When he is not considering how Nexteer Automotive can actively shape the brave new world of autonomous vehicles, company President Mike Richardson spends his time tending to 20 acres of land, incorporating forest and ponds, in northern Michigan. “I have a garden,” he tells The CEO Magazine, “and I’m trying to make my own wine. It’s quite terrible wine – only my mother likes it – but this is my escape, and I’m grateful for it.” The head of a global business specializing in steering and driveline systems, Mike celebrates Nexteer’s storied history, and embraces the potential for further success that the future holds.

Mike Richardson President Nexteer Automotive
Mike Richardson, President of Nexteer Automotive

The Nexteer story

One can only wonder about what shape the next chapter of the Nexteer story will take – given its century-old history and clairvoyant-like ability to be ready with the right product at the right time just when the market steers into a new direction. Nexteer came to life as Jackson, Church & Wilcox Co. in 1906, in Saginaw, Michigan. Bought out by Buick Motor Car Co. in 1909, the firm found itself in the General Motors family soon after when Buick became part of GM (itself newly established in 1908).

In 1928, the company became known as GM’s Saginaw Steering Gear Division. Reaching the US$1 billion sales mark in 1977, this division became the Saginaw Division in 1985 before becoming a separate business unit of GM under the Delphi banner. Delphi turned independent in 1999, before filing for bankruptcy in 2005. GM bought the division back in 2009, renaming it Nexteer Automotive, and then sold it to Pacific Century Motors (PCM) in 2010. A Chinese state-owned enterprise, the Aviation Industry Corporation of China (AVIC), purchased a majority stake in PCM in 2011, and the company completed its IPO in Hong Kong in 2013.

As Mike tells it, “this company has been around for more than 110 years, and for most of that time we were in GM: we were their in-house provider of, primarily, steering, but also driveline. Competitors would come in, and we would be on the customer side of the table. It was a fabulous education for us.”

Fully aware that the company’s history is a long and convoluted one, Mike speaks of “the many twists and turns in our story” that led up to the AVIC acquisition, noting that “this was a crazy, dynamic season, amid the global financial crisis, that brought extreme complexity and political uncertainty”. With the acquisition, everything changed.

“As an independent, Chinese-owned company, we established a three-year track record. You can imagine what that involved: writing our narrative, traveling extensively, explaining who we are – a Chinese-owned, global, automotive Tier-1 supplier centered in North America, making safety-critical, highly engineered products – and explaining the nuances of steering and vehicle character to investors who generally don’t drive cars. In 2010, when this happened, it was the largest Chinese acquisition of a global automotive supplier in history. There was no precedent, no template, no rulebook for making this East–West marriage work.”

“There was no precedent, no template, no rulebook for making this East–West marriage work.”

A life’s work

The marriage has turned out to be a happy one. Mike has served as president since 2016, and he describes his 44-year career with Nexteer, in its various guises, as his ‘life’s work’. “I started three days after high school, coming through the door as a co-op student, and I’ve done everything through this company,” he says. “I gained my engineering and business degrees, and multiple certifications, licenses and recognition. I grew up within this company, in engineering.”

In 1984, while the company was still part of GM, Mike took his first business trip to Europe. This maiden voyage “expanded my scope of thinking and opened my eyes to the fact that there’s a global market. This began a season of extensive travel where I was focused quite exclusively on Europe for many years, leading to a four-year assignment.” Beginning in 1995, the assignment overlapped with GM rotating its European manufacturing footprint from west to east; Mike was put in charge of regional engineering, production control and logistics.

“It was a rich learning experience,” he remembers, “because this was the point at which we began, in earnest, to establish a regional economy in Europe.”

In 2001, having returned to the US, Mike – at this point Delphi’s CTO – oversaw a fundamental shift in operations that to this day defines Nexteer as a company. “This was an important time for Nexteer as we were transforming and forming our core competencies from a hydraulic-based company to an electronic one, a process which entailed hiring and training, and significant years devoted to inventing new products – not only by us, but by the industry.”

“Nexteer is responsive, knowledgeable and open to innovation. Their commitment to equality and ‘doing what is right’ has solidified our commitment to growing with them. Working with Nexteer has been one of the most open supplier–customer relationships we have experienced.” – Marty Emery, Senior Account Manager, CW Bearing USA, Inc.

