Its acquisitions of US- based Royal Power Solution and Green Motion SA of Switzerland are powering this new drive towards electric.
Eaton expects its electric mobility business to become the new driving force going forward.
Shailendra Shukla, Managing Director, Vehicle Group, Eaton India told Autocar Professional that e-mobility will now see greater focus keeping in line with shift in demand. "We are treating it separately as we want to make it big," he said.
Shukla, who took charge of the vehicle division in early 2021, is responsible for leading this business in India along with overseeing operations, sales performance, market development, customer management, partner relationships, new product launches and leadership development.
From his point of view, it is a no-brainer that the automotive ecosystem worldwide, including Eaton, is transitioning towards a greater focus on EVs. "However, while we are evolving, we also have significant businesses to cater to in Europe, China and North America. We do not want to lose our standing in the current business while looking to grow in EVs," said Shukla.
It was during the pandemic when the Eaton leadership team decided to do some serious introspection on its strength and weakness especially at a time of mobility disruption happening in new areas like electric. Following this up, the company acquired the US- based Royal Power Solution for $600 million in January this year.
The company makes high-precision electrical connectivity components used in electric vehicle, energy management, industrial and mobility markets. Prior to this, In March 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland for $106 million.
Eaton's product portfolio under e-mobility includes high voltage inverters, converters, fuses, onboard chargers, circuit protection units, vehicle controls, power distribution, fuel tank isolation valves and commercial vehicle hybrid systems. The principal markets for this segment are OEMs and aftermarket customers of passenger cars, commercial vehicles, and construction, agriculture, and mining equipment.
The company’s vehicle group in India is front-faced by its plants in Ranjangaon and Ahmadnagar which supply medium- and heavy-duty truck transmissions and components both for the domestic and export markets.
Its electrical business provides power distribution/quality, back-up, control and automation, power monitoring and management solutions and services to commercial, residential, utility, alternative energy, IT and data centres, public sector institutions, and OEMs amongst others.
Globally, Eaton has a wide spectrum of products including transmissions and transmission components, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, locking and limited slip differentials, transmission controls, and fuel vapour components.
These are supplied to OEMs and aftermarket customers of heavy, medium, and light-duty trucks, SUVs, crossover utility vehicles (CUVs), passenger cars and agricultural equipment. "Our vehicle business continues to grow globally and in India,” said Shukla. Around 40 percent of revenues comes from this segment.
India has also emerged the mainstay of its R&D and supply chain management. Over 2,000 employees are positioned at its 'Centre of Excellence' in Pune working on products and technologies across segments. Centres in Japan, Brazil, Mexico, South Africa, Australia, Europe and the US get serviced from the India hub especially in the CV space.
Founded in 1911, Eaton is present in over 170 countries with a workforce of over 85,000. In its latest annual report, it has reiterated its efforts to reinvest earnings while deploying $575 million for capex and $616 million towards R&D. Sales in 2021 totalled $19.6 billion in a challenging environment and the increase was primarily due to “strength in all regions compared to 2020” which was significantly impacted by plant shutdowns due to the pandemic. This growth was achieved despite the vehicle business segment's organic sales hit in 2021 with customers experiencing supply chain constraints leading to reduced production levels and low inventory.
Eaton is also keeping an eye on those businesses which are not yielding the desired results. Hydraulics is one such case of "slower growth" and "lower-margin" despite being relatively larger in comparison to its divisions. It was sold to Danfoss of Denmark in January 2020. Similarly, Eaton divested itself from automotive fluid conveyance in December 2019 and from lighting in March 2020.
The developments reflect the company’s decision in the second quarter of 2020 to undertake a multiyear restructuring exercise to reduce its cost structure and gain efficiencies. Since the inception of the program, Eaton has spent $292 million with an additional $28 million expenditure to be incurred in 2022 towards plant closing and other costs. The projected mature year savings from these restructuring actions are expected to be $230 million when fully implemented in 2023, according to its latest annual report.
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