46. The CEO Magazine - January 2016 theceomagazine.com theceomagazine.com The CEO Magazine - January 2016 47.
In The OfficeEXECUTIVE INTERVIEW
FORTUNE FAVOURS FRICTION
After 11 years at TMD Friction, CEO and President John Hudson has the experience and knowledge of the company to take it into the future.
Images by Mauro Bellisimo
As the oldest friction manufacturer in the world, TMD Friction [TMD] knows its industry. The company
produces everything from disc brake pads and drum brake linings for everyday passenger and commercial vehicles, to brake pads for top racing cars and industrial applications such as for the wind turbines that generate clean energy. TMD produces more than one million products per day in 15 production sites located in 12 different countries on five continents.
Following a 50-year relationship with the Japanese group Nisshinbo Holdings Inc, Nisshinbo acquired TMD from its private equity owners in late 2011. The CEO
Magazine spoke to John Hudson, CEO and President of TMD, about that acquisition, the opportunities he saw when taking on the CEO role, the company’s commitment to being a leader in its chosen field, and what’s next for TMD.
The CEO Magazine : What key roles in your professional background have contributed to your leadership style now?
John: I’m a chartered accountant by background, having trained with what is now KPMG. Following a five-year period with KPMG, I then spent some 20 years in the chemical industry with ICI —now part of Akzo Nobel—and INEOS. I joined TMD in 2004 in the group CFO role as part of a restructuring of the senior
management team by its private equity owners. Together with the new CEO, we led an operational and financial restructuring of the group, which ultimately led to the sale to Nisshinbo in November 2011. The seven years leading up to the Nisshinbo transaction included the very ‘exciting’ and challenging period through 2008 and 2009 where we all learned many new ‘life-critical’ skills, some of which we would rather not have learned!
Over the last 30 years, I have lived and worked in Singapore, Germany, Belgium, and the UK, and many of the roles have also given me the chance to experience the working cultures across most of Asia–Pacific, the Americas, and Africa. The finance roles have been
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in both group corporate as well as business responsibilities, and I have previously had CEO responsibility for running business units. During these times, I have built four different finance teams and two group management teams around the world.
Looking back, the many and varied experiences have given me the skills to live and work in many different cultures, how best to build and motivate employees as well as the financial skills from my professional training. My cultural awareness skills also come from being born and growing up in Africa.
With my understanding of TMD and my cultural approach, Nisshinbo Holdings asked me to stay on after the acquisition and to step up into the CEO role.
What were the opportunities you saw for yourself when you decided to take on the role of CEO at TMD Friction?
TMD is the oldest automotive friction manufacturer in the world.
The company started in 1878 in Dundee, Scotland, and over the last 137 years it has been at the forefront of technology development for automotive friction, whether that’s manufacturing technology or product technology.
Its history is incredible. If you think of the many wonderful classic European cars, TMD probably supplied the majority of these cars when they were first built with our brands Mintex, Textar, and Pagid. We have a pedigree in the racing area, having supported Formula 1 and saloon car racing for many years. We exited from Formula 1 when the braking technology changed to ‘carbon-carbon’ for discs and pads but we continue to support saloon car and rally cars. We have supplied friction solutions to many of the race teams in Europe and in the USA, particularly for NASCAR. We have supported drivers like Jack Brabham, Sterling Moss, Fangio, Carlos Sainz, and many others to win their races, and we were the manufacturer chosen to supply brake pads into the first
caliper brake system developed for cars—these were first used on the Jaguar C-type race car in 1953. Today, we are still known as the guys who solve difficult braking issues and we supply friction to cars ranging from small cars such as the Renault Dacia Logan and the Toyota Yaris, to the BMWs, Audis, and Mercedes, and up to the high-performance cars such as Aston Martins, Ferraris, Porsches, and Bugatti Veyron.
We had made many improvements to TMD in the years leading up to the acquisition but this tremendous heritage was not being put to good use—partly due to the many ownership changes over the last 20 years. We had forgotten our ‘DNA’ and how to use it.
With TMD becoming part of the Nisshinbo organisation, I could see how we could bring more of our history and DNA into good use inside and outside the organisation. We could make better use of it in the way that we support customers, the way we work with suppliers, and the way
that we develop and promote people inside TMD.
Importantly, we could also use it as we started to reshape TMD to better align with our Nisshinbo colleagues as, together, we began to define how the largest automotive friction supplier would gradually integrate activities to better serve our worldwide customer base.
