Level Up

Interview with CEO Eelco Spoelder about the Level Up One 6–8 strategic program and the potential for profitable growth

Mr. Spoelder, you’ve been CEO of Autoneum since March 27, 2023. What were your initial impressions?

During my initial time at the Company, I visited our locations around the world over the course of several weeks, including the plants of the newly acquired Borgers Automotive. This allowed me to speak with more than 250 employees about our organization, products and processes. Their enormous and varied expertise and strong sense of team spirit were very impressive! Autoneum has a very sustainable product portfolio and a strong global customer base. The insightful discussions allowed me to better understand our Company's potential and opportunities.

What measures did you develop on the basis of your initial observations and analyses?

Following an in-depth analysis of the current situation, the members of the management team and I first determined the key areas where action is required. We then worked together to define six strategic priorities to lay the foundation for sustainable and profitable growth. With this basis, we committed ourselves to significant efficiency improvements in Europe and North America as well as a positive contribution to the results from the acquisition of Borgers Automotive. Goals and the measures needed for implementation were defined for each of the six priorities. All of these points were included in the Level Up One 6–8 strategic program.

What does the name of the strategic program stand for?

We consciously chose a name that contains the specific goals of the strategic program: “Level” stands for the good basis and “Level Up” refers to the next level we want to achieve. “One” stands for One Autoneum and our aim of working more closely with the acquired Borgers units, and to use this inner strength to further expand our position as the number one in our industry segment. Finally, “6–8” stands for our medium-term goal of achieving growth and profitability of 6–8%.

Our Level Up One 6–8 strategic program includes six priorities. Thanks to the enormous commitment of our management team and employees, we’ve made progress in all areas.

You mentioned six priorities. What are these priorities?

The six priorities include: the successful turnaround in North America; better performance in Europe; offsetting the impact of inflation; the successful integration of Borgers Automotive; and profitable growth with new products for the electric and commercial vehicle market. The sixth priority – “One Autoneum” – refers to the further strengthening of our corporate culture in a globally connected team, and it is a key element of Level Up One 6–8.

And have you seen progress as a result of Level Up One 6–8?

Of course! Thanks to the enormous commitment of our management team and employees, we’ve made progress in all areas. Profitability has been increased substantially in both Europe and North America in the past year. Supported by non-organic growth as a result of the Borgers acquisition as well as successful price management and higher production volumes, both Business Groups have recorded significantly higher results before one-time effects compared with the previous year. After removing negative one-time effects, Business Group North America finally achieved a successful turnaround thanks to the sharp improvement in results and margins in 2023.

The turnaround in North America has been a focus for some time. How was this achieved?

We defined a clear program of measures with a corresponding implementation schedule. Thanks to the enormous commitment of all those involved, the material and overall efficiency of the plants was optimized, both operationally and economically. The successful effort to offset the impact of inflation and a positive market environment also contributed to the improvement in profitability.

And how does the performance in Europe look?

We posted significant revenue growth in Europe in 2023, bolstered by the acquisition of Borgers Automotive. There was also organic growth as a result of a slight recovery of the market and the efforts to offset inflation, which were also carried out in Europe. Profitability was much better than it’s been in previous years. However, in order to ensure future growth and long-term profitability, we need to stay on course in the future and further boost the operating performance of our European plants.

The acquisition of Borgers Automotive was completed nearly a year ago. Have the corresponding expectations been met?

On the whole, the business acquired from Borgers made a positive contribution to results and value from day one. We view this as a clear success and the result of intensive work over the past year. Autoneum further expanded its position as the market leader in vehicle acoustics. Its expertise in wheelhouse liner and trunk liner product lines, as well as its truck business, are an ideal complement to Autoneum’s offerings. To better utilize the potential of the truck business, we established a separate business unit, the Commercial Vehicles Business Unit.

How is the integration process proceeding?

