dave carroll & roger stone capital markets day 2004...
TRANSCRIPT
Dave Carroll & Roger Stone Capital Markets Day 2004
Developments in Powertrain
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Agenda
• Powertrain Overview• Powertrain Overview
• Stackpole Update
• Powertrain Developments
• Systems Update
• Summary
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Developments in Powertrain
High Value Segment
Content per vehicle = $2,750
Engine$1,800 perVehicle
Transmission$950 per Vehicle
4WD Transfer Case$450 per Vehicle1
OE powertrain accounts for 17% of Group sales
1 Not included in Total Global Content per VehicleSource: Merrill Lynch
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Developments in Powertrain
Powertrain Market Opportunity
% outsourced in 2002 20%Only
% outsourcing potential higher compared tonext largest content area – body / structural
49%higher
% higher than average component content of $743 270%
higher
Source: Merrill Lynch
Content per vehicle = $2,750
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Developments in Powertrain
A Wide Range of Powertrain Products
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Developments in Powertrain
Why We Like Powertrain
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2
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Evolving market
Highest value segment in vehicle
Largest and fastest growing segment in vehicle
Supplier technology is embraced
Differentiated technology is rewarded
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Developments in Powertrain
Agenda
• Powertrain Overview
• Stackpole Update
• Powertrain Developments
• Systems Update
• Summary
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Developments in Powertrain
New Product Launches On Track
Precision Metal Components Engineered Products II
Significant increase in manufacturing space
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Developments in Powertrain
Stackpole’s New Facilities
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Developments in Powertrain
New Business Highlights
• > C$ 223m in new business
• > C$ 79m in near-booked business
• > C$ 140m in business under development
• C$ 48m contract in China/Korea
Variable valve timingcomponents
4 wheel drive carriers& components
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Developments in Powertrain
Component to Module Migration – Carriers
Carrier component
$3
Multi-piece carrier
$20
Carrier assembly
$100
Providing customer solutions
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Developments in Powertrain
Stackpole Component to System Migration
2001 2008
43%43%
57%57%
SystemsSystems
ComponentsComponents
SystemsSystems
ComponentsComponents
19%19%
81%81%
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Developments in Powertrain
Long Term Sales Outlook
Calendar Year
$C (‘000)
0
100,000
200,000
300,000
400,000
500,000
600,000
2004 2005 2006 2007 2008 2009
700,000
CurrentCurrentCurrent
New BookedNew BookedNew Booked
Plan
15% CAGR
Near BookedNear BookedNear Booked
In DevelopmentIn DevelopmentIn Development
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Developments in Powertrain
Agenda
• Powertrain Overview
• Stackpole Update
• Powertrain Developments
• Systems Update
• Summary
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Developments in Powertrain
What is Driving Market Development?
• OEMs– cost reduction– product differentiation– risk sharing
• Legislation– fuel economy– reduce vehicle emissions– vehicle safety
$0
$15
$30
$45
‘95 ‘98 ‘00 ‘02 Jan‘03
Mar‘03
Jun‘03
Sep‘03
Dec‘03
Jan‘04
Mar‘04
Jun‘04
Sep‘04
US$ bbl• Consumer– fuel economy– improve performance– enhance feature level– reduce noise– vehicle safety
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Developments in Powertrain
Drivers: OEMs – Why Outsource PT Content?
Fixed cost reduction– Development costs– Manufacturing investment and labour
Variable cost reduction– Optimised designs for systems by specialist suppliers– Encourage supplier efficiency through Lean Manufacturing– Suppliers can apply parts/technology and plant
not just across platforms but across OEs
Risk sharing/reduction– Utilise supplier investment and capacity,
reducing volume risk exposure for the OE
Powertrain development costs must be better managed
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Developments in Powertrain
Driving Forces: Legislation
Example: Passenger Cars
MarketMarket LegislationLegislation DateDate CommentComment
Tier 2,bin 1-10 2004-09
Major challenge for diesel engine particularlyOxicat, Particulate and NOx aftertreatment Supplementary driving cycles including Aircon cycle
U.S.Federal
Cafe 2004-09 Applies to light trucks 20.7 to 22.2 mpg (U.S.)
LEV1 & ULEV1 2001-06 Emissions
LEVII, ULEV &SULEV 2004-09 Emissions
U.S.California
Possible CO2 ? In discussion/dispute with OEs
Euro V 2010? Emissions
CO2 2008 140gm/km fleet averageEuropePedestrianImpact? 2010? Underbonnet package smoothing and softening
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Developments in Powertrain
Impact on Engines
• Diesel Engine penetration continues to rise in Europe– Driven by running costs: better consumption, lower cost/litre– U.S. is still a long shot, but more likely now than ever before
1996 1997 1998 1999 2000 2001 2002 20030
1,000
2,000
3,000
4,000
5,000
6,000
7,000
OtherBelgiumUK
Spain
Italy
Germany
France
Car Sales (000’s)Diesel Car Sales – Western Europe
Source : Jato Dynamics/ Ricardo
Gates’ EMD, Smartdrive/TSAD etc apply to diesel engines too!
