As the global leader of sealing solutions for vehicles, Cooper Standard is no stranger to receiving a different type of seal of its own – those more of the award kind.
The automotive original equipment manufacturer (OEM) was named a finalist in this year’s Automotive News PACE Awards – which recognise the best in technological advancement and business performance among automotive suppliers – for its Fortrex technology.
Juan Fernando de Miguel Posada, Senior Vice President and President of Europe and South America, says Cooper Standard is already selling the material to other OEM giants such as General Motors and Ford. The company is also a major player in automotive systems including fuel and brake delivering, fluid transfer and anti-vibration systems.
While the PACE award winners will be announced in April, The CEO Magazine found out more about Cooper Standard’s status as an innovation leader, as well its ambitious global targets and how it will go about achieving them.
The CEO Magazine: Why is Cooper Standard’s Fortrex innovation such a game changer for the auto parts industry?
After a few years of frequent use, a car’s sealing goes through normal wear and tear. What was once black sealing is now less black. With Fortrex, this does not happen. On top of fantastic acoustic performance, it weighs 30% less than sealing made from EPDM material and 10% less than normal plastic TPV sealing. We’re putting our customers in another dimension.
What you have to understand is that we hadn’t had any kind of sealing innovation for more than 25 years. We’d been working extremely hard with some of the OEMs on how we could upgrade the EPDMs and TPVs – plastics essentially – and had been hoping for a breakthrough for so long. We’re glad it finally came through with our Fortrex.
Cooper Standard has its own ‘i3’ process, standing for imagine, initiate and innovate. How do you effectively apply that?
We have our Global Technology Council, a centralised group focused purely on innovative pursuits, which receives around 30 submissions every quarter. We evaluate them for ideas that are strong and impactful enough to make it through our rigorous development process.
We also get the separate geographical regions to collaborate with the Global Technology Council to ensure everyone’s innovation goals are aligned, so we use our solutions in a way that can benefit our sales goals.
This is how we differentiate ourselves from our competitors and maintain our current pace of increasing returns for our shareholders. Each year, I would say at least a third of sales can be attributed to this centralised innovation group, and we have a number of patents and trademarks all around the world.
What other ways do you stand out from your competitors?
While innovation is important, we can’t always compete on technology. Most of the people we have running the operational side have been plant managers in the past, and they know the only other way to compete in the automotive industry is on price. We are always looking for countries where we can produce at a low cost.
What benchmark do you want to reach by 2025?
By 2025, we want to be one of the 30 biggest suppliers in automotive parts in terms of sales and one of the five most profitable companies in that space. To reach this goal, it’s clear we have to be close to €7 billion in overall revenue, with at least €2 billion revenue in the respective regions of North America, Europe and Asia.
We’re at around €3.8 billion in total revenue now, which means we have to almost double our performance to get there. We’re pragmatic and aware that we might not reach this ambitious target.
Do the priorities vary across the company’s three geographical regions, or are they similar?
If we continue with organic growth in some of the mature markets in North America and Europe, we will not reach our goal. In Europe, we’ve been very strong with how we’ve restructured the business so we can be more competitive
in the manufacturing of sealing tubes, brake tubes, whole systems and integration systems.
Asia needs to be given as much support as possible from the other regions in order to achieve double-digit percentage growth every year. In 2018, we will be close to €700 million in sales, starting from €150 million. We’re doing fantastic work in growing the company in that region. Four years ago, we were almost irrelevant in Asia. In 2020, we’re going to be close to €1 billion in Asian sales.
How many suppliers do you regard as critical to Cooper Standard’s success?
We have around 15 that we would regard as crucial. In Europe, they account for almost 82% of our costs, meaning the concentration is massive.
The relationships aren’t always easy because in many cases we’re not representing a big part of their business. They have other interests. However, even though we might not be a top priority for them, we can be strategic in how we attract them, even if we cannot compete on volume. This is where we like to be strong.
You’ve had an interesting career path to get to where you are now. That’s true. I’ve had all kinds of jobs. I worked for Johnson Controls for 14 years in different positions, starting as a plant manager and worked my way up until I left as Senior Vice President of Electronics.
Prior to that I was in the UK as Vice President of Metals. I was also responsible for turning around the business in Italy. Then I was in Paris for a few years, where I was responsible for Electronics.
After John (Giovanni) Fiori left as Executive Vice President in 2005, followed
by the CEO John Barth in 2007, I realised it was time for me to make a change as well. I moved to Alicante, Spain, where I was the Western Europe CEO of Avincis Emergency Services.
It was my kind of heaven; my house was 15 metres from the beach. I did that for six months before Jeff Edwards, a Johnson Controls colleague and good friend, called me. He was now CEO of Cooper Standard. We had kept in touch, but it was more personal than about work. But he’s one of the few people who, wherever he goes, I’m happy to follow.
The moment CEO Jeff Edwards took over Cooper Standard, he offered me the job in Europe… I couldn’t say no.
The moment Jeff took over Cooper Standard, he offered me the job in Europe. The situation over there was pretty dire. I couldn’t say no. I took over the roles of Senior Vice President and President of Europe in 2013. Two years later, I became the President of South America.
The quality of the people is a major factor to the success of any company. What is special about the people at Cooper Standard?
In the first six months in Europe, we brought 25 of the top managers in the industry along with us. We didn’t need to pay a headhunter for any of them. Every one of them used to work with us and had a lot of credibility in other companies. Their reputation helps in attracting other high-quality people. I think that has made the difference in terms of what we’ve been able to deliver.
They’re not only good people from a professional viewpoint, but they are nice people personally as well. Our people are committed and engaged, and I think that this, together with a lot of work, discipline and resilience when the results were not arriving at the beginning, is what makes Cooper Standard stand out compared with other companies.