ALTIX INDUSTRY CHAMPIONS INTERVIEW
One on One: Discussion with a Global Industry Champion: Thyssenkrupp Bilstein of America Inc.
Each quarter we sit down with industry executives and thought leaders to discuss the trends, challenges, and best practices that are transforming their businesses.
Today, we are with Drew Guthridge, President & CEO Thyssenkrupp Bilstein of America Inc.
Drew, can you please introduce yourself and your company Bilstein?
I joined Bilstein in January 2018 as CFO and have been the CEO since April this year.
Prior to joining Bilstein, I worked almost exclusively in Automotive Tier 1 Manufacturing, including Faurecia, a global exhaust manufacturer with locations in North America, and BWI Group, which is Beijing West Industries – also a manufacturer of shocks in a global environment. If you look at my history and time at Bilstein, Tier 1 global automotive manufacturing is clearly in my DNA and close to my heart. I’m passionate about cars and trucks… I especially enjoy the high-performance side of automotive, whether it’s high performance on the road or off-road, it’s really the fun part of the industry to me.
So what’s your dream car?
For me, it’s a Dodge RAM TRX! We have one here as a company car – not sure if you have ever been in one. It’s a really cool truck and it’s equipped with one of our most cutting-edge technologies: the Blackhawk e2, which is a damper that we developed here with our local R&D team in 2019! RAM did a great job pulling that vehicle together.
Tell us a little bit more about Bilstein
Bilstein is a brand of Thyssenkrupp AG, headquartered in Essen, Germany. Thyssenkrupp AG has global sales of over 30 billion Euros a year and 100,000 global employees. Bilstein is in the automotive technology segment group and is also headquartered in Essen, Germany. Globally, Bilstein has about 5,000 employees, and close to 1000 of those are located here in the US. We specialize in high-performance shock absorbers. You can find our products on any number of global high-performance or luxury applications, and while we don’t like to share customer names, it’s safe to say that you can find our shock absorbers on any major European luxury brand, and on any domestic high-performance brand. In the US, we are headquartered here in Hamilton, OH, and we have 4 US locations. Here in Hamilton, we’re using our latest technology production concepts to assemble shock absorbers for 3 industry segments: for OEs which includes passive and semi-active adjustable systems like our DampTronic Sky technology which is a proprietary technology of ours. We also produce for the aftermarket, and a new segment for us: special purpose vehicles which caters to defense customers.
We are living and operating in a VUCA world – Volatility, Uncertainty, Complexity, Ambiguity. How have Global Supply Chain constraints impacted Thyssen Krupp Bilstein in 2022 and what do you expect to change in 2023?
This has been one of our biggest challenges in the last 2 years. Being a manufacturing company, we are highly dependent on our very diverse, global supply base in Europe, Asia, and North America – from nearly every continent. Those supply chains are becoming challenged in two ways: One is the price challenge – so for example, steel has increased 400% from August 2020 through August 2021, aluminum has seen similar increases, as did freight cost, so we’ve had to deal with rapidly rising economics on our purchasing side. Availability is an even bigger challenge! Previously a sea container out of Asia was $3,000 or $4,000 and you could get that readily available within maybe 1 week of sailing. Nowadays it will take months to get a sailing out of Asia and you will pay five times what you paid two years ago. So – the economics are becoming very tough and availability even tougher. At the same time, our customers’ expectations haven’t changed. They expect the same product with the same cost and the same lead time. That means that we must compensate for those serious challenges on our side. Those are external challenges.
Inside of our four walls, we’re dealing with the challenges of labor shortage and specifically skills gaps. Like many other manufacturers in our region, we are finding it difficult to find an adequate labor pool with the skills applicable to our products, which again are high-tech products; we’re making dynamic components with high customer expectations. These are our biggest challenges of today.
Going into 2023, we have learned a lot about our supply chains; we’ve learned some of the right questions to ask, and to become more proactive in identifying supply chain issues before we feel them. We have also learned that the status quo can change in a matter of months. For example, aluminum became practically unavailable due to the crisis in Ukraine within a matter of two months. Anticipating the next crisis is tough, but the reality is if we’re preparing robust supply chains, then relatively regardless of what the crisis is, we know we have the supply chains in place to see us through.
