Detroit – A walk across the auto show floor means one thing to BorgWarner Inc. CEO James Verrier: opportunity.
The Auburn Hills-based maker of engine, transmission and driveline systems boasts components in roughly 70 percent of the 750 cars and trucks on display at this week's North American International Auto Show.
Continuing pressure to deliver better fuel economy and tighter emissions despite low gas prices promises more of the same, a confluence of forces that could swell the supplier's estimated revenue of more than $8.1 billion to as much as $15 billion by the end of the decade.
"There will be noise about enactment of (tougher federal) fuel economy standards" by 2025, Verrier said in an interview Tuesday, the day before he is set to brief investors in the company's outlook for this year. "But it's going to happen. I don't think that will change materially at all. I don't think there's anybody better placed than us to take advantage."
Want to turbocharge a V-6 engine to power the Ford F-150? BorgWarner can help. Need a single-speed transmission to power the Tesla roadster, brainchild of EV impresario Elon Musk? BorgWarner can help — and it has.
The supplier sits astride arguably the central challenge in the global auto industry: the busy intersection of technology, government regulation, cost and the race by automakers to integrate all three in ways that satisfy both shifting consumer demand and unyielding regulators.
Aggressive federal fuel economy and zero-emission vehicle rules are driving development of more efficient engines, transmissions and alternative propulsion systems that play to BorgWarner's strength. So does the push to turbo-charge conventional gas engines slated for traditional market segments.
Not a bad place to be for a company that employs nearly 20,000 at 60 locations in 19 countries, books business in Europe, Asia and North America and expects to average annual revenue growth of 12 percent or more in the coming years.
More, BorgWarner envisions a future that more closely resembles the all-of-the-above future increasingly embraced by the global automakers, not the either-or caricature that assumes "no one" will buy plug-in electrics or gas-electric hybrid vehicles with gas at $2-a-gallon.
Maybe not this year, all things being equal. But BorgWarner cites estimates that the hybrid vehicle segment will account for 10 percent of global market share by 2024, with another 2 or 3 percent coming from plug-in electric vehicles.
With a total market estimated to be 100 million worldwide over the same span, that's 12 million vehicles in the alternative vehicle segment — hardly insignificant, whatever one's ideological predisposition to the evolving propulsion technologies.
You'd think Detroit, historic epicenter of lessons not learned, would know better and adjust accordingly. The evidence is that it is and it has, fielding a product portfolio that offers both powerful traditional models (see the 640-horsepower CTS-V unveiled Tuesday) and the tiny Chevrolet Bolt plug-in electric, to name two.
"These are sustainable, measurable trends," said Mark Reuss, General Motors Co.'s executive vice president of global product development, purchasing and supply chain. "Gas prices will change, I can tell you that. There are people in places other than Detroit who really do buy it."
There was a time not too long ago when a GM executive wouldn't say that. This, the company that produced cruddy compact cars, conceding the segment to Japanese players who turned it into a license to print U.S. dollars.
This from a company that would have expended massive amounts of lobbying cash and rhetorical heat to blunt regulatory creep because it could not be done, was too expensive, didn't hew to its long-term forecasts, or all three.
Not anymore, an attitudinal shift that says as much about the industry's new generation of leadership as it does the toughened regulatory environment and the public cost of fighting it.
"It's being used as a competitive advantage," Verrier says of the industry's push into fuel-saving gas technologies and the battle for visibility and credibility in the alternative propulsion space. "Who wants to be the automaker to go big time and say, 'We need to slow down these fuel-economy regulations?'"
Pretty much no one, which spells opportunity for a BorgWarner pushing to offer solutions its market demands.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151.