Traverse City, Mich. — Lon Offenbacher, president and CEO of Inteva Products LLC, is looking on the bright side as a Tier 1 supplier to a fluctuating, and increasingly high-tech heavy, automotive industry.
The top executive said successful navigation of the constant change comes down to knowing what people are buying, where they are buying it and what they need that they don't have yet.
"Innovation becomes a really big deal," Offenbacher said in an Aug. 6 interview at the Center for Automotive Research's Management Briefing Seminars.
For Inteva, a $2.8 billion global auto supplier with headquarters in Troy, Mich., innovation is at the front end. The company makes closure systems, interior systems, and motor and electronics systems. It also has its own trademarked material called Inteather, which highlights the evolution of thermoplastic polyolefin as a leather alternative in cut, sew and wrap applications for vehicle interiors and other capabilities.
The 'in' of Inteva stands for innovation, Offenbacher said. Though, he now refers to it as value-based innovation.
"A lot of times, companies will spend a lot of money and time on innovation, but if they don't have a focus on fulfilling a need that is near-enough term that the customer understands it, then it doesn't really pay off," he said.
Plastics News sat down with Offenbacher on Aug. 6 in Traverse City to discuss how the automotive supplier is staying competitive in the automotive interiors space.
Q: What will the future automotive landscape look like or have you essentially prepared for the unknown?
Offenbacher: For our space, we're in interiors. We're in door systems, and we're in motors and electronics. All three of those, while they'll be changed, they won't be earth-moving. We've actually seen a lot of change in the interior segment over the last probably 10 or 15 years, getting a more living room-type of appearance. We've actually put ourselves at the forefront on stitching. We've got three-dimensional automated stitching that is leading the industry. We can do things that five years ago couldn't be done, and do it very reliably and very reproducibly. To give a very high-tech, luxurious feel, we developed our own surface materials. We branded Inteather, and we basically have a whole palette of materials that the customer can deal with. And then, of course, leather and more exotic materials are also becoming part of that palette.
I think as autonomous becomes more prevalent, and people are getting into their vehicle and expecting to not have to spend — at least initially — quite as much time looking at the road, they're going to want to spend more time embracing what's around them. And that's what we do.
So, along with the materials, the technology has to lead, too — electronics integration, and we've got touch controls and more surface-reactive type of electronics, the integration of electronics into the interior, and exotic lighting. You're already seeing a lot of ambient lighting. I think that's going to become much more integrated rather than kind of a design or styling feature. It's going to be much more functional and effective. And I think, overall, the interior itself is going to be a very, very inviting thing.
Then you match that up with door systems. We've been a leader in the door systems business for 70 years. What we're seeing is more and more interest in automation. You approach [the car and] the door presents itself without you touching the handle. It can detect obstacles, so that it doesn't swing into other cars or poles or oncoming traffic. There's a lot of technology that's being pushed. And then in motors and electronics, there are going to be so much more creature comforts, so many more opportunities for people to get kind of a fully autonomous type of experience — not just the car driving itself — but a lot of assist, a lot of help. I think it's actually a bright new future, but certainly during the transition there's a lot of ambiguity. You're not sure which direction things are going to go. We're just trying to prepare ourselves for the landscape.
Q: The technology is changing so quickly. We're hearing a lot about advanced manufacturing now — smart factories, automation, connectivity, the internet of things — that's not going away. What impact are you seeing from a high-tech shift in manufacturing?
Offenbacher: IoT has been kind of a watchword for a while, and I hear these words — automated factories and things like this — and they're more evolutionary than they are revolutionary. A lot of the things that are enabling that have been around, but they're getting refined. Automation in the factory, as far as the key operating performance metrics, we've always had performance metrics recorded at the operator. So today, the difference is the operator might have a tablet device that he or she can enter the data. And guess what? That's much more legible than the handwritten charts or clipboards that we've used in the past. So, it's actually enabling higher reliability in terms of the data collection and higher reliability in terms of the data use. I think the electronic tools that are out there have helped facilitate and, not necessarily automate, but more or less digitize something that was an analog activity that was not really reliable.
Q: How do you turn auto industry disruption and challenges into profit?
Offenbacher: Well, that's key. Our customers are always driven in the supply world where we have a rather unique marketing proposition because even though there's a lot of people who advertise and promote, there are a very limited number of people in the world that make the buying decisions on parts that we make.
In the world of automotive manufacturing, we think we serve pretty much the whole industry. We have 115 customers. There might be another 10 or 12 that we don't serve that maybe we don't know about because they're just coming out. But take that proposition and think about maybe a dozen people that are making a set of decisions at any given time on your stuff. It comes back to intimacy: getting to know your customer and knowing what their wants and their needs are, and taking that advantage of a limited scope, or limited audience, and just embracing it and making it work for you.
At the end of the day, on the other side of that, even when you come up with something truly revolutionary, the first question customers have is, who else can make this? And if it's patented technology, will you license that technology? Because they want competition. They want a fair price. The march for innovation is to stay fresh with your product, but it's also to make sure that you have good cost control. Making sure that if you're vertically integrated, making sure that you're smart in your vertical integration and not doing things that you shouldn't be doing or deepening your value chain that you've already got to reduce the cost structure. That's ultimately how you preserve your margins.
Q: Earlier this year, Inteva sold its roof systems unit to another global auto supplier, CIE Automotive in Spain. Was this part of that profit strategy?
Offenbacher: No, not at all. Our roof business was a unique business. It didn't start out to be a strategic business. It came with the acquisition of ArvinMeritor's light vehicle systems. It's a good business, and in over the course of about 18 months, our owners [the Renco Group Inc.] and I got over a dozen different unsolicited overtures from other companies wanting to buy it. But kind of the innocent question was, guys, if there's this much interest, maybe it'd be an opportunity. As it worked out, the company that bought it was a very, very small player in the roof business, and this kind of put them on the map.
It's good for the team because that organization will plan on continuing to grow it, and it was good for our owners because they essentially got a dividend. And yes, some of the proceeds will be used to continue to invest in the core business at Inteva.
Q: Is there anything else you'd like to add?
Offenbacher: I think it goes back to making sure that you have the right product at the right time, and you have the right kind of focus with your customers. If you understand that you're serving a customer and you're trying to delight them — you're trying to not just serve, not just respond to an RFQ [request for quotation] and provide a part — but in fact, give them something that they not only expect, but in some cases, well-exceeds their expectations. I think that's fundamental.
One of the things we've done in the last five-10 years is we have a very, very deep understanding of the materials we use. We developed our own materials in the interiors business. ... That portfolio of products is getting a lot of attention from a lot of automakers and a lot of our competitors in the interiors space, so it's become effectively a fourth product line. The advantage of that is we not only have a nice palette of materials for our customers to pick from for the haptics, the feel, the touch, for this autonomous world — that's important — but we also have this value stream that we can offer sustainable technologies.