Do you see some restructuring of supply chains as well?
Yes absolutely. Right now, the question is how close we can have our suppliers to us, while still being able to leverage global commodity prices, economies of scale, best-priced countries… and the model is always changing. Just 10 years ago, there was a huge push for offshoring, and we saw a lot of our suppliers move into Asia. Now we’re seeing suppliers move closer to home, whether it’s the US, Mexico, or Canada, for a variety of factors including regulatory, risk and cost, etc. Now that our supply base is closer to home, however, we go back to the topic of labor shortages and skills gaps, because the labor base in the market wasn’t prepared to move as quickly as it’s happening. Our suppliers have the same issues we have!
Drew, I love to see the race cars in those beautiful US off-road landscapes. How do you develop and innovate for your customers in North America? Does R&D happen in Europe or in the US?
First of all, we are extremely lucky to be able to partner with some of the best OEMs in the industry. Our customers are cutting edge in their own vehicles. We also have a fantastic local R&D team that works closely with our customers, and understands our customer requirements, not just immediate, but for the next 5-10 years because R&D cycles in the automotive industry are typically 5- 7 years. That local R&D team is supported by our global corporate R&D footprint. We are fortunate to have very capable engineers around the world, collaborating not just on active programs but also on future development. So for example our DT Sky valves, which are a core Bilstein technology, were originally developed by our R&D team in Europe. I like to use this as an example of how one of our global technologies can be adapted into local customer programs and become a very successful. I believe our R&D team really view themselves as the innovation arm for our customers. We think of ourselves as problem solvers while our customers are trying to develop a whole car or truck. And while our customers may be good at integrating a lot of components to design a whole truck, they may not be experts in designing new shocks or in designing the tolerances, or the right quality they want to receive out of our products. That’s where we fill the gap. We approach our customers proactively, and at the same time our customers continuously push us on how we can collaborate to continue being cutting edge. We view ourselves as an integral part of our customers’ success and help them gain their competitive edge.
So, are those innovations for your customers then proprietary for those specific customers or are they developments for across the market?
Good question. In some cases, our developments are customer specific – and unique to a certain vehicle architecture or niche to a certain customer segment. But most of the time, what we learn from a project for one customer can be applicable for other customers.
What Pro´s and Con´s do you see for manufacturers thinking about a similar step of building a local/regional R&D center?
Our local R&D center is somewhat unique in our industry, especially within global automotive manufacturing you tend to see a core R&D center located centrally, and then you see a manufacturing site(s) that only do manufacturing. They don’t have the wholistic development concept that we have onsite. We have the ability to do core R&D, we have a test track on site where we can text shock absorbers and vehicles within days or weeks from being manufactured, and we get immediate feedback. Our design loop here at Bilstein is therefore very short, one of our unique selling points. In our industry, that design loop tends to be much longer.
For other manufacturers considering a localized or regional R&D center, I would encourage them to look beyond short-term payback. You have to focus on long-term ROI with R&D centers. We’ve had our R&D center here for over 10 years and I can tell you that our business is what it is today because of on-site R&D. So instead of focusing on ROI only, focus on strategy with that investment. Companies need to really evaluate the footprint of their customers and what local resources and talents are available. Before you decide on an R&D investment, you need to understand your access to universities, competitors in that area – what environment are you competing with – even when it comes to talent. For us an advantage is that the majority of our customer design centers are within a 4-hour drive of our development center, which is great because when a challenge arises, we can be at our customers within hours. This also translates into more facetime than our competitors with a global R&D facility have. For us, keeping our engineers close to our customer’s engineers is key.
So for you that is one of the reasons why it’s a long-term, strategic commitment, and a strategic asset for the development of your regional market.
Absolutely – for our industry, that is unique. It keeps us close to our customers and our customer engineering teams. A lot of decisions about key sourcing are made by engineers.
Does your R&D only focus on new product development, or does it also support the factory on product optimization, sustainability, automation? Having that ability is also a big advantage for a manufacturing site!
Great point. Having our engineers here in our production facility keeps them close to the product. So – for example – designing a product in CAD and then releasing that to be produced in the plant, our engineers are getting real-time feedback from our production facility. Again, keeping our engineers close to our plant provides a huge advantage. It offers the plant solutions as well when problems arise.
