoint of an e-biker, I’ve had to be very patient in recent months, especially with regard to ordering. Electronic components, controllers, etc. are a clear bottleneck, and as I see it, the automotive industry has been hit really hard in this regard. Is this an issue for you and, if so, is it having an impact on your business?

It is having a certain impact on our business. And yes, it has hit the automotive industry quite hard. Other industries, the consumer electronics industry, the communications industry have increased their orders and so semiconductor manufacturers have of course allocated their capacities to those customers who represent the majority of their market. The automotive industry only takes about eight percent of global semiconductor production, and since the automotive industry has now, thank goodness, recovered more quickly from the coronavirus crisis in terms of demand, we have a problem in the form of a materials shortage, a supply bottleneck, which we’re having to deal with on an ongoing basis.

The next question probably won’t surprise you either. The green transformation, sustainability. Key topics for thyssenkrupp, today and tomorrow. What opportunities does this present for Automotive Technology and how can you exploit them?

A very relevant topic, I think, for each of us personally, but also very relevant for the company. In the automotive industry, for example, it’s reflected in the fact that our customers are setting tough targets for CO2 neutrality in the supply chain. We’ve set ourselves very strict targets to implement this in our companies and are now also rolling them out to our supply chains, which we must of course hold to their responsibilities in the interests of our end customers. So that we can meet climate targets on the agreed timeline.

So, we’ve talked a bit about your company and about your customers’ requirements. What we haven’t talked about yet is the competition, especially from Asia. Do you see this more as an opportunity or a threat?

Every new competitor that appears on the horizon is like a fitness trainer. That’s good for us. As I’ve indicated several times we are operating in a pretty competitive environment. But in the 1990s we learned to deal with Japanese competitors after the major Japanese OEMs built transplants in Europe and North America. We’ve also learned to deal with Korean manufacturers. At the moment things are a bit different with the Chinese car manufacturers. In Europe there are already far more Chinese component suppliers than many people might realize, some of them with German names like Kuka, Kiekert, and Preh. But as I see it, as long as the Chinese car industry is still booming, there will be enough growth potential there, and we can also profit from this as we moved into China at an early stage. If that growth slows, then of course we have to expect more competition here, because the Chinese suppliers also have the required certification. But thanks to our international setup we have been in training for this for years, so to speak, and that will also help us deal with this situation.

That was a look to the outside. Let’s look inside again, and in particular at the positioning of Automotive within the Group of Companies. From the outside it might look as if Automotive doesn’t have too much in common with other companies. Is that an accurate assessment, is it an exaggeration, or conversely why is it actually good to be part of a Group of Companies?

First of all, it’s not just through us that thyssenkrupp is a major supplier to the automotive sector. Steel Europe supplies the auto industry, MX supplies the auto industry, and so do we at Automotive Technology. Overall thyssenkrupp generates sales in the region of ten billion euros with the automotive industry. So the auto sector is a common customer, and in absolute terms the major automotive OEMs are also thyssenkrupp’s biggest customers. But as our segments and business units are very product-focused, cost synergies across the group are very, very limited.

Let’s take a look further inside. As with my previous guests, I’d like to ask you about the results of the Pulse Check, in particular on the topics of leadership credibility and continuous improvement. The results were quite critical. How do you see it, what do you think needs to be done to achieve better results going forward?

The Pulse Check made a very important contribution this year, which clearly has to be seen as a year of transformation. And you have addressed exactly the right points: continuous improvement, which I place directly in context with leadership. For us, it’s really important to improve every day. And I think I can safely say that we have put very systematic processes in place for this. But now it’s also important that all our leaders commit to meeting the targets we have set ourselves to maintain and even improve our competitiveness. But I’m confident that in particular if we link these two topics together we will make clear progress.

That leads nicely into my last question. What exactly can we expect from your segment in the coming months?

Given the positive economic data, we expect car sales to continue to grow dynamically. Moreover, we have full order books. Going forward, our capacities are 85 percent booked up to 2023/2024. And now it’s down to us to use what I talked about earlier – the focus on innovation, costs and quality – to make the best of the booked programs. We have created the conditions for this in recent years. We have built several new plants, producing new innovative products. We’ve taken on a lot of new employees, and on the cost side we have moved into regions which on the one hand offer growth but on the other are not among the high-cost countries. With this mix, we expect to achieve our target margins, and we expect everyone to play their part.

There’s nothing I can add to that. Thank you for your time, Dr. Kroos. And thanks to all of you for watching. That was the latest episode of We will of course be back with interesting guests and new topics. Goodbye from Essen, stay safe, see you again soon!