JTEKT Targets Diversification and Steer-by-Wire Technology (Automotive News)

8/4/2015

NAGOYA, Japan -- JTEKT Corp. is not just the world's biggest supplier of steering systems but the world's 19th largest auto parts supplier, period. The Toyota-affiliated company also employs some 43,000 people worldwide and has 139 subsidiaries in more than 20 countries.

Yet to President Tetsuo Agata, his company is still not a "real global company."

Of JTEKT's 40 top executives, for example, only one is a non-Japanese. Agata wants more.

He is rushing to internationalize the Japanese supplier because demand is booming for electric power steering, thanks to the proliferation of advanced safety technologies such as lane-keep assist and auto-parking functions that help drivers steer their vehicles.

To keep its No. 1 position in steering, JTEKT needs to expand sales with non-Toyota customers, diversify its work force and branch into new technologies such as steer-by-wire, said Agata, who took office in 2013 after stints as an executive at Toyota Motor Corp. and Toyota Industries Corp.

Agata also targets massive cost reductions and quality improvements, by importing more efficient manufacturing processes from JTEKT's biggest shareholder, Toyota Motor, which holds a 22.5 percent stake in the company.

He aims to slash the cost of JTEKT's electric power steering systems by 20 to 30 percent in the next two years. And Agata wants to reduce the number of quality problems to one-tenth their current level in the same period.

"We are not satisfied with the current situation," Agata, 62, said in a June 30 interview at JTEKT's global headquarters here. "Just dealing with Japanese automotives is not good enough."

'Hot issue'

In fiscal 2014, JTEKT's sales to global automakers were an estimated $11.2 billion, according to Automotive News' list of top suppliers.

About 41 percent of JTEKT's global sales come from Toyota. The Renault-Nissan Alliance is the next biggest customer, chipping in about 17 percent of total revenue.

JTEKT says it owns a quarter of the global steering market. And when it comes to electric power steering, JTEKT says its penetration is even deeper, with a 33 percent share.

Its positioning in the latter is key because of an industrywide shift toward electric power steering, or EPS, driven by stricter emissions rules and demand for driver-assist safety features.

With EPS, an electric motor, not hydraulic pressure, moves the steering gears. It saves fuel because it uses energy only when the driver turns the steering wheel. With hydraulic steering, a belt on the engine constantly drives a pump to maintain hydraulic pressure.

EPS also responds more quickly and accurately to the software running such features as parking assist and lane-keep assist, making a good match for modern autonomous driving technologies.

The downsides of EPS long have been added cost and limited use in big cars, SUVs and pickups because of restricted power. But more powerful motors are pushing use into bigger vehicles, including the current Ford F-150 pickup.

"Right now, steering is kind of a hot issue due to automated driving systems," Agata said.

Going global

But Agata says to better compete on the global stage, JTEKT needs to broaden its outlook.

Agata, who speaks fluent English and spent 16 years working overseas, including stints in the United States and Belgium, said an epiphany came to him years ago while talking to an executive from Dow Chemical Co. He was stunned to learn that the company, based in rural Michigan, had a Brazilian CFO and was about to get an Australian CEO.

"That's a real global company," Agata said. "We seem to be a global company. However, from my idealistic point of view, we are still not good enough. We have to localize, and we have to pick up more local executives.

"If we Japanese always head the divisions, there will be a glass ceiling, and good, well-trained managers will quit. We have to break the glass ceiling."

Agata is overhauling human resources with the help of a consulting firm to review the 100 top positions at the company worldwide and decide who is the best person for each role.

Having a more diverse work force is one step toward diversifying its customer base away from Toyota, Agata said. A top conquest target is the Detroit 3, which have traditionally accounted for only a small piece of JTEKT's global business.

Steer-by-wire

JTEKT also aims to expand sales by advancing into new technologies.

"We are working with steer-by-wire because it is necessary and almost mandatory to achieve autonomous driving systems," Agata said. "We are working now to develop such a system."

JTEKT doesn't sell a steer-by-wire system.

But steer-by-wire systems, such as that introduced in the Infiniti Q50 sedan, are being explored by several carmakers. That technology breaks the mechanical link between the driver and the wheels. Instead, it converts steering wheel movements into electronic signals that control electric motors to move the wheels.

Proponents see the steer-by-wire technology as a natural progression of brake-by-wire and throttle-by-wire systems already in use.

Skeptics say steer-by-wire is gimmicky because it requires too many costly redundancies.

In the Infiniti system, for example, three electronic control units backstop one another to constantly monitor for malfunctions. And if anything still goes awry, another fail-safe feature re-establishes a backup mechanical connection.

"Jetliners are already steer-by- wire," he said. "The speed of adopting autonomous driving systems is accelerating. If we can eliminate the mechanical linkage, we can have more freedom in automotive design. In the future, steer-by-wire is essential."

Another vision

He's also exploring another vision for the future: Technology that reads the road and automatically tweaks steering without the driver knowing. The idea is to use sensors and computers to assess conditions and dictate minute steering adjustments much more quickly than a human could, Agata said.

"We have to have a more sophisticated system like this to achieve smooth driving," he said.

Agata did not give a time for bringing such a technology to market but said the supplier is working with several manufacturers to develop such a system.