It’s hard to keep count of the number of times that Hal Reisiger uses the word “smart” in an hour’s worth of conversation.
Smart technology, smart engines, smart cars, smart manufacturing, smart investment. The chief executive of the automotive technology group Cosworth is a man with a simple message: it is good to be smart.
“I’m a great believer in focus. I’d rather be excellent at a few things than mediocre at many,” he says, summing up the “smart” philosophy. He is applying that doctrine to Cosworth’s future strategy as it goes through a period of intense corporate transformation.
For anybody growing up in Britain in the 1980s, the name Cosworth was synonymous with high-performance car engines much admired by a certain youthful racy type, often based in the English county of Essex.
The company produced powerful engines for vehicles such as the Ford Sierra, capitalising on its record as one of the leading manufacturers of engines for winning Formula One race teams.
It was a British brand that typified technological excellence and power on the world motor sport stage, rivalling Ferrari as the leading engine manufacturer of F1 championship cars.
But, as Mr Reisiger explains, by the early 2000s there were changes happening in engine manufacture – what he calls the “power train” side of the motor industry – that were forcing a rethink of the image that had served Cosworth so well since it was founded in 1958.
“As F1 came to be dominated by the likes of Mercedes and Ferrari, we began to realise there was no future in motor sport manufacturing as an independent. They [the big global car companies] could use the sport to promote their brands and could invest hundreds of millions of euros into it. We had to make money,” he says.
The alliance with Ford came to an end in 2004, when two private equity billionaires – Kevin Kalkhoven and Gerry Forsyth – bought Cosworth and set about changing the strategy.
Mr Reisiger, a New Yorker now living in California and London, was in Abu Dhabi this week explaining that new direction to potential investors he hopes will accompany Cosworth on the next phase of its development.
Cosworth is still involved in the “power train” but these days half of its business comes from high-tech electronics and telemetric processes that are integrated into high-performance engines and car systems.
“Cosworth these days is a unique combination of experience and technology that allows us to provide a ‘one-stop-shop’ in motor electronics and engines. We can take the whole process from concept to production and very few companies can do that,” he says.
It has certainly changed since the days of the boy racers. Now, from plants in Northampton and Cambridge in the UK’s high-tech hub, to others in more traditional motor centres such as Indianapolis and (soon) Detroit, it uses state-of-the-art precision machining technology including the latest in robotics with a highly skilled workforce.
He reels off the customers attracted by the Cosworth offering. Aston Martin, General Motors, Nissan, Honda, Jaguar Land Rover and Lamborghini. The order book from GM alone – non-existent three years ago – is worth US$300 million. “We have a full order book until 2026 and we’re at full capacity, so we need to expand,” Mr Reisiger says.
One of the “smart” things Cosworth is doing is the latest advance on the motor car equivalent of an aviation “black box” – aliveDrive – which analyses car performance and records it in a data-retrieval system. It can be used in the event of an accident as a forensic tool, or more usually as an instrument to tell you when your next service is due – and how far you are away from a service agent. It will even automatically make the appointment for you when you are nearby. “That’s another smart thing about us,” he says.
The technology also has an eco-friendly aspect that strikes the right chords in an environmentally aware age. “Our technology can measure and control emissions and so help to reduce pollution,” he adds.
But such technology requires investment in research and development. A new plant, such as the one being built in Detroit, can cost up to $50m. The investors who bought the company from Ford have signalled that they want a new partner for the next phase. Hence Mr Reisiger’s trip to the UAE capital.
“Few countries can match the investment capability of the UAE and at the same time the country has a mandate to invest in new technologies in the diversification programme away from oil. The low oil price is only increasing the incentive to move towards advanced technology, ” he says.
He is looking to sell up to 40 per cent of the company for a multimillion dollar sum to fund the future, and has already had talks with two prominent investment entities in the capital that have a focus on technology. “I think they are interested. We want minority investors to help exploit growth opportunities and we have a good story to tell,” he says.
Potential investors will not just get a chunk of the equity. Cosworth is also offering to build manufacturing capability in the UAE to cater for the Asian market it currently has to service out of the UK and Taiwan. With this facility would go a branch of the Cosworth University, a high-tech research, design and manufacturing facility already set up in the UK. “We believe in the global training of the next generation of engineers, and we’ve been very impressed by the UAE’s commitment to technology training. We would like to launch the next phase of the university in a place that shares our commitment and passion for technology.
“We have problems in the UK getting the right people with Stem skills in science, technology, electronics and mathematics. About 10 per cent of our employees are apprentices,” he says.
There is also another carrot being waved at any potential UAE investor. Cosworth is planning an initial public offering in the next few years, when the current owners will seek to further reduce their controlling stakes, and Mr Reisiger would be very happy to see at least part of that share flotation go to a stock market in the UAE. “That would be a very smart thing to do,” he says.
fkane@thenational.ae
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