CHONGQING – Brose Group, the automotive mechatronic system supplier, celebrated the groundbreaking ceremony of its wholly-owned subsidiary here on September 26, 2011.
Located in Shapingba district, the Chongqing Brose Automotive Systems Co., Ltd. will start operation by mid-2012. The site, which measures nearly 40,000 square meters, will employ around 250 people for the production of seat systems, window regulators, cooling fan modules, closure systems and door systems.
After the groundbreaking ceremony, our reporter and editor, Jennifer Chen, made an exclusive interview with Ray Mirzaei, chief operation officer of Brose Asia. The following are highlights of the interview. – Editor
CBU/CAR: Please tell us about Brose’s current operational footprint in China.
Ray Mirzaei: We started our presence in Asia in 1993 by setting up a 60:40 joint venture in Zhangjiagang, China with our joint venture partner. It was Brose’s first operation in China. Later on we set up our second joint venture in Shanghai in 1999, called Shanghai Brose Automotive Components Co., Ltd., another 60:40 joint venture with Brose owning the larger share. Then we set up the first fully-owned operation of Brose in Changchun. Registration was done for this facility in 2004 and the facility started operation in 2006. We manufacture window regulators, seats, cooling fan modules and latches in this facility, which is one of our most complex and most mature Brose plants in China. Then we set up another fully-owned plant in Wuhan in September 2007. Brose is expanding its business in China and our next step would be to establish the fully-owned Chongqing plant.
Brose is changing its headquarters location and in the process of building a new headquarters in Jiading district in Shanghai. Next to this building, we will also have our fully-owned Shanghai plant. The plant will be opened next year (3rd quarter) and the headquarters is expected to be completed toward the end of next year. In addition to this, we are also adding an automotive hub to our Brose footprint in China, which is Brose Beijing. The Beijing sales office will start operating in November of this year. We will also set up our production facility in Beijing, which will supply door modules for the customers in this region.
CBU/CAR: What is the strategic significance of the new Chongqing plant in relations to Brose’s overall footprint in China? And how will it be integrated with Brose’s existing plants in Shanghai, Wuhan and Changchun? Will each of these production hubs serve a particular group of customers close to that hub?
Ray Mirzaei: Chongqing is one of the areas in central and western part of China that we have an interest to have a presence. There are customers of Brose in Chongqing and Chengdu areas, which are in our focus and we will set up a 12,000 square meters production facility with 3,800 square meters of office space in a land of 40,000 square meters to service the customer’s needs. Our products here will be concentrating on door systems, seats and latches and in addition we will further develop our process expertise here in China.
Brose is a very innovative company focusing on people, equipment and process. We would like to have a very consistent quality system with tailored processes that we set up everywhere, and develop our expertise specific to the region. Chongqing facility will be working very closely with other facilities of Brose in China. We have already started our laser-welding activities in Changchun and Wuhan. We have a very well established motor assembly in our Shanghai Electric Motors facility (Shanghai Brose Electric Motor Co., Ltd.). By setting up this plant and integrating all other components, Brose is becoming one of the leading suppliers in integration of products to accommodate the needs of our customers.
CBU/CAR: Brose touts weight reduction in many of its products, how will this tie in with the new fuel consumption regulations which require 6.3L per 100 km, and even tighter tougher rules down the road?
Ray Mirzaei: As I just mentioned, Brose is a very innovative company, not just a components manufacturer. We are a system integrator, which is continuously looking into getting different components that meet the durability, endurance and quality requirements of our customers, and at the same time, meeting the weight requirements. With new materials and manufacturing processes as well as increased functional integration, Brose Group has reduced the weight of its door, closure and seat systems along with its adjuster drives by 30 to 50 percent. At the same time, functionality has been increased without detriment to safety and comfort.
The 6.3L per 100 km regulation requires cars to be lighter, therefore in IAA held in Frankfurt, we presented Brose’s innovative approach in eco-balance system. We apply this technology by using recyclable, renewable and reusable materials in our products. It makes us more independent to the fuel-based crude oil energies. One of the products we incorporated recently is a wood-fiber reinforced polypropylene in our door systems. It cuts significant weights compared to the original steel that we used. Besides that, we have also looked into our drive units with more efficient motors. We can design the motors based on weights we want and maximize the output as well. We are going to equip the HVAC blowers with the brushless motor technology in order to reduce significant weight. We are also using long fiberglass polypropylene plastic carriers in window regulators and doors. The Unilatch®, approximately 60 percent smaller than other latches, can save 1 kilogram in weight if in use in a four-door vehicle.
CBU/CAR: Will you consider in exporting your products manufactured here in China besides serving the local market?
Ray Mirzaei: Of course. If you look at our headquarters, you are going to notice that we are not just set up facilities to do business only in China. Currently one of the seat motors developed and designed in China is being exported to North America to Brose London facility in Canada. We have nearly 250 engineers in our organization, and the goal of our Asian operation is to be self-sufficient and meet market requirements of Asia. We are also able to design, develop and come up with innovative products, and export products back to the Europe and North America.
