The Apprentice Looks into Schaeffler's Future

McGrath: "We recognized several years ago that the automobile was going to transform once again."

NEW YORK — Marc McGrath began his career as a co-op student clutch engineer at the Wooster, Ohio, factory of engine and chassis parts maker Schaeffler Group. On Oct. 1, he will take the title of CEO for the Americas for the company's automotive business. Knowing months in advance of succession plans and the orderly path to the future is Schaeffler's way, says McGrath, 52. The family-owned German supplier, with 2018 automotive sales of an estimated $10.1 billion, prizes long-range planning and steady management. During the Formula E electric-car race in July in Brooklyn, he spoke with News Editor Lindsay Chappell about the opposite of that — managing in the face of industry disruption and technology change. Here are edited excerpts.

Q: Why is Schaeffler involved with electric race cars at Formula E?

A: We recognized several years ago that the automobile was going to transform once again, probably into some new modes of transportation with new ways of propulsion. And the lines will become blurred between passenger cars, robocabs, shared transportation and industrial vehicles. But electrification will be one of the key drivers for all of it. And that means that Schaeffler has to start playing in the electrified space, which is what Formula E is all about.

Is it a venue for Schaeffler to prove itself?

It's everything. It's market intelligence, understanding what the best technologies in racing are and how might they translate to production. And where do you learn? You learn in competition. You learn under severe conditions.

Schaeffler traditionally has been a source of internal combustion components. At some point, the company decided to go into electric car technology. Does that make sense?

In the beginning there were internal questions about that. How big will electrification really become? But more and more automakers are coming into it. They recognize that electric powertrains are part of the future.

But Schaeffler's internal strategy has evolved, too, hasn't it?

Yes. If we were sitting here five years ago talking about electrification, we might have said that's just a niche market. But look at all the hybrids and electrified products that are coming now. We see the auto industry becoming a mobility business. Electrified vehicles are very conducive to ride-sharing, to robotaxis and to autonomous driving.

As you step into the CEO role this year, will you be expected to hit a target, where X percent of your sales will be in e-mobility?

No, I don't have a specific target. But we know that that segment of the industry will be growing and we need to be part of that growth. For the Americas, we know that vehicle sales will not increase dramatically. In order to grow here, we'll need to increase our content per vehicle. And to do that, we can't close our eyes to the new trends.

Schaeffler opened an office in Silicon Valley two years ago. Why?

There are new mobility suppliers out there, and people in the Midwest aren't even talking about what they're doing. If you're not part of that community, you won't have intel into future trends.

How have your operations in Silicon Valley changed the way you operate the business?

If you look at what team members in Silicon Valley expect, it's not really the way we've traditionally run. How they want to engage and the projects they want to work on — we have to be more innovative with our training programs, with our development programs and our training. We realize we have to evolve our human capital. We are asking, are we innovative in all parts of our business? We're going to challenge ourselves on that in the future.

Is there anything in the culture of Schaeffler, as a German company, that will help it through this new era of technology that's coming?

We have a culture of training our people internally instead of hiring them away from other companies, and that comes from our tradition of apprenticeships, or giving engineers the skills to help grow the company. That's just who we've always been.