With Nisshinbo Brake, we are clearly the world number one for on-road brake friction, and being CEO of a business that is part of the leading global player is a fantastic opportunity. Another reason for saying yes to the role was that having gone through two corporate cultural changes in my life with ICI and with INEOS, I understood what was involved and understood how to support our Japanese colleagues in the journey to combine the best aspects of two culturally very different organisations—western and Japanese. To say the least, it is quite a challenge, but it’s also an exciting one!
What have been some of the challenges involved for you personally, and also for TMD over recent years?
I can describe these in two different ways.
The first challenge with our new Japanese colleagues was to really learn to understand what each of us was saying. We might use the same English word, but that word could have very different interpretations of meaning. For example, the word ‘quality’. In Japan, the concept of quality is part of everything a Japanese person does and this is instilled from birth. In the western world, we have to be taught about quality! To deal with this, we set about defining and agreeing how to interpret particular words and phrases—a new dictionary, if you like.
There is a wonderful Japanese word called Nemawashi, which means consensus building. If you
think of, for example, the way that Italians work, the Italians tend to do a lot of consensus building outside of meetings—in corridors, over a coffee, and so on. The decision is already made and the formal meeting is, in many ways, a formality! The Japanese approach is quite similar; a consensus is reached well ahead of the decision meeting and all people involved have their input. It’s very different to the way the Germans or the English work. It’s fascinating learning about the different cultures, and looking at how to put a structure in place, a virtual structure, that allows Japanese colleagues to understand what we mean and interpret it in the same way that we would interpret it, and then allow our European colleagues to understand what their Japanese colleagues are trying to say.
The second challenge has been how to change the culture of the TMD organisation. For years, it has been under the ownership of various private equity investment groups. Today, it is part of a long-term, strategic industrial corporation. The approach to managing and growing the organisation and its people is very different now and we needed to ensure our TMD colleagues understood that it was time to
change. We adopted a concept popular in Japan—PASSION—the letters standing for profit, ambition, sincerity, strength, innovation, optimism, and never give up. It is an approach famously developed and used by Kazuo Inamori, a philanthropist, Japanese entrepreneur, and retired CEO of Kyocera Group. He used the approach to build Kyocera into a worldwide organisation and has recently used PASSION to reshape and restructure Japan Airlines [JAL]. PASSION is a Japanese cultural interpretation of many western business and management school theories. Importantly, it focuses on the employees, their involvement in the daily business life, and contribution to growing an organisation. It also helps to clarify the vision and mission of an organisation and to strengthen the approach to corporate ethics (the ‘sincerity’ part).
Cultural change is more a journey than a project; you never reach the end of the journey as we live in an ever-changing world. However, it is a unifying journey and for TMD this has enabled us to better understand how to work with and grow with our Japanese colleagues.
Those are two of the major challenges faced over the last three years. At the same time, we took
“The company was started in 1878 and it has been at the forefront of technology development, whether that’s manufacturing technology or product technology, since then.” - John Hudson
The perfect spare part?It’s there when you need it.
Europe’s flexible supplier of automotive spare parts// Brake parts, steering parts and related wear and tear parts // Comprehensive, full coverage product ranges in more than 25 product groups// Matching quality parts produced to TS 16949 standards// The market’s most flexible supply concept from efficient distribution platforms// Short and stable lead times// Fast reaction to market changes and individual needs// Inventory management at our customers’ disposal
Brake discs & drums// Market’s widest range // Customized and private label concepts available// Standard, coated or high carbon versions
theceomagazine.com The CEO Magazine - January 2016 53.
the decision to break out of the ‘functional’ approach and split the organisation into strategic business units [SBU]. We now have an SBU for original equipment–passenger cars, original equipment– commercial vehicles and for the independent aftermarket. Each SBU has its own dedicated factories, dedicated product-development capabilities and dedicated financial statements (profit and loss account, balance sheet, and cash flow). The SBUs are supported by a small, focused corporate activity and a regional structure for daily business in Asia and the Americas. The IAM had been trialing the SBU approach for a number of years, but it is now truly set up as a business unit. This was a big step for us to take and we successfully
implemented the change within a 12-month time frame.
Looking back at the changes we have been driving over the last three years, it is really satisfying to see how these have motivated not just the new SBU management teams but the whole organisation. There is a real drive and energy throughout the group and many employees at all levels are using their voices to take part in building our future.
How do you work with suppliers to ensure success?
Many of our suppliers have been working with us for over 20 years. The automotive sector has some very stringent controls for homologation of parts being
supplied into new-build vehicles. Once homologated, the supplied product must have exactly the same performance, quality, and lifespan as those used for the homologation process. Changes are not accepted without prior approval; and an approval requires new testing and validation, so it’s expensive to change.
