Continental, a technology company that serves mobility of the future, develops intelligent technologies for the transport of goods and people. It serves industries across the world through five divisions: Chassis & Safety, Powertrain, Interior, Tyres, and ContiTech. In France, the company is present in 18 sites and Continental Automotive in Toulouse is its headquarters. Having been set up in 1979 this plant is celebrating its 40th anniversary this year. It was a 50:50 joint venture between Renault, a French OEM, and Bendix, an American company, to make brake systems, hydraulics and starter motor components. The company changed name and hands until it became part of Continental in 2007. Recently T Murrali of AutoParts Asia had an opportunity to visit the Toulouse plant and interact with Stefan May, CEO of Continental Automotive France and Focus Country Head of Continental in France. He said, “We have had several changes in ownership but these always led to bigger sizes with the same goal: to be on the brink of innovation. Growth can only come through quality; we are working hard continuously to keep it at the highest level. We have achieved single digit PPM, now we are looking at single incidents.” Edited excerpts:
Q: Can you tell us about the plant in Toulouse?
May: The Toulouse plant is active in making tyre monitoring devices, body controllers and other applications linked to the interior of the car. We do mainly electronics here. This plant has about 2,000 people with quite a big R&D centre catering to body controllers and vehicle interior parts, functions linked to comfort, safety and security. We have another R&D centre for powertrains and ECUs.
In January this year the company was reorganised into two in the same campus – one part focusing on powertrain and the second on other automotive technologies. We also work on the chassis here looking at safety and security; in applications we are a Tier-2 supplier. We sell electronic functions and software to several suppliers including many in Asia who do have mechanical knowhow but not electronics; we bridge that gap.
Another activity in this campus is Continental Engineering Services, selling engineering solutions to the automotive world. We also try to grow in other industrial areas by selling engineering services, mainly to the aeronautics sector. We not only have the complete supply chain for the aeronautics industry here but also for the European Space Agency; the French Space Agency has a major tech centre here in Toulouse. These market needs are also met by Continental in order to diversify our portfolio.
Q: There are several activities at this plant – right from making components for car interiors to R&D for powertrains, chassis, safety and security and engineering services. Is this all-in-one-campus unique to the Toulouse plant?
May: It’s not really unique but there are not that many centres like this within the group. Regensburg, a German site, is similar but bigger. Then there is Schwalbach, yet another German site, Auburn Hills in the US, and Shanghai in China.
When exposed to major changes in our company history – e.g. changes of ownership, one positive is that we were always able to keep track when exposed to such strong changes. In the latest one 12 years ago, when this plant was acquired by Continental, we saw the opportunity to have a variety of technologies in one campus. The question was, is it okay to stay with one expertise for the automotive industry? The answer was in the negative. What this campus brought with it was the possibility to propose a variety of genuine development opportunities for the young people for the present and the future. We are able to provide real career paths to our employees in the long-term and keep their innovation spirit going. Cross-functional opportunities help think out-of-the-box. Another advantage is that the French State funds certain R&D activities; incentives are given to help innovation and attract new projects.
Q: Is this the reason to have R&D for Interior and Powertrain on one campus?
May: Yes, it is part of the equation.
Q: What kind of benefits do these cross-functional teams bring to each division?
May: Let me give you two examples. When Powertrain people switch over to Interior, the feedback I get is that they bring in Systems Engineering to the mix; this helps as Powertrain has been a system-oriented business for the last 25 years since it has electronics with software, actuators, sensors, etc. This has also been the case with Interior over the last 10 years as system knowledge contributes to enrichment of the segment.
On the other hand Powertrain people have to go deep into the systems approach to tackle complexity. They set rules regarding the generic principles on how a project should be run, how to standardise the PCB and populate it with our components; the same is done in the areas of electronics and software. The disadvantage is that at a certain stage you lose agility. So what the Interior people bring to the Powertrain world is agility. Take for example multimedia. Who do we compete with? It’s with the people in the consumer business where there is change every six months, with new technologies and upgrades coming up. So the enrichment is on both sides, agility when needed with a structured and organised approach representing what we stand for: safety in automobiles. However, we need to open up to more agility.
Q: Going forward, how would it help both the divisions, as change is the biggest constant in the automotive industry? What are the sweet spots you see? Has this R&D centre evolved to a Centre of Excellence for any particular aspect of innovation?
May: Regarding sweet spots what we do see is that the automotive industry cannot continue to have decentralised architecture with many small intelligences like electronics and software everywhere in the car. It prevents us from doing upgrades and updates – as Tesla has shown – to come up with different structural designs that lead to high-performance computing. In order to do this you need to address not only the function but the complete car; that’s the sweet spot. The fact of having all the bricks of technology already on-site will certainly help and enable us to address such issues quickly.
