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Nexteer Nabs New Business As EPS Turns Global

Executive Summary

Moving the half-ton-truck segment in the U.S. to EPS proves no product is off limits to electric steering. Even three-quarter-ton trucks are ripe for electrification, the supplier says.

DETROIT – Power-steering systems, parts and driveline supplier Nexteer, which endured two parent-company bankruptcies during the recession before an unlikely rescue by China’s national aviation industry, expects to ride a wave of new business to the head of its industry in the coming years.

Mike Richardson, executive director, senior vice president and chief technology and strategy officer at Saginaw, MI-based Nexteer, says the company’s backlog has ballooned to $8 billion, representing multiple OEM programs with volumes of at least 1 million units each in several regions around the world.

“We are digesting that huge backlog right now, and it will help us objectively move our global ranking as that production moves to the street,” Richardson tells WardsAuto in an interview.

The $2.2 billion supplier currently ranks No.5 among global steering-systems providers. It’s been in the steering business for more than 100 years, born out of General Motors and spun off with the automaker’s former captive parts maker Delphi in 1999.

Shortly after Delphi exited its 4-year stint through Chapter 11 in 2009, GM took it back to maintain a steady flow of steering systems and parts as it worked through its own bankruptcy.

About 18 months after GM completed bankruptcy, the automaker sold Nexteer to Aviation Industry of China in a deal valued at a reported $450 million. Shares bowed on the Hong Kong stock exchange last year.

Through all the ups and downs, Nexteer kept its R&D unit humming, Richardson recalls. When the Chinese took over, they immediately boosted new-technology spending 50%.

“They started as the least likely buyer, but they understood the safety, quality and capital-intensive nature of our industry,” he says.

Now, for the first time in years, Nexteer boasts a complete product portfolio, ranging from old-fashion hydraulic-power-assist to the latest electrically actuated steering systems and a line of complementary gears, pumps, reservoirs and hoses.

The portfolio also is broad-based, covering top-of-the-line rack-based EPS systems boasting the world’s highest-power output to an attractively priced, brush-motor based, moderate-output EPS system for emerging markets.

Much of the order backlog is new business, too. Nexteer expanded beyond GM four years ago to add the large pickup business of Ford and Chrysler to its customer sheet. Its exclusive 12V EPS technology today appears on nine of every 10 large pickups in North America.

i3 Tip of Iceberg for Nexteer

Nexteer’s latest business victory, like its new ownership, also came unexpectedly. As BMW vetted possible candidates to supply EPS to its i3 electric vehicle three years ago, the automaker invited Nexteer to submit technology for a judging process that included longtime suppliers to the German automaker.

“To this day, I don’t know why they invited us,” says Richardson, who speculates BMW may have remembered some steer-by-wire technology Nexteer supplied the automaker several years earlier. “They came back and said, ‘We don’t know how you did it, but you won the drive. In fact, we’re not even sure who you are.’”

The EPS launches on the i3 in May, as a single-pinion mechanism that Richardson claims pushes the boundaries of state-of-the-art in terms of power output and power density. It is a highly efficient system, he says, with low standby power demand and performance attributes in line with BMW’s “Ultimate Driving Machine” standards.

“It is unique to BMW at the moment,” Richardson says of the technology, which uses next-generation dual-core processors incorporating FlexRay vehicle communication bus capability. It meets the newest Autosar standards, Nexteer says, and includes lane-keeping and park-assist driver-assist functions.

“We’re very glad to be launching that with them at the highest level of capability.”

The i3 represents just the tip of the iceberg for Nexteer and BMW. Richardson says the same EPS system with subtle tweaks will appear on all 12 products underpinned by BMW’s new small-car platform. The volume would account for roughly half of all BMWs produced globally.

“The i3 is the first of many vehicles,” he says.

Richardson also sees Nexteer continuing to take advantage of the industry’s general migration to electric steering from hydraulic. He estimates the present global penetration of EPS in the U.S. and Europe at upwards of 64%, while China sits at about 24%. Brazil has just begun adopting the technology, which on average boosts an OEM’s fleet fuel economy 4%.

That’s the equivalent of shaving 500 lbs. (218 kg) from a vehicle, he says.

“When an OEM looks at his candidate responses,” to tightening global fuel-economy and carbon-dioxide emissions regulations, “this conversion from hydraulic to electric is at the top of the list.”

At the same time, he admits, EPS probably will not gain much efficiency in the coming years.

“We’ve made the big gains already,” he says, but adds that moving the half-ton-truck segment in the U.S. to EPS proves no product is off limits to electric steering. Even the big, three-quarter-ton trucks are ripe for electrification, although there are safety considerations that must be ironed out.

“That’ll be solved with dual-wound motors and redundancy in software,” Richardson says, hinting that a solution from Nexteer for big trucks lies shortly down the road. “That’s not launching this year, but it is in the product pipeline.”


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