"It has to do more than work - it has to be affordable": Delphi CEO, Rodney O'Neal
Delphi has well and truly emerged from its turbulent past to become one of the world's supplier powerhouses and is confidently predicting it will double in size by 2015. In the second of two interviews with just-auto, Delphi CEO, Rodney O'Neal talks to Simon Warburton about the global supplier's work in the electric vehicle field as well as the travails currently afflicting Europe.
O'Neal began his automotive career at General Motors (GM) in 1971 as a student at General Motors Institute (currently Kettering University). In 1975, he joined the Inland Division where he held a number of engineering and manufacturing positions in Ohio, Portugal, and Canada. He was named director of industrial engineering for the former Chevrolet-Pontiac-GM of Canada Group in 1991 and the following year became a director of manufacturing for Delphi. O'Neal was named general director of Warehousing & Distribution for GM Service Parts Operations in 1994. In 1997, he was elected a GM vice president and named general manager of Delphi Interior Systems.
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: Europe, particularly the southern Mediterranean countries, is going through economic and political turmoil at the moment. Does this impact on Delphi and how do you see the immediate future shaping up for the Continent?
RoN: "Europe is our largest region, around 43% of our company. A little bit of it is how you go to market with [for example] aftermarket, heavy duty vehicles, injection systems, we have an interesting customer mix.
"Our largest customers are the German OEMs, who, even in a downturn had a very robust year last year. The issue with Greece is when you look at their customer buy of vehicles, it is not material to Europe. The issue with Greece is the contagion of uncertainty that can drift through the market and will customers become concerned enough to delay purchases of automobiles.
"I am optimistic it [European economic situation] will get solved - the politicians have to get it done - so far they have not quite [got] it done."
j-a: There is an intense debate in Europe at the moment as to the balance to be struck between swingeing austerity cuts to reduce deficit and the need for growth stimulus - what is your take?
RoN: "You can't just have what I would call cost-cutting. You need to have a growth policy and you need both at the same time. I am hopeful it will get resolved as it has global implications.
"If Europe does not do well, the world will not do well. [If] the economy begins to contract, we will deal with it - it is what we do every day."
j-a: How is Delphi faring in the midst of such economic challenges?
RoN: "We selected 33 products to be aimed at safe, green and connected, most importantly they had to be relevant. As a result Delphi has grown to date, around 46% since we became the new Delphi in 2009. We will literally double the size of the company by 2015.
"There is demand top and bottom line - we participate in every area that is really moving rapidly in auto. China - we have a dominant position and German OEMs are our number one base. Aftermarket, electronics, electrification of the vehicle: if you like something in auto, then you have got to like Delphi, because we have got what's hot."
j-a: Now you have announced plans to purchase FCI Group's French Motorised Vehicles Division (MVL), could there be more acquisitions on the way?
RoN: "We have always been extremely transparent [what] we would do with the cash this [business] model generates. It helps support some of our largest German OEMs. It provides top line growth and depth and breadth of a technical perspective. It is accretive earnings per share by 2013.
"Acquisitions will always be on the table, but nothing huge, they will be bolt-ons."
j-a: Are you wary of having to deal with French trade unions?
RoN: "It is Bain [MVL is owned by affiliates of Bain Capital] that has to do industrial relations. It is not just France, it is a rule of all western Europe that you have to consult with the works councils. We have done it before and there is nothing unusual with what we are doing here."
j-a: What is Delphi's involvement with electric vehicles?
RoN: "We were always very capable in electric vehicles [and] we have some great technology. We are participating in the electrification of vehicles from hybrids up to fully electric - we are helping to create the technology of tomorrow.
"It has to do more than work - it has to be affordable and ultimately we have to turn a profit on it. When you look at EVs today, they do work, but there are range issues. It is an exciting spot, there is room for EVs"
j-a: How do you perceive government involvement with the automotive industry - is it too proscriptive?
"I think government should participate because in order to get it right, you do need commonality and standards. The key is they do dialogue with experts in the industry - key technical experts like ourselves because there are political decisions and there are political decisions that work.
"What we don't want are political decisions to drive the industry."