A leader in intuitive motion control

The transformation, made manifest in a shift from hydraulic power steering (HPS) to electric power steering (EPS) systems, has resulted, almost 20 years later, in a company that is leading the way in intuitive motion control. Mike attributes Nexteer’s success in this arena to three pillars: resilience, innovation and a commitment to thinking beyond boundaries; acknowledging, too, that the company’s history at GM has in many ways shaped its current approach.

“It’s a blessing and a curse to grow up inside an OEM. You’re blessed with a seat at the table. Your competitors come in to present their best products but at the end of the day you have the right of last refusal, and the unfair advantage. When we were part of GM, we were competing with Tier-2 suppliers that could make equivalent products.”

This left the company in a rather awkward position. “When you’re part of an OEM, it’s hard to diversify with other customers because they might fear that we have a particular loyalty to GM, and that they would not be treated at the same level. The relationships were not taking place at a free-market level; nobody wants to be forced to work with their brother-in-law.” Nexteer’s evolution out of GM allowed it to create a new identity for itself, and Mike notes that, “during this process, our management team took personal ownership of the business and our collective future”.

This future was in many ways determined by the transformation of the company’s core competencies, as part of the team’s commitment to innovation, back in 2001. “At that time, we were certain that EPS – engine-independent steering – would be the future. We did not know how to make it at a profit, but we knew we had to find a way.” Unable to replicate the vertical integration that Delphi was known for at the time,they decided what they could do was to take control over the design elements. “We began to call this the ‘Apple model’,” Mike recalls. “We didn’t need to manufacture everything in-house – we could depend on a growing supply base – but we could take complete design control of motor magnetic design, and let others make the motors.

“We designed our own power electronics, and produced our own sensor design; nobody else does these things. We’ve done it all in-house, with a contract manufacturer on the outside, and we write our own software code. Having full control, like Apple does with the iPhone and we do with our EPS, you are truly able to optimize product and process at a level that others cannot.”

“Working with Nexteer has been a true partnership that has driven our company to become more efficient and competitive. We’ve grown successfully together for the past 18 years.” – Mark Niehaus, Executive Director, Taigene Electric Machinery

In terms of thinking beyond boundaries, Mike explains that “the conversion to EPS was the first big wave of change in 70 years in the industry”. The next will come with the adoption of steer-by-wire, stowable steering columns and other technologies to support varying levels of automated driving. “Our thinking and, in time, our products, will go beyond steering vehicles. As mobility quickly evolves to higher levels of driver assistance and vehicle autonomy, the next horizon is a new era of safety and performance. These will be the things that, at the OEM level, differentiate one vehicle from another. We’re evolving as a software company with advanced steering systems, because we recognize that software has become the key differentiator of our product.”

“The conversion to EPS was the first big wave of change in 70 years in the industry.”

Mike Richardson President Nexteer Automotive
Sidney Bischer Photography

Mike illustrates the increasing importance placed on software by way of a telling comparison. The first space shuttle launch was commanded by a controller containing 400,000 lines of code; current EPS systems contain more than four million. Whereas Nexteer’s Steer-by-Wire systems contain 13.5 million lines of coding – and as OEMs request additional functions and features, this figure is growing. Those who work for Nexteer often describe the company as ‘Silicon Valley meets Motown’ to capture the new role that software is playing in its operations. “We’re becoming much more dependent on software as a differentiator,” Mike says. “We’re taking a quick, iterative design approach; we want to fail quickly, learn quickly, apply, and enhance.”

“Partnering with Nexteer for innovation and development has been a great success for PRISM Plastics. Nexteer’s key to being an innovation leader is early involvement with strategic suppliers like PRISM – to partner, optimize program and product deliverables on critical, high-precision components.” – Rhonda Wallace, Vice President of Sales and Business Development, PRISM Plastics

Going global

In the first half of 2018 alone, Nexteer broke ground on a new production facility in Morocco, opened a new driveline production facility in Queretaro, Mexico, and a software center in Bangalore, India. Revenue recorded for the period represented an increase of 3.7% over the equivalent period in 2017, and net profits were up by 11.1%. The picture revealed here is of a business thriving on a global platform, and Mike explains the motivations underpinning Nexteer’s global expansion.

