BorgWarner to up sourcing

PUNE: The ''low cost country'' advantage continues: BorgWarner, the over $3 billion engine and drive train components manufacturer, is looking at sourcing more business, both in its core area of manufacture and in the services field from these areas. India, of course, is one of its locations but so are others.
"We will set up, in the next six to 24 months, new business units in Thailand," Timothy M Manganello, chairman and chief executive officer (CEO), BorgWarner Inc, said.The company has a declared policy of getting additional $1.4 billion new business from these low cost countries in the 05-07 period.
Cynthia Niekamp, president and general manager, BorgWarner TorqTansfer Systems, part of BorgWarner''s drive train group, added that they visited the facilities of a major Indian software services company. The visit was part of their aim to source services from India.
"We want to increase purchasing from the LCC, which is now 15 per cent, to 25 per cent. This is on the manufacturing side," Ms Niekamp said, indicating that services, including software engineering design, would be additional. The three countries identified in the LCC are Korea, China and India for new business.
Mr Manganello, leading BorgWarner''s top management, is on an India visit, visiting joint venture and wholly-owned companies here. BorWarner has a joint venture and a wholly owned subsidiary in Chennai and a two joint venture companies in Pune. Divgi Warner, where BorgWarner holds a 60 per cent stake, is a 10-year old JV while BorgWarner''s global acquisition of the German company, Beru, has given it another JV in Pune. BW holds a 70 per cent stake in that company.
"There is no intention to merge all these entities because the percentage of holding is different in each, varying from 30 or 31 per cent to 100 per cent," Mr Manganello said. However, the auto component manufacturer is "investigating" the idea of a holding company, as it has done in China. In China, it is starting off with a campus style development, getting all the BW entities in one location.
DivgiWarner, the 40:60 joint venture, manufactures transfer cases for 4x4 sports utility vehicles (SUVs). The JV caters to the domestic and export markets, which it has traditionally catered through the US-based parent. However, for the first time, it will supply Ford in Thailand directly from India for the Endeavour-platform SUV. This is being done under the FTA between the two countries, which means BW will avail the 20 per cent duty exemption.
The recent acquisition, in January, of Beru, will widen BW''s portfolio. Mr Manganello said since India has accepted the European emission norms, where diesel is a major product line, BW thus address the growth in diesel engines in Europe, India, China, Korea and Thailand, too.
Referring to its China presence, Mr Manganello said they have two plants there now, a small engine and a medium sized company.
"In one-and-a-half years, we will have a chain business there; we have already set up a turbocharger plant and in two years, will take the transmission business there. All of this will be on the BW campus there which we can do since we are starting from scratch," he said.
He was categorical that every plant must first serve the local market needs before it can become a sourcing point.