Moving away from product development and going into industrialization: How do you keep innovating on the manufacturing side? How do you embrace industry 4.0 and the latest technologies into your manufacturing footprint and processes?
When you look at our manufacturing facility, you will see state-of-the-art manufacturing equipment and processes. Producing a unique and high-tech product requires matching our production base ability to manufacture it.
At Bilstein, you’ll find state-of-the-art equipment produced by a global supply base. We are acquiring equipment from Asia, European and North American suppliers, then we’re integrating that equipment here. Bringing multiple pieces of equipment from multiple different suppliers together can be a challenge. But the fact is, the high-tech nature of our products, combined with the extreme performance in the field, requires the most advanced manufacturing process. We’ve also seen an evolution of our production concepts moving into more automated production concepts. As we design more automated production cells, we’re also embracing industry 5.0 concepts while bringing older production cells – in some cases a decade old – up to current automation standards. We view automation as a requirement for our manufacturing process, especially in a high-cost country, and we actually have an industry 5.0 group which is tasked with deploying different automation concepts throughout our production facility.
As we are competing in a high-cost country while also competing for a limited labor pool, we know that not every job will be filled. Yet we have to remain competitive for our customers. When you add those two together, you come out with automation. We view proficient automation as a core competency of our business, not an extension of it. That is why we now have our internal industry 5.0 team. Another challenge I see is when an organization looks at going into an automated assembly, they tend to overthink the scale of a first implementation. Instead of going to industrial-scale automation, I would suggest asking themselves what simple automation techniques they can use to get a quick result.
It’s also good to develop the process step by step, not going in all the way, which often can overwhelm the organization. So, what challenges have you faced going down that path? What have you learned from going the automation path?
One thing our team has learned: When it comes to pioneering technology, perfection can be demotivating. Being able to accept an 80% success rate can be a sweet spot. When you are pioneering cutting edge technology or automation concepts that are not currently on the market, maybe you don’t always need perfection. Define what success looks like. Where will we be happy with ourselves? Know it’s OK to fail sometimes. One of our mottos here is to fail fast – so being able to recognize when a concept isn’t going the way we thought it would and being able to adjust or move away from that concept in favor of something else.
Being a pioneer, it’s very difficult to plan. We don’t yet see the future and the challenges, so being able to adjust and reroute accordingly is key. Our team is exceptionally good at that.
Another challenge we face is skills gaps between machines and operators.
The reality is those machines are being developed by highly trained engineers and they may not be as operable by the labor force available to us. How we can make our machines work around our operators is a key question. It’s easy to create an assembly line and say “OK, here it is, now go run it”, only to find out our operators aren’t adequately trained or capable of operating this machinery. Being able to design your equipment around your production team is an important concept that is often overlooked.
Have you made similar investments and technology upgrades on the intralogistics and material handling side?
Yes – here we are operating a 240,000 s.ft. distribution facility and the size and scale of that facility means we have to embrace automation concepts on the material handling side. At our production facility you will not see a lot of internal warehousing, as all of our raw materials and finished goods are being stored in our distribution facility and are brought over to production. That means our delivery system has to be seamless. If we miss a material delivery, we shut down the production line. We have explored different concepts for our material delivery and are now focusing on AGVs – automatic guided vehicles. Today we have four of these AGVs in place. They operate as 24/7 material handlers for us, moving our material between our distribution facility and our production facility. As a new concept it was a bit challenging for us to integrate them, but they have proven to be very efficient and robust at what they do.
While a lot of companies are now looking into automation within their production areas, as they look at different supporting functions, I think logistics often is overlooked. Only focusing on production can cause logistics to lag behind, and before you know it, logistics automation and logistics efficiency becomes your pacing factor. Our team has done a very good job of keeping the two on similar levels. Another important factor within automation of logistics is the software side of logistics. We now deal with several pieces of software… I would really challenge someone who wants to become cutting edge on logistics automation to not overlook the software side. There are a lot of concepts out there and I think being able to see them in your live production environment via demos, which a lot of manufacturers are willing to do, is a very interesting way to see the software before you go too far down any path.