“Global OEMs value performance and consistency: they want vehicles to feel the same, and to deliver the same performance around the world.” This lends a vital importance to the matter of scale, but equally important for Mike is that the company knows what its constraint is. Adamant that every company has one, Mike identifies Nexteer’s as engineering bandwidth. Accounting for this, “we prioritize global programs that bring the highest leverage of engineering bandwidth with scale.” As part of this effort, Nexteer these days often launches products simultaneously across three continents.

“Our global presence mirrors the regions in which our customers operate. We make it a point to produce in the region of consumption, and we like short supply lines.” The company has a manufacturing footprint of 25 facilities spanning six continents, and boasts 14 customer support centers worldwide. While Nexteer operates in English, regional representatives in these centers speak the native tongue of the customers, as the company understands the importance of clear communication from the beginning of the relationship.

“Our global presence mirrors the regions in which our customers operate. We make it a point to produce in the region of consumption, and we like short supply lines.”

“Global teams span regions, cultures, internal functions and divisions, and we believe that diverse viewpoints always yield better decisions and creative problem-solving.”

This approach enables Nexteer “to be more responsive to customer needs and tailor our solutions to the local regions.”

Mike Richardson President Nexteer Automotive
Sidney Bischer Photography

Activating innovation

In the Nexteer story that spans more than a century, one year in particular stands out as a watershed. “Under new ownership in 2010, everything changed,” Mike declares. “We went from a small division within a larger company to a standalone entity; frankly, I would say we didn’t realize everything this journey would entail as we began it.”

When the state-owned AVIC acquired Nexteer in 2010, it made history as the largest automotive acquisition to date by a Chinese organization. “The industry didn’t have a playbook for us to follow,” Mike says. “We had a lot to learn.”

While on this steep learning curve, the team discovered that it was innovation that would keep them alive. “We continue to compete with much larger peers, and differentiate ourselves through product quality, product performance and customer service.” All three aspects come down to innovation. “We can only improve our market position through relentless innovation,” Mike acknowledges.

“We’ve got to move more quickly than the others, and we’ve found that customers value a collaborative spirit, because that leads to creativity.

“Our teams are encouraged to innovate,” he continues. “This means we’re free to fail, to learn from our failures, and enhance our solutions. We say, ‘Think big, start small, fail fast and scale quickly’, and that’s the mental model that we carry around the world. As mobility itself is changing, our customers seek Nexteer for creative and innovative motion control solutions.” And innovation arrives not only in the form of the products Nexteer is developing, but also in its manufacturing and R&D processes, and its cross-functional global team structures.

“The industry has never been more competitive. When we started this journey, we had eight global competitors; that number has remained unchanged. There has been zero consolidation: everybody is shoulder to shoulder now, jockeying for position, so we’re driven to innovate. We’ve got all of the enterprise fundamentals covered, so increasingly we are differentiating ourselves on our attitude, our humility, our abilities, and our willingness to adapt to what a customer needs, because our competitors – particularly the larger ones – tend to lack that attitude.”

The ‘One Nexteer’ culture

Innovation is hard to come by in an environment that does not actively encourage it. Mike attributes Nexteer’s continued impressive performance to the culture that he and his management team have been carefully nurturing over the years since coming up with the ‘One Nexteer’ initiative. Built around the three sub-themes of enterprise growth, operational excellence and people, the One Nexteer culture was born at an offsite leadership event in 2015. Mike and his team studied Gary Keller and Jay Papasan’s bestseller, The One Thing, which prompted them to consider “one thing we could do that would make everything else easier, or unnecessary. We chose culture.”

Intended initially to “keep everybody on the same page as we moved further from home and expanded our product offerings”, these days this “adaptive, common culture” is still encouraged and celebrated in every place that Nexteer has come to call home.

Mike Richardson President Nexteer Automotive

In 2017, the leadership team was assigned Simon Sinek’s Start with Why. In search of their organizational ‘why’ – their reason for being – the team asked itself: “Why do our more than 13,500 people wake up in the morning and not only go to work, but go to work fully engaged, giving more of themselves to the global enterprise under the Nexteer banner than is required?

