borgwarner inc & borgwarner turbo systems company overview … · november 23rd 2017 borgwarner...
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November 23rd 2017
BorgWarner Inc & BorgWarner Turbo Systems
Company overview
Potential effects of Brexit
Nathan McArdle - Manager, Advanced Development Programs
© BorgWarner Inc. 2Confidential business information
Text in overlaying boxes, black,
between 14pt and 18pt
Our Vision:
A clean, energy-efficient world
© BorgWarner Inc. 3Confidential business information
BorgWarner at a glance
27,000employees
2016 Sales
$9.07
Billion consolidated
Financial and Employee information as of December 31, 2016. Locations as of November 21, 2016
62 Locations
17 Countries
© BorgWarner Inc. 4Confidential business information
Vehicle Mobility Trends
autonomous
driving
shared cars
and rideshare
connected
cars
efficiency/CO2
emissions
THERE WILL ALWAYS BE A NEED FOR A
PROPULSION SYSTEM
© BorgWarner Inc. 5Confidential business information
Product Leadership
We are a global product leader in clean, energy-
efficient propulsion system solutions for combustion,
hybrid and electric vehicles.
© BorgWarner Inc. 6Confidential business information
Volume
2016: 306,000 Turbos
PC : 11,000
CV : 295,000
2020: 662,000 Turbos
PC : 373,000
CV : 289,000
Process & Facilities
S&W & CW Machining
Core, HSCB & Final Assembly
Warehouses
Quality & Material Labs
Engine and rig testing
Certifications
ISO/TS 16949 – 2007
ISO14001 - 2009
ISO18001 – 2010 = UK Engine Manufacturers= UK Engine Manufacturers currently supplied from Bradford
LONDON
Plant Profile - Bradford
© BorgWarner Inc. 7Confidential business information
Passenger car Commercial vehicles Off Highway
Vehicle applications
© BorgWarner Inc. 8Confidential business information
Customers supported in Bradford
© BorgWarner Inc. 9Confidential business information
Manufacturing Processes
Assembly
High Volume / Low Mix
Low Volume / High Mix
Machining
Shaft & Wheel
Compressor Wheel
Turbine Housing
Low volume/Water Cooled
Waste Gate Electrically actuated R2S VTG VR2S
Manufacturing Capabilities
© BorgWarner Inc. 10Confidential business information
Relevance of international trade: exports 7.25%
36.3%
56.4%
© BorgWarner Inc. 11Confidential business information
Relevance of international trade: exports 7.25%
36.3%
56.4%
Impact on no deal/WTO tariffs
Export tariffs: 2.2% of sales
© BorgWarner Inc. 12Confidential business information
Relevance of international trade: imports 11.8%
28.9%
59.3%
© BorgWarner Inc. 13Confidential business information
Relevance of international trade: imports 11.8%
28.9%
59.3%
Impact on no deal/WTO tariffs
Import tariffs on components: 4.1% of component cost
© BorgWarner Inc. 14Confidential business information
Relevance of international trade: imports 11.8%
28.9%
59.3%
Potential opportunity to reduce tariff impact by on-shoring some of the EU imported components:
Turbine Housings
Bearing housings
Compressor covers
Need to ensure competitive in terms of:
Cost
Quality
Delivery
© BorgWarner Inc. 15Confidential business information
Supply chain common exampleX%
X%
Foundry
Engine
maker
Vehicle
maker
Farmer
Duty Suspension:
This example will qualify for some duty
drawback
But a robust duty drawback process and
capable IT system needs to be in place to
handle increase in demand if no deal in
place by Brexit
Calculating the duty drawback ‘value add’
will be an additional task and cost
© BorgWarner Inc. 16Confidential business information
Customs administration – Export/Import
Export: ~800 shipments per month
Invoice for each part number
Cost for ‘export entry’ ~£70 shipment
Annual cost = +£600k
1 hour processing per shipment compared to 10 minutes today
Annual cost = £400k
Import: ~1500 shipments per month (about 10% outside EU)
‘Import entry’ arranged by freight forwarder
Average cost £70
Annual cost = £1.3M
© BorgWarner Inc. 17Confidential business information
Additional cost to BW
2016: BW exported 265,000 turbochargers to Europe
Rules of Origin administration:
800 shipments / month, at least one hour processing time for certificates
Additional cost of ~£20k per month: £240k / year
Increase the size of the current shipping/import/export department
from 3 to 8~12 people.
© BorgWarner Inc. 18Confidential business information
Impact of customs delays
Goods can be delayed in customs due to systems overload,
paperwork errors, volume of traffic
Uncertainty in delivery timing creates particular burden on
manufacturers
If delays become substantial:
Increased inventory needed
Additional paperwork and human resources
Cost increase from suppliers
Cost increase to customers or reduced profitability
© BorgWarner Inc. 19Confidential business information
Review
The additional cost to BW if there if no FTA agreement: ~£5.0M/year
This does not include any monies claimed back through duty suspension
Current uncertainty of future rules is affecting business decisions
Finding staff qualified for customs administration will be a challenge for industry and agencies
Potential for customs delays adds additional costs and uncertainty for us and our customers
In the worst case, future growth will be impaired due to aggregate effect of all incremental factors on cost and ease of doing business
© BorgWarner Inc. 20Confidential business information
Thank you!
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