Freudenberg relies on its foresight on technology and innovation. The group reinvents itself from time to time with the common strategic planning process covering five to 10 years and special trends 15 years. Electromobility or digitalization will be the focus. “We focus on our long-term project which will go up to 2050,” Dr Mohsen Sohitold AutoParts Asia in an exclusive interview. The edited excerpts:
Q: Can you throw some light on the strategic plan of Freudenberg?
A: We are taking up our strategic planning process this year. In the normal process we look at five to 10 years. In this we put more precise three-year plan. But then the once-in-a-while special strategic topics will be looked at in five to 10 years. For example e-mobility; it doesn’t really become meaningful until 2030 in terms of volume. The same is with digitalisation. We have made special tracks to look at those businesses. For certain projects we went even farther than that because, it is our view that at some point the world wants to be less dependent on fossil fuel. The reasons could be either shortage or climate or both; beyond transportation this will affect lot of things in life. Therefore, we make the special topics very long-term.
Q: Since Freudenberg caters to over 40 industry segments, how are you able to justify long-term plans?
A: We are a conglomerate and one of the most successful ones, because we did not change ourselves based on the fashion of the year. Though we cater to 40 different sub-segments, the technology underneath is five or six.
So we have selected technology platforms that we follow and those that feed the different businesses we have. We have put the top-down view of how we see the strategic business plans.
For example, we have all our divisions to think about digitalisation and how it will affect their businesses not only in terms of efficiency and re-engineering but also re-imagining the world on how the interaction with the markets will change. Once we agree, then it becomes the strategic plan. If you know what you are doing, and we know what we are doing, it works very well.
Q: What kind of megatrends do you follow?
A:In the long-term the global economy is driven by population. Where will the future economic growth be and where will they live?
These will be one of the megatrends that we follow. By 2050 the world population will be around 10 billion with over two-third of people living in megacities.
Q: You have been supporting battery technology for over six decades; with emerging e-mobility what are the prospects you see for Freudenberg?
A: Our assumption is that by 2030 about 30 percent of the new car production will be plug-in hybrid, pure hybrid or pure electric. We do not see fuel cells becoming a meaningful percentage until a decade or two after that. The business that we have and supporting automotive has nothing to do with the kind of propulsion. One area that could be negatively affected is the sealing that we have in the IC engine. We have also invested in manufacturing battery sealing for many years and the opportunity just shifts.
Q: Will shared mobility affect car production and your business?
A: I think the assumption is that car-sharing in the future will go up but it will not be in every segment of the market; it will largely be confined to A and B for sure and some in C segment, where the content per vehicle for Freudenberg is very less. I’m not saying that we will not be affected but it may be compensated by the growth in number of cars per thousand people. We are very strong in the premium cars.
Q: How fast do innovations turn commercial in Freudenberg?
A: The share of revenue that comes from sales of products that are less than four years is 30.4 percent. This is the most important factor on how successful a company is in commercialising ideas. We invest in research very well; last year the R&D expenses related to sales was 4.3 percent (371.9 million Euro).
Q: Do you make your own products obsolete to market new products?
A: We do that as well; if we don’t do, then the competition and customers will do. Each industry has a product life-cycle and obsolescence depends on that.
Q: Would Freudenberg get into developing autonomous car on its own?
A: No, that is not in our plan.
Q: Don’t you leverage the disruptive technologies like digitalisation, additive manufacturing etc?
A:Digitalisation has been taking place at a rapid pace during the last three decades. Digitalisation is a significant megatrend which will continue in the future as well. What we are very mindful of more specifically is the way we collaborate with the customer, the way we get their information, their demands etc., and implement within the factories and deliver the products and services. I think this is very important. In this disruption, we need to make sure that we have the leading edge.
When we talk about all things connected, machines connected, data, analytics, Industry 4.0, the machines can schedule themselves based on the demand. They also diagnose when there
is a potential breakdown. Production of similar products in the different parts of the world would actually reduce the risk on account of any disaster or natural calamity at one location. It will also help additive manufacturing in making prototypes for different locations. We don’t have a dogmatic view of this technology. If it helps our customers reduce cost, improve quality and delivery, we will take it. We have to be pragmatic about that.
Q: How well placed is Freudenberg India in leveraging opportunities emerging from the Indian automotive industry in terms of emissions and other technologies?
A: Freudenberg is present in about 60 countries. We have to understand the market here and cater to it. For example, in terms of emissions Europe is leading, where Freudenberg has been a supplier to many customers. All we need to do is to bring in those relevant technologies to India.
Q: Any best practice from India that you could deploy globally?
A: The filtration division in Pune, India, works with lot of projects in power and fertilizer sectors. These plants require large quantities of energy; if the turbines in these plants improve the efficiency of the air flow, it can improve the efficacy of the turbine itself. The filtration division developed a solution along with a partner; as this worked very effectively we could move it around to customers of Freudenberg across all tropical belts.