The exercise, which also involved members of the team opening up about their own successes and failures, saw them reach consensus on the reason. “Our collective ‘why’, in a few words, is to inspire and empower people with the freedom to go beyond. We view inspiration and empowerment as complementary concepts. Typically, young people are inspired, but they’re not yet empowered; older, more experienced people are empowered but may not always be inspired, and it takes both concepts to have a high-performing organization.” Mike draws attention to the fact that there is no mention of products or customers, making clear that the intention behind this overarching purpose is to shape the company’s internal attitude and its modes of engagement.

“Our collective ‘why’, in a few words, is to inspire and empower people with the freedom to go beyond.”

Taking a step further back in the process and considering how Nexteer attracts high-caliber talent in the first place, Mike begins with “a thought on geography”. Though it is a Chinese-owned entity, Nexteer’s center of operations has remained in the US. “Our Global Technical Center is about as far north in Michigan as you’ll find in the country’s automotive sector. We are not in a major metropolitan area, but we are unique in that on our 400-acre site in Saginaw, we have co-located engineering, prototyping, product return, validation, a test track, and manufacturing.” This provides an environment rich in learning opportunities for interested engineers. The company’s world headquarters, located a little over 70 miles away in Auburn Hills, in metropolitan Detroit, offer prospects of a different kind, and has allowed Nexteer to grow its roster of corporate staff.

Mike recognizes the value of a diverse workplace, and notes that as the company expands its skill set beyond that traditionally required by the automotive industry, software and electrical engineering experts will take their place at the top of its recruitment list. “We hire talent anywhere in the world that we find it,” Mike says, and at this point his thinking expands beyond locality. Wherever they exist, he maintains, “world-class people and world-class organizations crave the ability to impact their environment. We’re transparent about the desire to improve the regional autonomy of each of our three divisions, and we track the progress to make it visible.”

An additional help in attracting employees comes from the fact that Nexteer is devoting its resources to becoming a competitive player in the autonomous vehicle sphere. “This area is going to be incredibly relevant to the industry and the world in about 2025, but we need to prepare now. We’re actively engaged with our key customers in vehicle autonomy; internally, we’ve got an urgent need for focused product and development. We find that new hires are interested in this, and they’re bringing much-needed skills with them to advance the art.”

Mike Richardson President Nexteer Automotive
Sidney Bischer Photography

Two years ago, Nexteer conducted a focus group that revealed the four top priorities of jobseekers: personalized careers, ethical and sustainable operations, opportunities for growth, and doing work that matters. Mike believes that the company offers these opportunities to potential recruits. “We’ve got complete in-house capabilities for product development; offer training and global cross-functional job opportunities; and a career tailored to the individual’s interests and strengths. EPS conversion is driven by legislation for reduced emissions and improved fuel economy, and we create value in an ethical and sustainable way. Employees gain broad experience quickly, but we take time to enjoy our work.

“Finally, we do work that matters. Millions of people around the world are touched by the work we do. We’re not only making driving safer and more fuel-efficient, we’re re-imagining the future of steering and personal mobility.”

In the driver’s seat

Mike’s enduring commitment to Nexteer’s success has set him in good stead to shape the company’s future, and he has evidently dedicated much thought to what it takes to be an effective head. “A leader needs to dedicate time to envisioning the future,” he says.

“Many people work on efficiency, doing things right and paying attention to metrics that measure efficiency; not so many people think about effectiveness, or doing the right things. This is where leaders need to spend time, systematically envisioning what the right things to be done are, because it often involves steering the ship in a certain direction.”

When Nexteer first started developing EPS, while it was still very much a hydraulics company, it lost money on every unit. Ordered to desist innumerable times, Mike and his team carried on regardless. “A few of us believed in this mega-trend of engine independence, fuel efficiency and so forth,” he says. Their obduracy paid off. “When legislation broke open the market, we were ready at the right time, with the right product.”