We provided training to employees at the former Borgers plants on key topics, including compliance, the Code of Conduct and accident prevention. Access to our internal communication channels (intranet, Teams, email, etc.) was ensured from the first day. We introduced standardized production figures at all locations, including figures related to emissions, waste amounts and recycling. This will serve as an important basis for future reporting on our production and sustainability performance. The organizational integration was completed by the end of 2023, as planned. In particular, the cultural integration is being carried out through joint work on projects across the two companies and thus the shared interest in being successful.

You said that profitable growth is another priority of Level Up One 6–8. How is this being implemented?

We have defined various initiatives for driving our growth. For example, the acquisition of Borgers Automotive has made Autoneum a major player in the market for commercial vehicles. Our analyses show clear growth potential for products in this segments, which includes medium and heavy trucks and agricultural vehicles.

What are some of the other initiatives for realizing future growth?

Other important initiatives include growth in Asia and cross-selling products and technologies in all global regions and business areas. For example, Propylat allows us to offer a versatile and completely vertically integrated recycling technology to all vehicle manufacturers. Propylat was originally developed by Borgers Automotive and was previously sold mainly in Europe. Thanks to Autoneum’s well-established global customer network, we see significant potential in this technology for expanding our market share in other regions, particularly in Asia.

One Autoneum is a crucial basis for expanding our market leadership, our corporate culture and for future profitable growth.

That’s the key word: Asia. What are you doing in the world’s largest automobile market?

We achieved our ambitious goals for 2023 with respect to incoming orders in Asia, and we’re pleased about the high level of customer satisfaction. For example, our Chinese plant in Taicang received several awards in 2023. One came from Volvo for performance in the area of sustainability, and another from Jaguar Land Rover for a decade of excellent performance. In addition, we want to further increase our market presence in Asia and achieve profitable growth. With a new plant in Changchun in the Chinese province of Jilin, and another plant in the western Indian city of Pune, we will further expand our presence in the Asian growth markets of China and India. The decisive factor for the expansion of production capacities in China and India is the increase in customer proximity in two central automotive hubs in Asia. With the new locations, Autoneum will supply both international and local automobile manufacturers with lightweight and multifunctional components for acoustic and thermal protection in passenger cars of all drive types.

The share of vehicles with electric engines compared to traditional combustion engines continues to grow rapidly. To what extent is Autoneum benefiting from this development?

This trend presents us with an opportunity for additional growth. While we are losing somewhat in the area of heat shields, we are making gains with new products, for example in the area of acoustics and thermal insulation. We see enormous potential for noise-reducing components, both in the front and rear areas of electric vehicles, and for thermal protection of batteries. For this reason, we set up a team to analyze and further develop attractive, competitive solutions for batteries and existing components for electric vehicles – a profitable growth area for us.

Can you provide an example of this?

A good example of our technologies showing sharply increasing demand is Hybrid-Acoustics PET. It is made entirely of PET, and as much as 50% from recycled fibers. The waste created during production is recovered, processed and reused, and the material can be fully recycled at the end of the product life. The unique textile technology, which is part of the Company’s own sustainability label Autoneum Pure, is especially suited to absorbing high-frequency noise emanating from the electric engine and offers the ideal ratio of absorption and insulation. In addition, components made of Hybrid-Acoustics PET are up to 40% lighter than traditional insulation. Can you explain the priority “One Autoneum” in some more detail?

We achieved our ambitious goals for 2023 with respect to incoming orders in Asia.

Would you explain the priority One Autoneum in some more detail?

One Autoneum is a crucial basis for expanding our market leadership, our corporate culture and for future profitable growth. We have launched various initiatives to promote our culture, teamwork, communication and employee and talent development at our Company over the long term. Among other things, these initiatives include establishing a vision and mission, which we’ll introduce later this year.

Could you say that One Autoneum serves as the basis for the other priorities?

A committed workforce and a corporate culture that is implemented and observed serve as the basis for every successful company. Our employees are therefore a key factor in the successful implementation of our growth and profitability goals. We can only complete the many tasks and sub-projects if we all work together toward our goals – as One Autoneum – and embody the Company’s vision and mission. Only in this way will we be able to set the standard in our industry segment in the future as well.

Thank you for speaking with us, Mr. Spoelder.