Drew, I really appreciate your point about the software. Do you also give that to your industrial IT team?
Yes, in fact, within our logistics team we have an embedded logistics engineering team which is tasked with not only the hardware automation side of logistics and handling but also the software side. And that team has grown over the years.
How do you ensure that industry and manufacturing principles are mastered, like lean management, OPEX, the mastery of a production system?
I think Lean and the Master of Production System is often overlooked as a lot of manufacturing companies assume it’s happening and tend to take it for granted.
But the reality is that we must revisit these basic concepts daily. At Bilstein, we have a focus team – we call them our OPEX team, OPEX stands for Operational Excellence. That team is tasked with keeping our operations grounded in the fundamentals on a daily basis. The focus is to ensure we are the most proficient and efficient at everything we do. You can leave a lot of money on the production floor if it’s not working right.
At the end of the day, it always comes back to leadership and culture. How do you prepare and train the workforce? You mentioned making machines ready for their human operators. Let’s now talk about the other side of that – the people. How do you prepare the people for these machines and this high-tech environment?
Training is an investment that does not have a one-day ROI. It’s important to set expectations accordingly, but do not be afraid to invest in training and training systems. Often, manufacturing companies are afraid to ask if their employees are adequately trained for their jobs. That’s a tough question to ask and a lot of leaders are afraid of the feedback.
Instead of doing just on-the-job shadowing training, which is also important, it really pays to take a systematic approach to training: to be able to tell your employees what they will learn on day one, week one, month one…it also allows you to set expectations.
It’s very important to understand whether your employees feel empowered to take on their tasks. Lastly, I would emphasize that the job design should match your candidate pool. Designing jobs around candidates that are available to you is key. For global organizations, job designs may work in various regions or locations, but while we tend to copy and paste, this may not work for all countries, cultures, and languages. I believe effective job design needs to happen on a regional or local level with focus on what skills you have available to you. This does not only apply to the production environment, but also when assessing R&D competencies and skills available in your market.
In this tough current labor market, how do you keep innovating to differentiate yourself and to keep attracting and retaining good talent?
We strive to compete in non-traditional ways and our “Total Rewards” package, a term coined by our HR team, encompasses everything we are offering an employee in exchange for them working for us. Compensation packages are usually designed by an executive team and may not always be representative of the overall company workforce. Making sure Total Rewards delivers what the majority of our workforce needs and excites them is something we really challenge our HR team to do.
We also strive have very clear development paths in place for our employees. Giving our emerging talents a clear career progression plan and being able to say to a young talent “hey if you continue to work and deliver these results, you can expect to move into this career” makes a big difference. Another opportunity is to move our supporting teams cross functionally. For example, it will give someone in supply chain the opportunity to work in sales, or perhaps someone in HR can move to production. Giving your employees the opportunity to go cross functional helps them see other sides of the business, and some of our biggest success stories come from cross functional promotions. So really reaching into different departments and building well rounded individuals has really worked for us. Looking forward we need to be prepared to really adopt to new and non-traditional ways to retain good talent. We need to be cutting edge in what we’re offering our talent pool.
Being an international company, has that cross-functional dimension been offered internationally as well?
Absolutely. We have several success stories of global Bilstein colleagues coming to the US, or in other cases we have exported talent to some other Bilstein locations in other countries. I think getting people to experience locations outside of their own can be a huge development opportunity. It gives them the opportunity to see variations, even in our own production facilities across different global locations; to see and share best practices, and we also tend to export a lot of our local industry 5.0 and define use cases around the world for Bilstein.
I like to say the future is now as our world is turning faster and faster. Tell us a little bit about your next big-ticket items on your agenda?
Our markets are developing faster than ever before, especially with respect to the BEV market or the battery electronic vehicle market. We’ve seen a significant increase in this market for the last 2 years and that’s expected to continue until 2030. I recently read an industry publication that’s saying that 40-50% of new vehicles produced in 2030 will be battery powered. That presents a unique opportunity for us: Battery Electric vehicles tend to be heavier because of the battery packs, and heavy vehicles need more advanced damping. That means the market is moving in our favor. We need to position ourselves, so we are able to take advantage of that market shift. We need to continue innovating our products and make sure they are ready for the markets we’ll see in the next 4 or 5 years. The vehicles that will be produced in 2025 are being designed now, which goes back to the vehicle development timeline I mentioned earlier: the products we are integrating in vehicles literally won’t be seen in the market for some years, so we really need to keep ourselves cutting edge.
