Sense & Technology

.

ZF Friedrichshafen AG (zf.com) is an interesting company from many perspectives.  Take, for example, the ownership structure of the automotive supplier. The majority—93.8%—is owned by the Zeppelin Foundation. Yes, as in the dirigible. The company was established 100 years in Friedrichshafen to produce transmissions for the airships.

The company has been doing exceedingly well with its offerings to the market, particularly in the transmission space where it offers automatic transmissions—its nine-speed automatic gave notice that eight is not enough—manual transmissions, dual-clutch transmission, axle drives, powertrain modules, and more. It provides chassis systems and components. It has products for trucks and vans, coaches and buses, and off-highway equipment (and, yes, it offers tech for the aviation industry, keeping its hand in there, although the primary focus is on helicopters).

In May it closed on the acquisition of TRW Automotive, which adds braking systems and steering systems, body control systems and occupant safety systems, and more to its portfolio. Clearly an interesting move.

So what was behind the $13.5-billion acquisition? Why did the company take on the more than 130,000 women and men of TRW, the manufacturing facilities and the development centers? 

Dr. Stefan Sommer, ZF CEO, explained how the board decided that it would be a good idea. 

It wasn’t just a matter of having a whole bunch of financial spreadsheets created such that they’d be able to look at the rows and columns of numbers and figure out how the present and future contracts that TRW has would add to the bottom line. 

No, Sommer says that a couple of years ago, the board set about to develop long-term strategic goals: “In 2025 we want to be a company that is as successful as we are today.”

Note the lack of both braggadocio on the one hand and false modesty on the other. They concluded that they’re a good company doing well now and it is a matter of doing the same 10 years from now. The interesting thing here is the fact that there isn’t some bombastic statement of how there will be intergalactic market domination in a decade, the sort of things that CEOs in the tech sphere can be prone to.

Of course, they recognize that in the year 2025 things won’t 

be quite what they are today, so it isn’t a matter of doing the same thing then as they are now and expecting the results to be the same in an entirely different environment. So they codified what Sommer calls “megatrends” that they think will shape the future of mobility. They see that the issue of efficiency is going to play a big role, efficiency not only on getting the most out of whatever fuel (e.g., gasoline or electricity) is being used to propel a vehicle, but efficiency that will help reduce emissions.

Autonomy will play a bigger role. But it is interesting that in this arena Sommer and his colleagues are more measured than some tend to be when discussing self-driving cars. Even though the TRW acquisition puts ZF in a good place from the standpoint of active safety technology, which is most certainly a building block of autonomy, Sommer isn’t declaring victory. He sees the development of autonomy being something that will occur development by development, and they are most certainly playing their role in making those developments (e.g., they have developed their own concept car, the “Smart Urban Vehicle,” an electric car that features a self-parking assistance device that allows a driver outside of the car to control the car via a smart watch or tablet). And, of course, they have a number of emergency braking and steering assist systems predicated on sensors and cameras that TRW has brought to the portfolio.

And the third megatrend is safety. This becomes all the more critical as autonomy begins to develop: when cars are driving themselves, then it is essential that it be done in a manner that is safe for not only the occupants of that particular vehicle, but also for other drivers and pedestrians.

Arguably, the auto industry right now is undergoing a transformation unlike anything that has occurred since about 100 years ago, when technologies were being developed, sometimes deployed, sometimes rejected. When there was a wide array of companies on the scene, some success, some forgotten to history.

Today we’re seeing companies like Google and Apple on the automotive landscape, and certainly in the case of the former and possibly the case of the latter, doing more than providing operating systems for infotainment. Asked about those companies, Sommer says, “Our main job is making parts. I don’t think Google or Apple will make car parts.” Again notice that for all of the technological capabilities and prowess that ZF has, 
Sommer is sensible about its role.

It is that approach that is so interesting. So remarkable. And so likely to bring the success they’re looking to achieve in 25 years—and beyond.