China can be innovative and aggressive to move towards greener vehicles

Gasgoo.com: Could you please tell us how the China-based "Innovation Team" of TRW is going on? What can the team bring to TRW? How to assess this team's achievements for TRW?

Gougarty: Following a strategic review in the United States in 2008, is was decided to take a new approach to innovation and set up Innovation Teams to review options to develop cost optimised products specifically for this market.  Anyone within the company was invited to apply to join the teams and we used an assessment process to ensure the team had the right balance of creativity and the ability to see a project to the end.  The focus was on starting with a completely blank piece of paper – not trying to amend an existing technology to fit this market’s requirements, but start with those requirements as the basis.  The first team has come up with a new proposal for a steering wheel system for the China market.  The concept has been reviewed by TRW’s global senior management and is now going through the company’s standard new product introduction process, which will determine if it we should market this to customers.  This approach is a real example of how we recognise that we have to bring together the benefits of our local knowledge and expertise along with our global experience. 

Gasgoo.com: TRW has been expanding its economy products in China, where its own-brand OEM business is growing rapidly. What measures will you take to reduce costs and extend the application of some new or leading technologies? Can some innovations in the Chinese market have global influence? Or can these innovations inspire the development of new products and new technologies?

Gougarty: TRW Automotive has developed its value line products for markets such as China.  We approach the development of such products in several ways.  In some instances we start from the beginning, for example with our scaleable airbag control unit, we’ve designed a product that can work to meet the requirements for the domestic vehicle market, but can easily be adapted for different requirements for export.  In other instances we use the modularity of a system to support us in offering a product for the lower cost vehicle segment.  An example of this approach is with electronic stability control: TRW has a family of products starting from ESC-L as a value line offering and building up through standard, to a premium product.  And finally, we will sometimes modify an existing product to optimize its costs for markets such as China.  TRW is proud of its focus on affordable safety.  And that is not just for within China.  Our aim is to support vehicle manufacturers in all markets to be able to offer all safety products and systems to all consumers.  This way we can increase the market penetration of safety products and help improve road safety on a wider scale.  As a global player we take the opportunity to learn from our developments in China to benefit global developments and take our experience from other markets to benefit our Chinese customers.

Gasgoo.com: What do you think are the stimulus and resistance for the global companies to develop new products and new technologies for the Chinese market? What external supports are needed (such as policies)?

Gougarty: We don’t see any resistance to the opportunity to develop new products and technologies for this market.  We are delighted to see that the government is putting appropriate emphasis on safety as a key issue for the industry.  As a safety company, we are happy to work across industry and governments to support increased regulation to help protect drivers and other road users.  The Chinese vehicle manufacturers are hungry for new products.  We see there is a real opportunity for China to lead the way in terms of fuel efficiency.  This market doesn’t have the legacy of traditional powertrains, so can be innovative and aggressive in its attempts to move towards cleaner, greener vehicles.

Gasgoo.com: What is the trend of future auto's active and passive safety development? What is TRW planning to do in this field? How are the active and passive safety products and technologies applied to China's passenger vehicles?

Gougarty: TRW is moving in the direction of making vehicles smarter to help keep people safer – we call this Cognitive Safety.  We are proud to claim that ‘we put the thinking in safety’.  By this we’re talking about systems that can sense their environment, analyze the situation, anticipate the appropriate response and then act in the most appropriate way to support the safety of occupants.  We are driving our development in three major areas underneath the umbrella of Cognitive Safety: Affordable Safety; Fuel Efficiency; and Advanced Safety.  In terms of how this is applied to China’s vehicles, we have a number of concrete examples of developments with Chinese customers or production contracts that demonstrate the application of these three roadways.  In terms of affordable safety we have our value line developments. For fuel efficiency, we’ve been excited in the interest for our electrically powered hydraulic steering system that can offer up to three per cent fuel efficiency compared with standard hydraulic systems,  And in the area of advanced safety, we’re working with vehicle manufacturers here on a number of driver assistance and advance braking technologies.

Gasgoo.com: What do you think has caused the current crisis in the auto industry? How much competitiveness does the North American auto industry still hold? How will this industry restructuring affect the strategic layouts and competing patterns of global auto-parts manufacturers? Will it trigger a wave of mergers and acquisitions among auto-parts companies?

Gougarty: The first point is of course the global economic crisis triggered the auto industry crisis.  The double impact of a fall in demand and the inability for consumers to get finance has had a significant impact.  In addition, there was the overcapacity issue that has been discussed for many years.  The North American auto industry will prevail – it will be more efficient when it gets through this crisis and there will possibly be fewer players, but North America will remain a key player on the global stage.  Global auto parts suppliers will need to be extremely focus and focused on efficiency to get through this period.  TRW started its cost control efforts early and these have cut across all elements of the business and I’m confident that it will improve our long term position as we will emerge leaner and more efficient.  It is my view that there certainly will be some consolidation and, regrettably, some players won’t get through this period.