Johnson Controls might need to move beyond its core business segments to continue achieving double-digit sales growth, its top executive said.
Chairman Steve Roell was quoted by the Milwaukee-Wisconsin Journal Sentinel as saying company had plenty of growth in store through its record backlog but revenue would soon need to grow by another US$5bn a year to maintain that growth trend.
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“That’s going to be a real challenge,” he said during a talk at the Greater Milwaukee Committee’s annual meeting.
Johnson Controls is spending over US$1.8bn worldwide and launching 500 new automotive supply programmes this year alone, Roell said.
Double-digit growth in sales is projected this year in its three core businesses – automotive seats, automotive batteries and building control systems/energy-efficiency consulting. Sales are projected to hit $44bn this year, and could approach $60bn within five years, he said.
“That could mean different business models or adjacent businesses,” he said.
For instance, the company’s investment in battery technology, which today spans from lead-acid batteries to lithium-ion batteries for hybrid and electric vehicles, could expand to batteries for the power grid, he said.
Roell said the government bailout of GM and Chrysler helped prevent more bankruptcies, including Ford.
“It saved a whole lot of suppliers that would have gone out of business,” Roell said.
But he said Johnson Controls may have cut too much when it restructured. After the recession, the company has had problems managing and executing an array of new product launches in its automotive business.
In addition, the severity and swiftness of the decline in this downturn has prompted the company to change the way it assesses risk.
It now assesses not just what could happen but how swiftly problems can occur, and how multiple problems could combine to create an even worse situation, he said.
Looking ahead, the key challenge for Johnson Controls continues to be to find ways to manage its growth through attracting skilled technical people.
Also, the company continues to see much faster growth in emerging markets such as China, where it now has $4bn in sales and 18,000 employees at 60 factories.
