mighty bosch A Non Starter

Bosch CEO Volkmar Denner's attempt to sell off the car starter business is part of his strategy to evolve away from heavy metal products and toward smart technologies.
Protests in the heat at Bosch. 

It was an unusual event for Bosch when 2,000 workers protested outside company headquarters in Stuttgart against the spinoff of the car starter business, which generates €1.4 billion ($1.55 billion) in sales.

Employees could have spared themselves the stifling temperatures of 95 degrees (35 Celsius) because historically, once management has made a decision, it’s always been irreversible.

When it’s a case of selling off a core division that replaced hand-cranking with the electric starter for cars 100 years ago, it’s a certainty Bosch CEO Volkmar Denner has studied every possible scenario a hundred times.

He wouldn’t take lightly something that strikes at the very heart of the sense of unity among employees. But it’s little consolation to those who will be affected that they’ll be better cushioned from tough cost-cutting than workers at most other companies.

Mr. Denner is steering the company through its second technological revolution.

The real question is whether the division can find a strong partner or die a slow death at Bosch.

The metalworkers’ trade union, IG Metall, can save the expense of consultants tasked with finding a way to retain the division. Margins in the business are too small. The division has been thoroughly restructured over the past decade and there is no more meat left on the bone as workers seek €50 million ($55.3 million) in remedial contributions.

What will come of it? Is Bosch expected to spend billions in a sector with a storied history but no returns? And will the sector be needed in an era of electric cars over the next two decades? Bosch can sell the division today while it still boasts the attractive gas-saving Start-Stop technology as an added incentive. In ten years, that probably will not be the case.

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Mr. Denner thinks in terms of long-term strategies. He is preparing the company for the networking of products and industry in addition to electric mobility and autonomous driving. Software and sophisticated electronics rule, so that’s where the company is investing billions. Basic components made primarily of metal generate low profit margins and have little future. Bosch previously sold its brake business and the wind turbine gearboxes from Bosch-Rexroth. Now, attention has turned to a formerly core unit. Heavy metal doesn’t stand much of a chance in the company anymore.

Mr. Denner is steering the company through its second technological revolution since the introduction of electronics in the early 1970s. He’s more calculating in the way he views the future than his predecessors and rubs many people the wrong way.

If the product doesn’t contribute to the new goals and remains unprofitable, out it goes. That’s his message, but the pressure for smart products to create new markets builds with every elimination of an old business sector.

Mr. Denner soon must deliver more -- and at a much faster pace.

 

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