BorgWarner Inc. Business Report FY ended Dec. 2014

Business Highlights

Financial Overview

 (in million USD)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 Rate of
Sales 8,305.1 7,436.6 11.7 -Excluding the impact of the 2014 Wahler acquisition and weaker foreign currencies, primarily the Yen and the Real partially offset by the Won, sales increased approximately 8%.
Operating Income 963.7 855.2 12.7 -
Engine Segment
Sales 5,705.9 5,022.1 13.6 1)
Drivetrain Segment
Sales 2,631.4 2,446.5 7.6 2)

1) Engine Segment
-Excluding the impact of the 2014 Wahler acquisition and weaker foreign currencies, primarily the Yen and the Real, sales increased approximately 8% from the year ended December 31, 2013 primarily due to higher sales of turbochargers and engine timing devices.

2 ) Drivetrain Segment
-Excluding the impact of strengthening foreign currencies, primarily the Won, sales increased approximately 7% from the year ended December 31, 2013 primarily due to higher sales of all-wheel drive systems, traditional transmission components, and dual clutch transmission modules.


-The Company finalized its acquisition of Gustav Wahler GmbH und Co. KG. A producer of exhaust gas recirculation (EGR) valves and tubes as well as engine thermostats for both on- and off-road applications, Wahler's customers include leading automotive manufacturers from around the world. BorgWarner announced the acquisition of all shares in Wahler in December 2013, and completed the acquisition on March 1, 2014. Wahler will join the BorgWarner Emissions Systems business. (From a press release on April 1, 2014)


-Followings are other major contracts from a press release in 2014.
<Engine Segment>
 Product Installed model
6.35 mm inverted tooth silent chain Nissan, Suzuki, Mitsubishi, Hyundai, GM and other OEM models Oil pump chains for Jatco's CVT7 continuously variable transmission, which is designed for 0.66- to 1.8-liter minicars and small front-wheel drive vehicles
B01 turbocharger with integrated wastegate for controlled boost pressure Volkswagen's 1.4-liter four-cylinder gasoline engine -
Regulated two-stage turbocharger (R2S) 2.0-liter four-cylinder diesel engine for Volvo's new Drive-E powertrain family -
Multi-spark ignition coil Mercedes-Benz "C-Class", "E-Class", "S-Class" The Company produces the multi-spark ignition coils at its plant in Muggendorf, Germany, for Daimler's six- and eight-cylinder engines.
Pressure Sensor Glow Plug (PSG) Volkswagen, Audi, Seat, Skoda models For Volkswagen's all new diesel engines
HY-VO chain For tansfer cases for Toyota Lexus "GX", "Land Cruiser Prado", "4Runner", "Tacoma", "FJ Cruiser" -
Eco-Launch solenoid valve GM -
Engine timing systems Volkswagen "Jetta", "Beetle" and other models designated for the U.S. market The Company produces the engine timing systems for Volkswagen's third-generation 2.0- and 1.8-liter DOHC I4 engines developed by Audi in El Salto, Mexico.

<Drivetrain Segment>
 Product Installed model
Fifth generation (GenV) electro-hydraulic actuated all-wheel drive (AWD) coupling Lamborghini's new Huracan LP610-4 sports car -
Friction plate 2014 Volkswagen "Golf", "Audi A3 e-tron" For Volkswagen's hybrid disconnecting clutch in the DQ 400e transmission
Mini direct-acting variable force solenoid (VFS) 2015 Chevrolet, Buick, GMC models For GM's global front-wheel drive 6-speed automatic transmission program (GF6)
Two-speed part-time four-wheel drive transfer case, HY-VO transfer case chain 2014 Toyota "Tundra" The Company produces the two-speed, part-time four-wheel drive transfer case at its facility in Seneca, South Carolina, U.S.A.


-The Company announced that its U.S. facilities in Frankfort, Illinois; Water Valley, Mississippi; and Ithaca, New York, received 2014 Supplier Quality Excellence Awards from General Motors. From its award-winning locations, BorgWarner supplies GM with HY-VO transmission chain (Ithaca, New York), one-way clutches for the rear-wheel drive 6-speed automatic transmission family (Frankfort, Illinois), and mini-direct acting variable force solenoids for global front-wheel drive 6-speed automatic transmissions (Water Valley, Mississippi). These components are used in a wide range of Buick, Cadillac, Chevrolet and GMC vehicles. (From a press release on November 21, 2014)