Our suppliers are an important part of our commitment to deliver the same specification of parts day in, day out. We look to work with suppliers who can guarantee the same quality and ‘fingerprint’ of the raw material for each and every delivery. It is fascinating how a slight difference in a raw material can create performance issues—noise when braking being the common issue. As our customers look to upgrade the quality of their own product offering, so they expect their suppliers to match the upgrade. As electric-drive vehicles become more popular, it is easier to hear noise when braking and we, therefore, need to be constantly improving the performance capabilities of our friction products.
For this reason, we work with trusted suppliers and will pre-qualify both a supplier and their raw materials before we allow our product development people to
“TMD Friction is our leading partner in the testing, validation, and adoption of NUCAP’s new brake component technologies. Like us, technological leadership in the creation of industry-leading products is a key mission for TMD Friction, driving a strong global partnership.” - Mark Lavelle, Global OE Sales Director, NUCAP Global
theceomagazine.com The CEO Magazine - January 2016 55.
utilise the materials. Whether the suppliers are from China, Brazil, Mexico, Europe, or South Africa, they have to ensure that they provide us with the same quality standards that were used for the first production and ensure that same standard when delivering to our sites across the world. For the aftermarket, it’s a slightly different world, but we still need to ensure we meet the safety standards, and our internal safety standards are higher than those specified by European Union regulations.
It’s key for us to be absolutely sure that our products on the road will perform. For all of our suppliers, no matter how long our relationship has been, we perform regular quality audits of the raw material and their manufacturing processes. Where we see an opportunity to improve the process and or quality, we will then work with them to reach that improvement. We do have multiple suppliers for many of our products, as everybody does, but this is driven by security of
supply. We are not in the game of trying to force the suppliers to the lowest possible cost. We need long-term thinking to support our customers and driving for the lowest cost without a thought for quality of supply and security of supply usually ends in ‘tears’.
What are TMD Friction’s plans for the future?
My first thought is that we will, of course, have a much closer relationship with our parent company Nisshinbo. The way that we work with our Japanese colleagues will continue to improve and intensify. At the moment, we are bringing our two organisations together gradually. The focus is to combine the best parts from both organisations while ensuring we can support all customers as one team.
The culture and historical way of supporting customers are quite different and we must therefore take care to avoid disruption for our customers whilst slowly bringing the two teams together. We obviously network a great deal; we have joint teams for new product development, new technology development, and Kaizen improvement activities but, for the moment, our Nisshinbo colleagues focus on the Japanese customers and we continue to focus on ours. Over the coming five years, we see ourselves coming closer and closer together. There will be a closer integration of technology and many of our sites will have common technology allowing us to truly support customers across five continents.
With support from Nisshinbo, we are going through quite a number of major investments within TMD. For example, in Germany we are merging the Leverkusen manufacturing facility into a sister plant in Essen, about 70 kilometres north of Leverkusen, and in Brazil we are relocating our factory from
the centre of a residential district to an industrial area about 15 kilometres away. Both projects are the first examples of us implementing a combination of TMD and Nisshinbo manufacturing technology and processes. They are exciting projects and will give us the two most modern friction manufacturing sites in our industrial sector. They are scheduled to be completed in 2017 and 2018 respectively.
Leverkusen will continue as the location for the corporate centre for TMD, our central research and development, and the management base for the commercial vehicle and independent aftermarket SBUs.
Today, an integral part of all growth and development plans is how we protect our heritage and how we make better use of the DNA that has been built up over the last 137 years. The steps we are taking today with our Nisshinbo colleagues are designed to provide the foundation for our next 137 years of history.
“We look to work with suppliers who can guarantee the same quality and ‘fingerprint’ of the raw material for each and every delivery. It is fascinating how a slight difference in a raw material can create performance issues.” - John Hudson
GAYSORN INTERPARTS LIMITED– Since 1995 –
The name behind the world class brand.We specialise in the manufacturing of backing plates
and hardware kits for disc brake pads.
636/3 Bhuddaraksa Road Tambon Praksa Samutprakarn 10280 THAILAND
+66 (0) 27013442+66 (0) 999838793
Website: www.kck-thailand.comEmail: [email protected]
ISO/TS 16949:2009 Certified
“Working with TMD Friction is quite challenging and interesting due to the high standard of quality. This gives us the motivation to expose our brand into another level of aftermarket business with great opportunities to enhance our quality and efficiency” - Suvadee Sakulthong, Managing Director, GAYSORN INTERPARTS CO. LTD
