"Our proposition is about solving very difficult problems for our customer base": Delphi CEO, Rodney ONeal

"Our proposition is about solving very difficult problems for our customer base": Delphi CEO, Rodney O'Neal

Delphi has reinforced its ambitious intentions with the US$962m buy of FCI Group's Motorised Vehicles Division (MVL), which it says will allow it to use part of its significant cash strength and bolster its presence in the connector sphere.

The deal - Delphi's first major purchase since restructuring - will see MVL become part of Delphi's Electrical/Electronic Architecture (EEA) segment - a global provider of interconnection systems for use in safety restraint systems, powertrain and electrical vehicles. In the first part of two interviews, Delphi CEO, Rodney O'Neal talked to Simon Warburton from the supplier's global headquarters in Troy, Michigan about that deal and Delphi's aspirations.

O'Neal began his automotive career at General Motors (GM) in 1971 as a student at General Motors Institute (currently Kettering University).

When Delphi became an independent company following its spin-off from GM, O'Neal was elected a Delphi vice president and president of Delphi Interior Systems in November 1998. In 2000, O'Neal was named executive vice president of the former Safety, Thermal & Electrical Architecture Sector.

O'Neal was named president of the Dynamics, Propulsion and Thermal Sector in 2003 and was named president and chief operating officer in 2005. He was named to his current position of CEO in January, 2007.

j-a: Following your emergence from Chapter 11 some time ago, how would you define Delphi's role in the automotive sector?

RoN: "We think our value proposition is about solving very difficult problems for our customer base through technology, innovation and applications of technology. We aimed our resources at 'safe, green and connected' - it is a space that is really hot.

"You look at where we are today - and the future - there is so much interest in it from customers through to governments around the world. It is so relevant in our plans and also for the climate. No matter where a customer is in the world, they want a vehicle that is safe, green and connected. How to do that affordably and safely - some of the models looked at [by] the OEMs are incredible."

j-a: Can you give an example of where Delphi concretely address your 'safe and green' concept?

RoN: "We started looking at fuel economy and emissions standards. No-one knew quite how to do that affordably and efficiently. That is where a supplier like Delphi comes in.

"You take this [demand] that is being asked for and you create solutions. We are a very meaningful player and at the [same] time helping to shape rules of engagement around the world.

"They [regulatory bodies] talk to suppliers like ourselves to see what we think - I am not talking to Presidents or Prime Ministers on a regular basis, but our teams are. We show them future technical solutions because at the end of the day we are trying to solve a problem with balancing what is practical with what is possible. It might be extremely expensive, but the key to this...is to make it affordable."

j-a: Why did you decide to go for the acquisition of MVL? (still subject to regulatory and works council consultation)

"We have always been extremely transparent [what] we would do with the cash this [business] model generates in order to create more value for shareholders. Our priority in terms of the acquisition would be in the space of electronics or powertrain and put our cash to work.

"So an acquisition would be strategic and fill gaps - we said an area of interest would be connectors.

"We know FCI and we have looked at it for years - it is a unique asset in the connector space - we have a very strong connector business and this just solidifies and improves customer diversification particularly with customers like Nissan."

MVL had revenue of EUR692m  in the year ended 31 December, 2011 and is owned by affiliates of Bain Capital. Delphi expects the transaction will enhance its portfolio of connectors for hybrid and electric vehicles.

Delphi has earmarked synergies of US$80m to be achieved by 2015 from procurement, product development and the supply chain.