-BorgWarner Inc. received an Automotive News PACE Innovation Partnership Award for its collaboration with General Motors (GM) on the Eco-Launch solenoid valve. Several patents are pending for the innovation, and GM has already committed to using the technology on an upcoming vehicle. BorgWarner's innovation also received a 2014 Automotive News PACE Award. (From a press release on April 8, 2014)


R&D Expenditure

(in million USD)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Total 336.2 303.2 265.9
% of sales 4.0% 4.1% 3.7%

R&D Facilities

-The Company will expand its Powertrain Technical Center in Auburn Hills, Michigan, to support programs in North America and supplement its global network of technical centers. The nearly 46,000-square-foot addition will include space for program managers, sales and engineering professionals. The expansion is expected to be complete in early 2015 and support up to 200 regular full-time jobs at the BorgWarner facility. (From a press release on March 25, 2014)

Investment Activities

Capital Expenditure

(in million USD)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Total 563.0 417.8 407.4
% of sales 6.8% 5.6% 5.7%

Investment Outside U.S.A

-The Company signed an agreement with the Ninbgo government for its new plant project in Yinzhou, Ningbo. The Company is planning to invest USD 36 million to construct a plant on approximately 50,000 square meters of land. The project will be carried out in two phases. The new plant is expected to serve as BorgWarner's production base for EGR products (EGR valves, EGR coolers, and so on), high-performance ignition systems, thermostats, and secondary pumps in China. (From news releases issued by multiple sources on December 29, 2014)

-The Company announced that its production facility in Ningbo, Zhejiang Province, China, has produced more than 1.5 million exhaust gas recirculation (EGR) valves for passenger cars and commercial diesel vehicles. Starting in 2010 with the production of EGR valves and adding EGR coolers and EGR modules in 2013, BorgWarner's plant in Ningbo has been supplying several European and Chinese customers. BorgWarner expects demand to increase over the coming years and plans to produce one million EGR valves annually in Ningbo beginning in 2016. (From a press release on September 16, 2014)

-The Company announced that it has opened its new production facility in Taicang, Jiangsu Province, China. With a building area of 161,500 square feet (15,000 square meters), BorgWarner's new facility is its second turbocharger plant in China and will produce advanced turbocharging technologies for several automakers. It will employ more than 150 people by the end of 2014, and this figure is expected to rise to 500 employees by 2018. BorgWarner expects the Chinese light vehicle turbocharger market to more than double from 4.2 million units in 2014 to 8.6 million units by 2019 as emissions standards become increasingly tight. (From a press release on September 5, 2014)

-The Company announced that it has opened its new production plant in Lanheses, Viana do Castelo, Portugal. The building expands BorgWarner's production capacity to meet growing demand for several exhaust gas recirculation (EGR) technologies, such as EGR coolers and EGR tubes, as well as glow plug control modules for passenger cars and commercial vehicles. With a total facility area of 280,000 square feet (26,000 square meters), the new facility provides 50 percent more manufacturing space, than the currently rented site in Valenca and has additional space for future expansion. BorgWarner intends to complete the shift of its present production lines in Valenca to the newly inaugurated site in Viana do Castelo in early 2015. (From a press release on November 7, 2014)

-The Company plans to invest USD 9.4 million in its plant in Dixon, Illinois, USA, over the next three years. The expanded production capacity will allow BorgWarner to optimally supply several customers with environmentally friendly technologies, including exhaust gas recirculation (EGR) coolers, tubes and thermostats-key technologies that help reduce emissions and improve fuel economy for passenger cars and on- and off-road commercial diesel vehicles. The Dixon plant has a total area of 135,000 square feet and a current workforce of 210. BorgWarner expects to create 40 new jobs. (From a press release on August 14, 2014)

-The Company began producing its electronically controlled Visctronic fan drives at its new plant in Itatiba City, Brazil. By operating only when needed and precisely controlling the fan speed when engine cooling is required, BorgWarner's advanced technology provides efficient engine cooling as well as improved fuel economy and reduced emissions for trucks, buses and off-highway applications. (From a press release on May 8, 2014)

-The Company began manufacturing its advanced engine timing systems in El Salto, Mexico, providing localized production for Volkswagen's third-generation 2.0- and 1.8-liter DOHC I4 engines built at Volkswagen's new engine plant in Silao, Mexico. Developed by Audi, the gasoline engines power the Volkswagen Jetta and Beetle as well as other models designated for the U.S. market. Initially, Volkswagen is expected to build over 300,000 engines per year at its new engine plant in Mexico, with the potential for higher volumes in the future. BorgWarner also supports these Volkswagen engines with local manufacturing in Europe and Asia. (From a press release on January 22, 2014)