INTERVIEW: Always moving the herd westward: TRW EVP Peter Lake
"There is so much you can do - put the eyes and ears on a vehicle" - TRW EVP Peter Lake
Peter Lake is TRW executive vice president sales and business development and has been with TRW's automotive business since the 1999 acquisition of Lucas Varity, where he was serving as VP of marketing for Lucas Varity Automotive. He talked to Simon Warburton on the sidelines of this year's North American International Auto Show in Detroit.
Lake joined the former Lucas Industries immediately after earning his degree in business in 1978, progressing through a number of sales and marketing positions within the diesel and heavy-duty electrical division (CAV).
He subsequently joined the company's Aftermarket Operations as general manager of Lucas Braking Parts and Service. He later was appointed marketing director of the Lucas Aftermarket Division, became commercial director for Lucas Varity Aftermarket Operations, then was elected to head Automotive marketing, a position he held when TRW acquired Lucas Varity.
Lake has a degree in business and is a member of the Society of Automotive Engineers and the Original Equipment Suppliers Association.
j:a: There is significant talk surrounding the US automotive uptick and what it could mean for suppliers - what is TRW's view?
PL: Things continue [their] gradual improvement. The uncertainty that was here 18 months ago as to what was the trajectory, seems to be behind us. There is general consensus we are improving.
That is beneficial as it gives certainty and with confidence, people are prepared to make some larger purchases. If you feel confident about the future, then your business is more prepared to make investments.
I don't see the glass as half full rather than half empty. Suppliers learned a lesson from the depth of that recession...perhaps being careful about bringing cost back into the business - particularly fixed cost - whether that is the vehicle manufacturer or supplier or industry more broadly.
j-a: Can you give an example of how the market has evolved since the last Auto Show in Detroit in 2013?
PL: While last year at this time, there was not full clarity as to [how] the whole driver assist and semi-automatic braking market would evolve, in the last 12 months our understand [ing] of that has solidified and we see vehicle manufacturers being much more aggressive with their uptake about that sort of technology.
Much of the Frankfurt show was about automatic driving functions. Some of the pundits have been perhaps over-ambitious, but we are certainly seeing our forecasts are in excess of where we were last year.
Perhaps one of the challenges is some greater clarity around automatic brake systems and what technologies are going to be required to meet that challenge. It is more a medium term thing - a three to five-year time.
j-a: Is that drive coming from the OEMs or consumers?
PL: Some of the fitment rates we are seeing are higher than we had originally envisaged. Certainly some of the fitment rates we are seeing with our technology, such as cameras, there is a strong pull from the marketplace for these features.
We have to make these technologies user-friendly - you don't have to be a member of MENSA to know how to use [them]. They need to be intuitive and fit for purpose.
j-a: Could there be 'too much' technology for drivers to absorb?
PL: We have this mantra: 'safety that everyone deserves.' If something is too complicated to use, it is just not going to be used.
There was a lot of concern about cognitive distraction and we have a responsibility to ensure there is not that overload.
If anything, we are seeing a continuation of pull for safety technologies and people are starting to embrace the thought active safety has a role to play. Automatic emergency brake [ing] is such a feature.
j-a: Does TRW undertake much lobbying of regulators, either through OESA (Original Equipment Suppliers Association) or directly in Washington?
PL: We as as company are not active lobbyists. We see our role as an objective provider of input, rather than pursuing self-interest in this area.
Of course we give input on proposed rule-making, but we are not as a company, having a philosophy of active lobbying. We are data driven and fact driven, to support the industry, allowing government and industry to come to the right decision.
If you look at what has been achieved [with] the number of fatalities and how safe vehicles are - the acid test is not to get everything right - but have we moved tangibly forward?
We have to up the bar every year - as long as upping that bar is realistic and sensible. The current [government] administration talking about active safety is certainly [in] the right direction. The direction is right - it has to be pursued.
j-a: TRW posted third quarter 2013 financial results with sales of US$4.2bn, an increase of 6% compared to the prior year period. What is your view of the financial performance and has that reflected in your hiring?
PL: Our Q3 [results] were very strong. Sales were up year to date - up compared to the backcloth of a difficult market condition in Europe which is a large part of our sales. Lots of positive things are happening in Q3.
We have been increasing our headcount and increased our spend in engineering quite significantly in the last couple of years.
For many years engineering has been under-valued. The real people who deliver value to the economy - certainly engineers play a big role in that.
j-a: You mention Europe - do you see light at the end of the tunnel and how are emerging markets performing?
PL: Obviously, a sizeable proportion of our business is in Europe. It is still a massive manufacturing market. [Some] 43% of our sales in 2012 were [in] Europe. We have had solid growth in North America, Asia and China.
With the growth in vehicle manufacturing in China and Brazil, to a certain extent we will see China become a more important proportion of our business as we go forward. For the whole industry, that is healthy, that is good. In absolute terms, there is great future potential in China.
j-a: Estimates for US vehicle production range from anything between 16m and 17.2m units for 2014 - what is your opinion?
PL: Something in the 16m range is probably close, but you will cycle around that and you will have high and low points.
j-a: How does TRW view the competitive supplier landscape?
PL: We are in a space where we have formidable competitors. What do we have to do to up our game and what do we have to do to be better then they are?
We have to drive ourselves, no-one else is going to drive ourselves. The main thing in business is to get more right than wrong and always to move the herd westward.
j-a: How do you see technology practically improving vehicles? Will we see fully-autonomous cars?
PL: As soon as you have electric steering on a vehicle, then with the addition of sensors and some electronics, there is so much you can do with the longitudinal and lateral control of the vehicle. Put the eyes and ears on a vehicle.
Step by step, this engineering potential is available and we are going to see a lot of functionality rolling out over the next few years.
Our belief [is] full automatic driving is realistically further away than some of the other pundits are saying. We believe in evolution rather than revolution, not least because in some environments the whole legal framework has to be tested.
Let's talk about functionality at low cost. Lane departure warning or lane guide in itself would a tremendous move forward
No-one has the brakes and steering, the driver assistance systems and electronics TRW has, plus passive safety. That is what distinguishes us from the others.
Euro NCAP believes AEB systems offer significant safety potential. Its assessment will be included in the rating scheme from 2014 onwards. Real world performance data suggests such crash avoidance systems can reduce accidents by up to 27% and can lead to a significant reduction in injuries.
A recent IIHS report indicates the full implementation of Forward Collision Warning, Collision Imminent Braking, and Lane Keeping on US vehicles could save an additional 11,000 lives per year.
Four US States have enacted legislation to allow the testing of autonomous vehicles on public roads - including Nevada, Florida, California and Michigan.