The experience taught the team that purchased electronics offered little to no value proposition. They faced another problem when “Delphi made it abundantly clear to us that the Delphi center of expertise would be Delphi Electronics, not Delphi Steering”. Flouting the ‘militant’ instructions of its parent, the team, having already anticipated that the future lay in EPS, knew that the better thing to do was develop their own in-house capabilities. “We began developing our own power electronics from scratch, because we knew it was needed for our long-term survival. That operation unlocked the value proposition, making us profitable and able to grow in EPS.”

This part of his history reveals Mike to be in possession of ample reserves of forward-thinking, persistence and readiness, all qualities to be found in a true leader.

Mike Richardson President Nexteer Automotive

Expanding upon the idea that he sees the world through an engineer’s eyes, Mike notes that “every leader brings unique personal strengths to their position; mine happens to be technical understanding. But I’m keenly aware of many areas where I depend on others to contribute to our collective success. Through the IPO, and the later completion of our capital structure, I spent years with the financial and legal communities. It was a priceless education; concurrently, I was able to share our company narrative, to explain what our competitive strengths are and to define our horizon. This level of collaboration presents an opportunity for genuine value creation, but it must start with personal awareness of our strengths and weaknesses.”

Mike’s leadership philosophy is one that places a high value on the contributions of others, while drawing on principles of the servant-leadership style that encourages leaders to, above all else, serve. There are five traits that he prizes in a leader: integrity, courage, participation, curiosity and brevity. The last is of particular importance to him.

“Brevity and clarity are priceless; confident leaders are decisive, they speak with clarity, and they’re unafraid to be wrong. In one of Andy Stanley’s books, he says, ‘People will follow you if you’re wrong. They will not follow you if you’re unclear.’ Clarity is of vital importance in every leader’s communication.”

“Brevity and clarity are priceless; confident leaders are decisive, they speak with clarity, and they’re unafraid to be wrong.”

Mike Richardson President Nexteer Automotive
GM Supplier of the Year Awards Ceremony
Pictured left to right: James Danahy – GM’s Executive Director, Global Functional Leader Chassis Engineering Jesse Kalkman – Vice President, Global Sales & Marketing Mike Richardson – Executive Board Director, President Steve Kiefer – GM’s Senior Vice President, Global Purchasing & Supply Chain (Right)

Valuing reciprocity

Nexteer is committed to fostering solid connections with key partners. “We see our supply base as an extension of ourselves, and an important element of our value chain,” Mike says. “Leaving supply chain performance to chance is not an option for a world-class organization, and strategic supplier relationships are completely integrated with our strategic sourcing in our commodity management process.” We’re highly integrated with our supply base and, over the years, we’ve become increasingly dependent on our suppliers.”

The relationship between Nexteer and its suppliers is one built on loyalty and reciprocity. “Increasingly,” Mike says, “as new products and processes are refined, we’ll share our learnings. That’s been our track record, and everybody knows it. We generally rely on supply partners to play a larger role over time.”

Mike is keenly aware of how Nexteer benefits from the reciprocal nature of these relationships. “I will be the first to say that we are not perfect; we learn every day, and our suppliers are giving us valuable feedback to help us do better. In parallel, we believe that suppliers also greatly benefit from collaborative relationships with their customers: their business is more stable and predictable, they become more cost competitive, they improve their core capabilities, and they can deploy these capabilities to diversify themselves and win more business externally.”

Facing firmly forward

An early realization of EPS’s value and opportunities set Nexteer in good stead to continue to capitalize on the industry-wide change. “We weren’t the first to jump into electric power steering,” Mike concedes, “but we were an early mover in the field, because we foresaw the inevitable technical conversion from hydraulic power steering to EPS.”

“We weren’t the first to jump into electric power steering, but we were an early mover in the field, because we foresaw the inevitable technical conversion.”

Based on the amount of production units shipped, Nexteer has risen, since the acquisition by AVIC, from sixth to third in the world in steering, and is showing no signs of slowing. Explaining that the company measures business won in terms of lifetime revenue, Mike notes that “our current backlog of new business won is about US$24 billion. Foundationally, that fuels our continued organic growth. Last year, we finished a little short of US$4 billion annual revenue; the backlog has proven to be a strong indicator of what is to come.”