We have also seen our customer timelines decrease significantly – a traditional customer development timeline was 2-3 years but with the focus now on some of the EV companies; these timelines are shifting from 36 months to 12 or 18 months. Being able to react on those timelines gives us a competitive advantage too, and we’ve seen some of our customers make their decision to partner with us based on timeline. In that sense, keeping ourselves flexible is really important but what it really means is that we need to be able to deliver extremely fast. Aside from our traditional markets, we also see new opportunities from adjacent markets like ultra-high performance off-road, and additional defensive military applications. We believe we have a huge opportunity to leverage our competencies around technology and our global presence to make a great entry into some of these new markets.
As a leader, you are challenged in many ways – how do you personally find your balance and keep your energy level high with a positive / forward thinking mindset, even in the most difficult times?
One of my biggest takeaways I share with my leadership all the time is “attitude is contagious”. The attitude you display at work is the attitude that your team will take on. This is often overlooked but the reality is the way you engage with your counterparts, your peers and your working team personifies how you work.
Also, finding small wins and celebrating them as opposed to waiting for a significant win is important. If you are waiting to celebrate, chances are you’re not doing it enough. We like to celebrate frequently, and we also like to provide rewards and recognition for smaller but meaningful wins. That goes into my next point which is building momentum. Organizational culture is not adopted overnight. It takes years to develop your culture, which I believe is a direct reflection of the leadership team and their ability to recognize the efforts of the team to steer and lead the organization with a positive attitude.
What is the one thing that could make a big impact on your time management and allocation and free up some time for high-quality investments?
I’m agenda driven – I live and die by my calendar; I use it not only to schedule but also to outline and define my goals. Back to small wins – I consider it a small win if I can move through my agenda efficiently. I think it’s important for leaders to set up weekly, monthly, and annual priorities to clarify what success looks like. I also challenge myself to think in terms of goals rather than tasks. Instead of focusing on the route, focus on the destination and handle the route as it comes. I challenge our leaders to think about the 20% of tasks that they can do that will impact our business and to really focus on those, and to be able to delegate the other 80%. And while this is challenging, I think it is important to keep coming back to this point and ask yourself “Did I spend 80% of my work really driving the business? Did I work efficiently?” Lastly, don’t be afraid to take time to think and to clear space in your head. Humans tend to be extremely forward-looking, so really challenge yourself to be in the moment. Be present at meetings and make time to think…
Thank you again Drew for being with us today and allowing for this Champions Interview! We are excited and honored to feature you and Thyssenkrupp Bilstein of America Inc. in the Altix Access Newsletter and Industry Champion Interview!
ABOUT THYSSENKRUPP BILSTEIN: ThyssenKrupp BILSTEIN is part of the Automotive Technology business segment of the thyssenkrupp AG. Headquartered in Essen Germany, thyssenkrupp AG has annual sales over 30bn EUR and over 100,000 global employees.
Across the globe, the name BILSTEIN stands for innovation and high-tech solutions in automotive chassis engineering. With production facilities in Europe, North America, and Asia, BILSTEIN supplies products for the complete spectrum of damping applications. We have created solutions in balancing the needs of safety, performance and suspension design to deliver the perfect driving experience for over 100 years.
BILSTEIN of America is headquartered in Hamilton OH and employs over 850 employees across our four United States locations. In North America BILSTEIN utilizes the latest manufacturing technology and production concepts to assemble shock-absorbers for three distinct production groups — Original Equipment, Aftermarket and Special Purpose Vehicles. Our North American product portfolio covers the full spectrum of automotive damper applications ranging from on-road semi-active adjustable systems to ultra high-performance off-road shocks.
ABOUT ALTIX: Altix is the middle-market international industrial champions’ management consulting partner, providing business strategy, technology and innovation, and operational excellence support, in the world of advanced manufacturing and international supply chain. www.altixconsulting.com