Johnson Controls chief executive Steve Roell has told a US conference the battery, interiors and building controls specialist expects its auto revenues would grow “substantially” over the next five years as markets recover and developing markets expand, and as the company gains market share.
“Automotive will continue to be a strong element of our business for the next five years, and probably 10 years,” Roell said at the Reuters Manufacturing and Transportation Summit. “Longer term, the opportunities on the building side will dwarf that.”
The news agency noted the supplier has said building efficiency will dominate its mergers and acquisition activity though it will not neglect its auto interiors or battery business from a deal standpoint.
Johnson Controls’ automotive sales, which are leading the company’s business recovery so far, are still below pre-crisis levels, but a rebound in US auto production is likely to continue and the company expects to restore some jobs. It cut its workforce from 145,000 to about 130,000 during the downturn largely because of difficulties in the auto sector.
The company last month reported quarterly profits better than expected and raised its full-year forecast above Wall Street’s estimates, as cost cuts introduced during the recession began to pay off and some of its rivals failed.
Auto production dipped to an annual rate of only about 8m units at the depth of recession, half its peak, and will gradually climb back between now and 2014, Roell said.
“We’ll be adding positions back. It will be tied back to the recovery of the auto industry,” Roell said.
He said Johnson Controls’ estimate of 10.9m vehicles produced in the fiscal year ending in September could be conservative but was not dramatically below expert estimates. Roell also said Europe’s automotive sector still had too much capacity.
But he is optimistic both about China’s car industry and the strength of its economy.
“China has never let up,” he said.
Johnson Controls’ China auto revenue is expected to be around $3bn this year, up from $1.9bn in 2009, and should approach $5bn within four years, Roell said. Chinese car manufacturers, such as JCI customer Zhejiang Geely, are starting to step outside their home market, though global expansion is not their top priority, Roell said.
“I don’t think a lot of them have dates or have set estimates of what they hope to do in terms of growing internationally,” he added.