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Jürgen Otto: In consistent pursuit of our company strategy

Frankfurt, 2009-16-09

Despite a sluggish global market and considerably tougher pricing pressure in the international supplier industry, the Brose Group has succeeded in further expanding its market position.

Through the acquisition of the motors business from Continental in April 2008, it has significantly expanded its product portfolio and enhanced its mechatronic competence and value chain.

In doing so, the company has today positioned itself as the only supplier with comprehensive development and production competence regarding all mechanical, electric and electronic components for the vehicle body and interior.

Brose intends to use this leading technological position and economies of scale gained from 100 million electric drives sold a year to achieve further growth in light of increasing vehicle electrification, particularly in the product segments of electric power steering, dual-clutch transmissions or battery cooling management. The aim is to hold a top-ranking market position in terms of technology, quality and cost effectiveness in all business areas.

At the 2009 Frankfurt Motor Show (IAA), the company will, for the first time, be presenting its larger product portfolio: apart from mechatronic systems for doors and seats, this also includes electric drives for window regulators, sunroofs and seatbelt retractors, drives for electronic braking systems, drive train, electric power steering systems, HVAC blowers and engine cooling.

2008: growth through expanding product portfolio

Through the acquisition of the motors business from Continental AG, sales revenues could be increased by 13% in 2008 with the new business segment of drives contributing approx. 450 million euro to the turnover.

After three quarters of strong growth in all business segments, customer delivery requests dropped in the 4th quarter by up to 40% due to a massive drop in vehicle production.

This strong decline in sales towards the end of 2008 had a significant negative impact on earnings. It was possible to avoid a loss by carrying out tough cuts in cost budgets and implementing consistent personnel adjustment measures.

2009 sees low sales in all business segments

Due to the steep decline in sales, the high staffing level of 2009 with the company numbering more than 15,000 employees worldwide could not be maintained: during this period, Brose cut over 2,000 jobs in Europe and overseas, by employing fewer temporary staff and not refilling vacant posts. There are currently approx. 13,000 employees working at 50 locations.

To increase competitiveness and to offset ever-increasing costing pressure, numerous cost-saving measures were implemented at locations worldwide. Moreover, in 2009, the company introduced short-time working at its German locations and negotiated agreements with works councils aimed at reducing labor costs.

At the same time, structural adjustments were introduced: the motors plant in Gainesville/USA will be closed down in 2010 and production capacities transferred to existing locations in North America. Moreover, development and sales activities of the product area of cooling fan modules previously located in Berlin will be integrated in Würzburg, where the drives business division is based, by the end of 2009.

"In the crisis a company can prove its worth by demonstrating how adeptly it responds to the declining economic situation and by taking appropriate decisions. Even in difficult times, we do not call the company’s long-term orientation into question," says Jürgen Otto. He emphasizes that the exceptional solidarity within the workforce is equally important. From production to administration – whether in Germany or in China – cost-saving measures are spread fairly among all locations.

In the past eight months, sales revenues were 20% below the level of the previous year. As a slight increase is anticipated by the end of the year, the company is currently expecting a group turnover of 2.5 billion euro for 2009.

Investments in the future

Despite the current crisis, Brose will be investing in new products, technologies, qualified managerial staff and employees in 2009. Approx. 160 million euro will be invested in fixed assets, among other things, in expanding test facilities in Coburg, in stepping up activities in China, Russia and India as well as in expanding manufacturing facilities for product ramp-ups in the plants in Europe and overseas. Moreover, the pace at which engineering and sales functions in Asia and Eastern Europe are being set up is to be accelerated.

Budgets for research and development as well as for training employees again constituted approx. 10% of the turnover in 2009, a top-ranking value in this respect for this industrial sector. Every tenth employee is engaged in the development of new products and manufacturing processes. Brose will spend more than 12 million euro in 2009 on personnel development and young talents.

The automotive supplier has not decreased its number of apprentices this year. Currently there are approx. 260 young people at six German locations being prepared for assignments at locations in Germany and abroad.

In 2010, Jürgen Otto anticipates slight growth in turnover – due to increasing demand in Asia and a revival in the premium segment. Otto expects important impulses to come from the IAA in Frankfurt which Brose – in contrast to many competitors - is participating in, even in this year of crisis 2009: "We wish to achieve a top-ranking position with our new portfolio as well and to convince our customers of our capabilities, efficiency and performance by presenting innovative product ideas," continues Jürgen Otto.

Long-term orientation and stability can stand the test of difficult times

Since the family-owned company of Brose was founded more than 100 years ago, it has been geared towards long-term growth and stability. Stability means continuity in ownership structures and a high self-financing margin with regard to the company’s development. This has been achieved through great cost discipline and modest withdrawals by the owners, resulting in a sound equity base for the corporate group. "With this sound financial base and our broader product range, we have created good preconditions for achieving further growth," Jürgen Otto continues.

Brose innovations at the IAA 2009: mechanics, electrics and electronics - all from one source

At Frankfurt’s International Motor Show 2009, Brose is presenting a number of innovations which provide economical and technical benefits for the automakers as well as making driving a car safer, more comfortable and eco-friendlier. Apart from innovations in doors, seats and electric motors, the company has developed three new products based on findings from customer surveys; these will provide additional value for the end customer.

Infinite manual door check

Particularly in narrow parking spaces, conventional multi-step door checks limit the little range of movement car drivers have anyway as it only permits two or three defined opening angles. In the worst case, the door opens wider than intended when someone is getting in or out of the car and collides with a neighboring vehicle or garage wall. Brose’s infinite manual door check Variostop® holds the door at the desired position exactly, even if the car is standing on an incline. Optionally, there is a collision-detection feature to prevent damage to the door: a sensor detects obstacles and the door stops immediately. Variostop® has identical fixing points in the vehicle door, the same as many commercially available solutions and provides package space-related and weight benefits for the automakers.

Steering-wheel adjuster with power clamping feature

For the first time, the company is presenting a mechatronic steering-wheel adjuster at the 2009 IAA, which clearly enhances ease of use and safety. Instead of pulling at a lever underneath the steering column, the driver presses a pushbutton located directly on the steering-wheel to unlock the power clamping feature. Letting of the pushbutton locks the steering-wheel again. For safety reasons, adjustments are not possible during driving.

The Brose steering-wheel adjuster combines the release mechanism from closure systems with the holding principle from window regulator technology. Since this new kind of mechatronic drive technology can dispense with elaborate mechanics, the Brose steering-wheel adjuster consists of much fewer components. This results in less package space and weight savings of around 800 grams compared to commercially available systems.

Capacitive switch for liftgates and trunk lids

Loading and unloading a vehicle is much more convenient with the new capacitive switch for liftgates which the company will be presenting for the first time at the IAA in Frankfurt. A sensor below the bumper beam reacts to a simple foot movement and opens the trunk in conjunction with the keyless-entry system.

This development allows Brose to offer the automakers a complete convenience package for cargo management; from the latch to the cinching function via the liftgate drive with anti-trap feature, the power cargo floor with cover to the capacitive switch for touch-free opening and closing of the trunk.

100 vehicle premieres at the IAA: Brose is on board

In 2009 around 100 vehicles were presented to the public at the IAA for the first time. Brose is on board with many new presentations - with window regulators, doorsystems, seatsytems, closure systems or electric motors and drives.

Press Contact Kommunikation Brose Gruppe +49 9561 21 1188 E-mail

Brose México, S.A. de C.V. Parque Industrial El Marqués C.P. 76246 El Marqués, Qro.