Regarding this centre evolving to a Centre of Excellence, I hope it does. I think that the French naturally do have a real asset when it comes to systems engineering. They are very rational in their approach when it comes to Physics and Chemistry and elite engineering schools mean that you get highly skilled people in the labour market mainly on the systems approach. Centre of Excellence means keeping in mind the entire system and not just the components segment.
Q: How would innovation and the sweet spot, as mentioned, help commercialise products for the Continental Group? What kind of products could you make?
May: First and foremost, high performance computers; nowadays there are around 1,500 components in a PCB; with high performance computing that figure could go up to 8,000 or so, increasing the computing power four-fold. This would entail many technical challenges with respect to subjects like electro-magnetic compatibility or heat dissipation, etc. Space in a car is at a premium today and fitting in all systems properly is the key. The systems approach will help us upgrade the content of the products we manufacture in the Toulouse plant. A technical challenge is always an opportunity to show our customers how prepared we are.
Q: According to experts, with hybrids the current 48V technology may settle at 60V. Do you see a sweet spot again in this?
May: Definitely, yes. For powertrains, in addition to Toulouse plant, we have two satellite plants 80 km from here with around 700 employees, one of which is dedicated to electronics or ECUs and the other to sensors. We are active on the 48V and do have a first project with Renault with this technology. Emission standards in the EU need to come down; 95 gm/km is the target set by the European Commission. We cannot reach that until we massively go in for hybrids. The first affordable hybrid solution to bring emissions down is 48V.
Q: What are your initiatives to increase the content per vehicle?
May: With regard to content enrichment, we as a group certainly see opportunities in autonomous vehicles: increasing sensors, cameras and things like that. Within Continental Engineering Services we do have a group of around 50 people working on cameras specifically.
We feel the connected car clearly represents an opportunity to bring in new and additional features; it’s a bit less in the changeover from IC engines to hybrid, electric or fuel-cell cars. So you either add new technology or replace the current know-how with something better. The diesel experts will have to change and adopt the new systems. The switchover would be a challenge for the whole industry. With new features like ADAS coming up we could even feed service businesses based on data. Continental is well prepared for this. A subsidiary created in 2016 called Continental Digital Services France (CDSF) addresses all the questions around ITS – Intelligent Transportation Systems. We want to develop expertise on e-horizon where the vehicle has an upstream and downstream link with the cloud. Embedded electronics would be in use but you will have to address the communication, content, data fusion and many other things linked to the vehicle. We have a group of 170 here in Toulouse taking care of all these. Their background is not only automotive but includes telecommunication, IT Services, R&D, big data treatment, etc.
Q: Was it intentional to choose people from other areas than automotive?
May: Yes; of the 170 mentioned, only 15 have an automotive background while all the others are from different areas.
Q: Was this plant first owned by Siemens VDO?
MAY: Yes, like in India. In France the automotive area has existed for 75 years but that is the plant south of Paris. The Toulouse plant was set up in 1979 as a 50:50 joint venture between Renault, a French OEM, and Bendix, an American company, to make brake systems, hydraulics and starter motor components. Then it was called Renix. It came up here since Toulouse was identified as the place for electronics engineering because of the aerospace industry. It was a time when the auto industry didn’t have a clue about electronics. But it soon attracted people from the space sector to automotive. Unfortunately, the JV did not succeed and was withdrawn in 1985 leaving Bendix by itself. The company was later sold to Siemens in 1988 which correctly foresaw the advent of electronics in a big way in the automotive industry. We were part of Siemens VDO from 1988 to 2007, when it joined Continental. There had been continual changes in ownership but they always led to bigger sizes, always with the same goal: to be on the brink of innovation.
Q: Which are the customers that this plant supports?
May: To a large extent the national OEMs as Peugeot-Citroen of the PSA group and Renault / Nissan/ Mitsubishi, as part of the alliance. We serve Ford; the Volkswagen group is served by the three plants in this region. Our tyre monitoring system serves Japanese customers; BMW is another valued customer. So the customer profile includes 50 percent of French OEMs with the rest being high-profile names from the industry.
Q: Do you supply to the aviation sector from here?
May: We do provide some small support to aviation, not with Airbus directly but with their sub-suppliers, helping them to improve pilot monitoring for helicopters for instance.
Q: What are your short-term and long-term plans?
May: Growth is a must; we always need to keep that in mind. Growth can only come through quality; we are working hard continuously to keep it at the highest level. We have achieved single digit PPM, now we are looking at single incidents. This plant contributes in ensuring high quality to the Continental group; we need to be always on the positive side of the equation. We are in a high-cost country unlike some other areas of the world where wages are lower; all the more reason for us to maintain high quality at all times. We have the expertise to ensure this. High performance computing with bigger devices produced to increase sales is all part of this journey towards growth.