March 01, 2013 : Brady Ericson, president & GM, BorgWarner Emissions Systems

How do you plan to grow the product portfolio in India?
Right now we produce the EGR tubes and coolers. We will be bringing EGR valves for Euro 3 to 5 emission standards as per market requirements. What we generally do is to get the inputs from our local team on the technology they need and then we talk to Carlos Castano, director (global engineering) and ask him to work with his team to develop a product specifically for this market.

With new CV players coming to India, how will you address this market for emission products?
Obviously, the CV folks have a much higher durability requirement as far as the expected life of the vehicles is concerned, so some of the designs have been developed specifically for this segment. They will help reduce stress inside the cooler. With temperatures going in at 700deg C and exiting at 130 or 140deg C, the thermal expansion and stress inside the coolers is very high. So Carlos and his team develop some very great products that minimise those stresses to allow it to expand without constraining it and causing any breakages. So we have some very specific products designed for commercial vehicles.

When will CV supplies kick off in India?
Work has already been awarded, designed and validated. We are just waiting for the OE manufacturers to start production for instance, Tata Motors, Ashok Leyland, and Volvo Eicher.

What work will the testing facility carry out?
In the short term, we still have a relatively young team here, so the core R&D will be done at our two major technical centres in Europe and North America. Core R&D revolves around very specific technology development but the bulk of the work done here will be in application engineering. But in future, we are looking at getting some more R&D work done in Asia as the locations develop and get experience on the applications side. Then we will ramp them up to do a little more in R&D.

Will India be a likely candidate for R&D?
We have different options –China and India and it depends on the duty of the application engineering groups. At this moment, the first step is to put the facilities and validate the products that our customer needs locally. We have three different types of testing to check product performance, its durability and testing the corrosion of materials (this is specific to India). This application engineering group communicates with the chemical centre to participate increasingly in this activity.

When do you think the technology centre in Asia can start functioning as a global R&D unit?
For the emissions group, we have got R&D centres in North America and Spain right now and will start adding some small projects in China as we have been in China for a number of years in emission products. I am a strong believer in engineers having test rigs and testing capability which allows them to try different technologies. Once they get 4-5 years of experience, it really allows them to have a better understanding of how the product works and they can then take the next step on how to design the next technology based on customer requirements.

What are the trends in emission products in India compared to other emerging markets?
Emission products are growing the fastest in the emerging markets for us as these EGR systems are really coming on in Euro 4, getting a little more complex in Euro 5 and a little more complex in Euro 6. So for us, we see tremendous growth potential in whichever country is bringing out new emission regulations. India is heading in that direction and we are eager to roll them out in India. Here they are yet to be fully implemented in many segments including off-highway and commercial vehicles, so we see tremendous growth potential in developing locations as they roll out Euro 4.

Which kind of engines will suit these air management systems?
Primarily, every diesel engine that is Euro 4 will have some EGR system on it, so diesel engines are pretty much for all our businesses but in the next 3-4 years we will see more petrol engines, turbocharged, small, downsized with direct injection and a lot of EGR systems. Right now we are supplying for diesel engines in cars but petrol is now coming on. EGR systems were very popular back in the ‘80s and ‘90s when they first started leading to a fuel economy benefit. The cost benefit kind of went away when EGR systems were along with valve timing, four cylinders and four valves per cylinder on the petrol side for a while. But with direct injection and turbocharging, with which you can have more air in the engine resulting in nitrous oxide emissions, the best way to reduce them is with EGRs. And if you run a few percentages of EGR you don’t need to cool, so you just need a valve and some tools. Now we are seeing diesel running 20-30 percent higher EGR rates and therefore we need to cool it before it is put back in the engine, so now there is a demand for EGR coolers, tools and valves as well.

What will be your investments going forward. . .
We will be growing at a very rapid pace and are making multi-million dollar investments on an annual basis to support our growth and in our testing facility.

Can you elucidate on plans to shift European production to India?
We will be looking to move some of the European production but our strategy is not to produce in India to support the bulk of the European market. What we will look at is some kind of an optimal manufacturing strategy; say we are running at half-a- million units a year for Euro 4 applications as Euro 4 is phasing out in Europe but we will still have some demand for Eastern Europe as they support northern Africa and some other locations with their engines. So once it ramps down to 50,000 or 100,000 units, for us to maintain a line in Europe capable of producing 500,000 units will not be efficient. And the line here is for 300,000 units for local customers for the same part, so why don’t we move those 50,000 units down here? Those are the kind of things that we will be looking at.

Any special training initiatives for the workforce at Manesar?
We have close to 300 people at Manesar where production started in November 2012. They are working on Euro 4 products and are talking to customers for Euro 5 and 6 products. The HR team has developed a talent exchange programme through which we send people for months at a time to work globally, not just sit in a classroom and be taught by our engineers. But as they do the job of an application engineer, design engineer, a technician or a manufacturing engineer in those developed locations, they are building relationships, learning the products and coming back. We also send folks over here as needed to further the training and education for engineers and have global engineering meets to pass the training.