CBU/CAR: What is the unique competitive advantage of Brose in China compared with other multinational suppliers operating in China such as Bosch, Delphi, Continental, Denso, etc.?
Ray Mirzaei: I will say that Brose is an innovative company. Brose is always thinking outside the box, trying to understand what the customer’s next steps. There are three ways that Brose is leading its competitors. First, we are an innovative company. Second, we are a systems integrator – we are making our own motors, latches, door systems and module systems with flexibility to combine all these, and offer our customers with one package. Third, Brose is an employee-oriented company. We develop people for the future. In our headquarters, we have a program called “Talent Circle” that we promote our young managers to become even better and to reach higher positions to the director levels. We have many social benefits and flexible working hours. Our president meets our people for lunch gatherings or coffee breaks to be in touch with them. On top of that, we launched a program to provide opportunities to our talented individuals who have the chance to work in Germany for 1-2 years. This is a very motivating sector here in China. They can grow from within and take on the top management positions in the regional headquarters. We always have people going for training, and some of the individuals even have three years spending in Germany. After they come back, they become the transitional bridge between German and Chinese cultures and also convey the right messages, bringing these two cultures even closer to each other. At Brose, we have spirit that we do the job with “passion.”
CBU/CAR: As a supplier, how are you coping with the sudden slowdown of the overall market this year compared with rapid growth exhibited in 2009 and 2010?
Ray Mirzaei: If you compare the growth of 2010 with 2009, it is a phenomenal growth in the market of China. But if you look at the numbers for 2011 and compare it with 2010, we have to say that we still have the growth, but not as strong as 2010. It is a healthy growth. The skyrocketing growth brought worldwide problems of overcapacity, heavy investment, and high logistics cost to automotive industry. Some companies, including suppliers, were really struggling in some cases to meet the demands. If the market remains 10-12 percent growth, we can sustain and develop our people even better.
We expect our global sales revenue to increase 12 percent in Europe, 18 percent in Asia and 27 percent in North America. Because of the dynamic market, the figure is still higher than what we expected. Sales revenue in incorporate group will increase by 17 percent compared with the same period last year. I think the market has a steady growth in China, and we are ready to meet these challenges.
CBU/CAR: How will Brose play a part in China’s efforts in developing and commercializing new energy vehicles?
Ray Mirzaei: New energy vehicle has been the topic of discussions for long time, and is one of the areas that Brose is looking into. Brose will work together with our partner in Germany in tackling this requirement. Brose has come up with a very innovative vehicle charge units with wireless technology. We will work closely with joint venture partner, Brose electronic teams and energy teams to meet these demands. We are taking our fair share in the market by collaborating with organizations that have significant lead in this area. We will definitely tap into China’s growing demand on electric vehicles, with very innovative approach getting batteries charged directly from our home source using the wireless technology. Brose will invest in the future more as the market demands.
CBU/CAR: Your overall outlook of Brose’s development in the next 5-10 years.
Ray Mirzaei: In the next three to four years we expect to double the sales and reach €1 billion by 2015. We are completing our manufacturing footprint in China. We are going to incorporate more local management teams to take senior positions in Brose organization in Asia region in the next five years. Brose is going to become more self-sufficient and independent in terms of engineering, research and development in the region. We will definitely aim to outperform the growth in automotive market in China.
About Brose Group
Brose Group is a world leader in the production of window regulators, door systems and drives for EBS and also numbers among the leading suppliers of HVAC blowers and electric steering drives. For electric seat adjusters Brose is No. 1 in Europe and No. 2 for closure systems.
Brose Group is the fifth largest family-owned company in the automotive industry. Around 18,000 employees develop and manufacture mechatronic components, systems and electric motors for vehicles in 22 countries. One in three vehicles produced worldwide is currently fitted with at least one Brose product.
Brose started its activities in the Chinese market in 1995 and has been growing ever since. It will soon cover five of China’s most important automotive regions with seven sites and has localized its entire product portfolio and its R&D competence in the country. The company employs around 2,700 people in China and generated sales of around €480 million in this region in 2010.
The built of Chongqing plant is out of the need to meet the further development of the automotive parts marketing in central and western regions of China, meanwhile to provide closer and quicker responsive service to customers.
Brose plans to increase the localization rate and aims to produce the entire Brose product portfolio in this region in the long term.
About Ray Mirzaei
Ray Mirzaei, 47, chief operation officer of Brose China Co., Ltd. Majored in mechanical engineering at Queens University in Kingston, Ontario, Canada, Ray joined the automotive industry right after his graduation.
Ray worked for Venture Group, Warren Industries in Canada in charge of engineering and program management afterwards becoming the general manager for window regulators division with Magna taking an assignment in setting up Winmax facility in Mexico. Ray moved to Prague in Czech Republic at the end of 2001 to run an electric motor company where he joined Brose in 2005 as operation manager for Czech Republic plant in Ostrava. In 2007 Ray became the chief operation officer of Brose Asia.