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Developments in Powertrain
Impact on Engines
SmartdriveTM
• Low Friction Engines– Two approaches:
• “Internal” friction reduction • Action to reduce parasitic loss from auxiliaries
• Combustion Improvement and Variable Displacement
– Both initiatives centre around variable valve timing/lift devices
• Aftertreatment– Especially for diesels
• Hybrids– Multiple technologies “in-play” – Issues with weight, cost and efficiency
still require better solutions
Confirms areas of current activity, pointers for more!
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Developments in Powertrain
Impact on Transmissions
Automatic transmissions• Europe: conventional technology too
inefficient for huge growth
• CVTs typically compromise driveability
• Dual Clutch Transmissions (DCT) offer best of both worlds:
– excellent driveability– better than manual fuel consumption– excellent performance
• USA: conventional auto will persist but with more 5 or 6 speed units
– Stackpole supplies the pump for the latest 6 speed unit shared between GM and Ford
Oil PumpOil Pump
DCT’s require high pressure oil pumps – Gates/Stackpole opportunity
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Developments in Powertrain
Capitalising on the Trends
• Gates technology– “SmartdriveTM” all belt solution– TSAD – geared hub
• Subject to customer pull
• Full launch in ‘05
• Fuel saving: 2% - 6%
• Complementary to Stop-Start
• Significant “value per engine”
Two-speed auxiliary drives
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Developments in Powertrain
Capitalising on the Trends
• Traditional engine oil pumps oversized
• Our technology matches delivery with demand– Reduces parasitic loss – Improves fuel consumption
• Already used in auto transmissions
• Market demand proven
• New application– DCT transmissions
Variable displacement oil pumps
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Developments in Powertrain
Capitalising on the Trends
Belts vs. Chains
0 2000 4000 6000Engine Speed [rpm]
0
0.1
0.2
0.3
Friction loss band fortiming belt drives
Friction loss bandfor chain drives
Lower Friction Loss• Growing recognition by OEs of the friction loss advantage of timing belt drives
• Fuel consumption benefit: 1%-4%
• One major OE has a high priority programme to investigate further
Source: FEV
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Developments in Powertrain
Capitalising on the Trends
New Technologies
• Several IPR opportunities:– VVT– Hybrids– NVH devices – Electronic enhancements to
existing technologies
Gatescouplings
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Developments in Powertrain
Capitalising on the Trends
Asymmetric Tensioners
• Cost saving opportunities
• Unique technology, tiny package
• Reduced belt tension– improves fuel consumption
• Customers:– Mazda (Japan) – in production– PSA (Europe) – in production– Several others in development
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Developments in Powertrain
Exploiting Technology Assets
Globalisation of Regional Strengths
• Exploiting Gates strength in Europe to market proven Stackpole technology– European OE customers interested
in oil pumps from Gates– Stackpole designs for both engine and
transmission applications– Manufacture in Gates European facilities– Initial programmes commencing– Start of production anticipated in 2008– 3 opportunities
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Developments in Powertrain
Agenda
• Powertrain Overview
• Stackpole Update
• Powertrain Developments
• Systems Update
• Summary
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Developments in Powertrain
Key New Product: Electro-Mechanical Drive™
• PSA launches in Europe on the Citroën C3– Only available in France at first– Gates anticipates Europe wide availability after success in France– Very high impact launch, very positive initial market reaction
Fuel savings generated every time the vehicle stops for > 3 seconds
5.0
5.5
6.0
6.5
Manual Transmission Automated ManualTransmission
Automated manual trans.With Stop & Start
Saving FuelGasoline usage in a 1.4l Citroen C3
with 3 different powertrains
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Developments in Powertrain
Key New Product: Electro-Mechanical Drive™
• Several other opportunities in development – 4 in Europe, 2 in Asia and 1 in North America– Regular launches expected over coming years– An excellent customer acceptability rating is expected– Volumes will grow dramatically as customer acceptance is
established and more applications become available– Diesel applications are also in progress
High growth potential
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Developments in Powertrain
Key New Product: GEM 10® Update
• 1st GEM 10® Customer Development Programme– SOP mid-2006– €13m in 2007– Belt driven application includes
oil and water pumps
• GEM solutions now availablefor entire range of options
• “Modulette”– Spin off from module studies
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Developments in Powertrain
Agenda
• Powertrain Overview
• Stackpole Update
• Powertrain Developments
• Systems Update
• Summary
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Developments in Powertrain
Summary
• High potential market
• Investing for future growth
• Inevitability of outsourcing
• Responding innovatively to capitalise on trends
• Strong product pipeline
• Moving up the value chain
Dave Carroll & Roger Stone Capital Markets Day 2004
Developments in Powertrain