borgwarner inc & borgwarner turbo systems company overview … · november 23rd 2017 borgwarner...

November 23rd 2017

BorgWarner Inc & BorgWarner Turbo Systems

Company overview

Potential effects of Brexit

Nathan McArdle - Manager, Advanced Development Programs

© BorgWarner Inc. 2Confidential business information

Text in overlaying boxes, black,

between 14pt and 18pt

Our Vision:

A clean, energy-efficient world


BorgWarner at a glance

27,000employees

2016 Sales

$9.07

Billion consolidated

Financial and Employee information as of December 31, 2016. Locations as of November 21, 2016

62 Locations

17 Countries


Vehicle Mobility Trends

autonomous

driving

shared cars

and rideshare

connected

cars

efficiency/CO2

emissions

THERE WILL ALWAYS BE A NEED FOR A

PROPULSION SYSTEM


Product Leadership

We are a global product leader in clean, energy-

efficient propulsion system solutions for combustion,

hybrid and electric vehicles.


Volume

2016: 306,000 Turbos

PC : 11,000

CV : 295,000

2020: 662,000 Turbos

PC : 373,000

CV : 289,000

Process & Facilities

S&W & CW Machining

Core, HSCB & Final Assembly

Warehouses

Quality & Material Labs

Engine and rig testing

Certifications

ISO/TS 16949 – 2007

ISO14001 - 2009

ISO18001 – 2010 = UK Engine Manufacturers= UK Engine Manufacturers currently supplied from Bradford

LONDON

Plant Profile - Bradford


Passenger car Commercial vehicles Off Highway

Vehicle applications


Customers supported in Bradford

http://www.perkins.com/

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Manufacturing Processes

Assembly

High Volume / Low Mix

Low Volume / High Mix

Machining

Shaft & Wheel

Compressor Wheel

Turbine Housing

Low volume/Water Cooled

Waste Gate Electrically actuated R2S VTG VR2S

Manufacturing Capabilities


Relevance of international trade: exports 7.25%

36.3%

56.4%


Relevance of international trade: exports 7.25%

36.3%

56.4%

Impact on no deal/WTO tariffs

Export tariffs: 2.2% of sales


Relevance of international trade: imports 11.8%

28.9%

59.3%



28.9%

59.3%

Impact on no deal/WTO tariffs

Import tariffs on components: 4.1% of component cost



28.9%

59.3%

Potential opportunity to reduce tariff impact by on-shoring some of the EU imported components:

Turbine Housings

Bearing housings

Compressor covers

Need to ensure competitive in terms of:

Cost

Quality

Delivery


Supply chain common exampleX%

X%

Foundry

Engine

maker

Vehicle

maker

Farmer

Duty Suspension:

This example will qualify for some duty

drawback

But a robust duty drawback process and

capable IT system needs to be in place to

handle increase in demand if no deal in

place by Brexit

Calculating the duty drawback ‘value add’

will be an additional task and cost

http://turbolabofamerica.com/turbine-housing1.jpg


Customs administration – Export/Import

Export: ~800 shipments per month

Invoice for each part number

Cost for ‘export entry’ ~£70 shipment

Annual cost = +£600k

1 hour processing per shipment compared to 10 minutes today

Annual cost = £400k

Import: ~1500 shipments per month (about 10% outside EU)

‘Import entry’ arranged by freight forwarder

Average cost £70

Annual cost = £1.3M


Additional cost to BW

2016: BW exported 265,000 turbochargers to Europe

Rules of Origin administration:

800 shipments / month, at least one hour processing time for certificates

Additional cost of ~£20k per month: £240k / year

Increase the size of the current shipping/import/export department

from 3 to 8~12 people.


Impact of customs delays

Goods can be delayed in customs due to systems overload,

paperwork errors, volume of traffic

Uncertainty in delivery timing creates particular burden on

manufacturers

If delays become substantial:

Increased inventory needed

Additional paperwork and human resources

Cost increase from suppliers

Cost increase to customers or reduced profitability


Review

The additional cost to BW if there if no FTA agreement: ~£5.0M/year

This does not include any monies claimed back through duty suspension

Current uncertainty of future rules is affecting business decisions

Finding staff qualified for customs administration will be a challenge for industry and agencies

Potential for customs delays adds additional costs and uncertainty for us and our customers

In the worst case, future growth will be impaired due to aggregate effect of all incremental factors on cost and ease of doing business


Thank you!

borgwarner inc & borgwarner turbo systems company overview … · november 23rd 2017 borgwarner...

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