Mike recognizes the strengths that equipped Nexteer to forge a successful future, in the US, EMEA, South America and Asia–Pacific. “If you think about the global steering industry, we’re the only one that’s both a global Tier-1 and a state-owned enterprise. That gives us unique opportunities in China.” Nexteer has recently entered into joint ventures with Chang’an Automobile and Dongfeng Motor Corporation. Together, the companies represent roughly 27% of China’s domestic vehicle market.

“I expect both these JVs to grow and become a relevant part of our revenue base,” Mike says. “While they are maturing, we’re expanding geographically into new markets where we find opportunities, because we see geographic placement as a market channel that we must exploit.” Nexteer makes a point of producing in the region of consumption, taking the opportunity to keep supply lines short.Vehicle autonomy, naturally, remains a priority. “We’re keenly focused on this world because we believe it’s the next big disruptor in our industry.

Fundamentally, autonomous vehicles need two things: lateral and longitudinal directional control. Our specialty is lateral, side-to-side motion. For this new world, the emphasis shifts beyond vehicle character to vehicle integrity, dependability and reliability, which means having a highly reliable product. To further address the need for both lateral and longitudinal control in automated driving, we established a joint venture with Continental called CNXMotion. The JV focuses on integrating advanced steering and braking solutions and accelerating R&D for both parent companies.”

Making reference to the taxonomy outlined by the Society of Automotive Engineers (SAE) that defines vehicles by their level of automated driving features, Mike notes that Nexteer is currently working on products ranging up to Level 5, the highest level.

Mike Richardson President Nexteer Automotive
Sidney Bischer Photography

“We are providing lateral control for vehicles with no steering wheel and no pedals. We think there’s tremendous opportunity for us here, and it’s put us in a position where we collaborate with many others.”

With its focus on vehicle autonomy, Nexteer is well poised to lead in the steer-by-wire product arena. Nexteer’s steer-by-wire systems replace the mechanical connection between road wheels and the steering wheel with algorithms, electronics and actuators.

Supporting both traditional and automated driving, steer-by-wire opens new possibilities for advanced safety features such as automatic emergency steering, collision avoidance, enhanced stability control and more. It’s also a key enabler of Nexteer’s stowable column technology, Quiet WheelTM Steering (where the steering wheel remains still during automated driving) and Steering on DemandTM Systems (providing safe transitions between traditional and automated driving modes). Nexteer is currently refining and testing these technologies with some of its global customers.

Mike speaks excitedly of the ‘new world’ waiting beyond SAE Level 3. “This market channel has our attention and our customers’ attention. In fact, we’re carefully selecting the customers we’ll work with, and who have the opportunity for serial production.”

 

SAE automated driving levels:

1: Driver assistance
Driver controls vehicle. Vehicle assist features may be included in the design.

2: Partial automation
Driver must stay engaged at all times. Vehicle has combined automated features.

3: Conditional automation
Driver is a necessity, but not required to monitor environment and must be ready to take control at all times with notice.

4: High automation
Driver has the option to control the vehicle. Vehicle is capable of performing all driving functions under certain conditions.

5: Full automation
Driver may have the option to control the vehicle. Vehicle is capable of performing all driving functions under all conditions.

While the fast-changing world of mobility is thrilling to engineers like Mike, it comes with its own set of challenges. Mike knows how much easier it is to conjure up a vision of the future in 30 years’ time than it is to determine with any clarity what things will look like five years from now.

Thirty years into the future, autonomous vehicles will be an established presence, but the paths available to reach this point are many and varied. “Full vehicle autonomy is something on our mind every day; we want to order our steps in the most efficient way to be a part of this. It’s going to be dependent on environmental standards regarding roads, on internet bandwidth, on legislation and legal precedents, on the convergence of industry standards that are not yet established. This is where we’re spending our time, and this is where I find the greatest personal challenges as the leader of the company.”

After speaking with Mike about the future of mobility and his role in it, it is hard to imagine that he has much time to spend in quiet contemplation on his Michigan acres. The chance to be at the forefront of one of the largest shifts the automotive industry has yet seen, however, is surely some kind of compensation – and the ‘terrible wine’ he has been making might benefit from having a little bit more time to age.