Dr. Konstantin Sauer is a member of the Executive Board of ZF Friedrichshafen AG. Dr. Sauer began his career as a consultant at intra management consulting in Düsseldorf in the 1980s and as a doctoral student in the central purchasing department at Daimler-Benz in Stuttgart. In 1990, he changed to ZF Friedrichshafen, where he held various management positions. In 2007, he became a member of the Executive Board responsible for Finance, Controlling, Informatics, Materials Management, Legal and Insurance in the Car Chassis Technology Division in Dielingen, and has been a member of the Board of Management and CFO since 2010.
How do you see the future of mobility, in the context of climate protection, resources and economic viability?
Sauer: Megatrends such as digitization are changing the mobility industry even faster than expected. This requires us, as a technology company, to develop new products faster and work together more efficiently. We have developed our ‘Next Generation Mobility’ strategy to achieve this. It serves as the basis for all business decisions and defines our goal of offering clean and safe mobility: Automated, convenient and affordable, for everyone, anywhere. We are active in four areas of technology – Vehicle Motion Control, Integrated Safety, Electromobility and Automated Driving. Digitization and the Internet of Things (IoT) enable us to use our technologies not only in all mobility applications, but also in the field of industrial technology.
How will the market develop in the future? Do you think California, Singapore, Tel Aviv and Shenzhen have outperformed Europe in terms of developing new technologies such as autonomous driving? And how is ZF positioning itself for the market of the future?
Sauer: In the future, mobility will be much more convenient, more individualized, more sustainable and, above all, more efficient than urban mobility in the early 21st century. The ‘modal split’ – switching between different mobility solutions – will probably become the hallmark of the new urban mobility. In some areas, the mobility of the future will undergo rapid change. Our strategic focus on ‘Next Generation Mobility’ captures not only existing private means of transport and passenger and freight transport, but also extends to new forms of mobility. ZF is also well equipped to serve emerging new mobility customers with a comprehensive range of skills and expertise. The greatest success will be enjoyed by those who identify future trends early, anticipate solutions, and seize opportunities to take advantage of disruptive change in the automotive industry – whether in Silicon Valley, Tel Aviv or in the heart of Europe. The decisive factors are innovative strength and global presence.
What is your highest priority for the transformation of ZF? And how do you create a sustainable transformation process in the company?
Sauer: We are constantly working to further improve our cost situation, processes and structures, and to increase our competitiveness. We are not skimping on the future, and are maintaining high levels of funding for research and development. We also involve our team in the process, communicate transparently, and seek solutions in collaboration with our employees. In this way, we are ensuring our company’s lasting success.
How does the transformation impact organizational culture, employees, and corporate management, both locally and globally?
Sauer: Interdisciplinary cooperation is becoming increasingly important, as many processes and development cycles are now much faster than they used to be. We can only cope with this if we work even more closely together in research and development and share our knowledge within the company to an even greater extent, so that other departments also benefit from it and we avoid duplication of effort. Agile methods and approaches to work, as well as agile management concepts, will also become increasingly established in the course of the transformation.
Klaus Stratmann of Handelsblatt wrote an article a few weeks ago arguing that e-cars are not the only way to achieve climate neutrality and appealing to politicians not to give them exclusive backing through generous subsidies and regulations. What is your view on this? And what is ZF’s position on e-mobility, hydrogen, etc.?
Sauer: ZF is prepared for the transformation and accepts the challenges presented by climate protection. Success requires regulation that promotes technology and that explores every option to reduce emissions. We need to take this technology-friendly approach simply because we deliver what our customers order. That’s why, in addition to purely electric drives, we also have plug-in hybrid drives in our product range. These help our customers to transition from conventional to purely electric drives at a pace that exactly matches that, dictated by car buyers through their purchasing behavior. We want to pull out all the stops – in part to ensure that individual mobility remains affordable. The fuel cell is a particularly cost-efficient drive concept for commercial vehicles, because haulage companies prefer to transport goods rather than heavy battery packs. Existing fleets mean that we also need e-fuels, because vehicles with internal combustion engines will not disappear from the roads overnight. And we need completely new and exciting mobility concepts as well. If we take a broad technological approach, and if politicians and engineers work together to develop solutions, there is a greater chance that the transformation of the automotive industry will be a success not only in terms of climate and industrial policy, but also in sociopolitical terms.
The Fridays for Future movement shows that young people want to take a different approach to living, working and mobility. What changes in demand do we need to prepare for?
Sauer: The changing demand behavior of young people is a major driver of disruptive change in our industry. Technological innovations are no longer being driven by the usual market leaders, but by new players. Products and technologies as well as customer structures and business models – in other words, allaspects of the business– are changing at a furious pace. Private passenger transport is being complemented by new mobility concepts such as autonomous people movers and robotaxis, which offer mobility on demand. Autonomous ride-hailing concepts will also meet a large share of mobility needs, especially in cities. We have prepared for this changed user behavior and have greatly expanded activities in the area of new mobility concepts in recent years. One example is 2getthere, a subsidiary of ZF, which already has a lot of experience with autonomous shuttles and through which we have direct market access.
Labor costs are certainly a key factor in ensuring industrial added value and employment at a production site. ZF operates globally. How do labor costs compare to other European countries and to what extent can they also be seen as a competitive advantage for Asia?
Sauer: Labor costs are an important factor in international competition, but they are not the sole factor in deciding for or against a production site. Which sites manufacture which products in future will depend on numerous other factors, such as production expertise, the competitiveness of these sites, and the location of customers demanding these products.
What does ZF’s annual report look like for 2020, a year that was undoubtedly significantly impacted by the coronavirus pandemic? Was business in China a lifesaver, as it was the case for other companies?
Sauer: The pandemic has had a significant impact on ZF business and sales, particularly due to the virtual shutdown of global production and the general lockdown in March and April. In the first half of last year, ZF Group sales were down more than a quarter from the prior year. In the meantime, capacity utilization in a number of areas of our company has improved significantly – in part due to the positive development in the Chinese market and a noticeable recovery in the US market. In the end, the operating result was actually positive – but the bottom line was down significantly. We will present details of the 2020 financial statements at our annual balance sheet press conference on March 18.
What is your business forecast for 2021? What share of sales will the internal combustion engine business continue to account for, and what share will electromobility have?
Sauer: I cannot give you a business forecast for the current year until the annual press conference. But as far as the share of sales is concerned: If you look at total sales over the past year, less than 27 percent of our Group car and truck sales were internal combustion engine-related – with a continuing downward trend. However, this includes our very successful plug-in hybrid transmissions, which can also be driven electrically. We started on the road to e-mobility almost 15 years ago and are continuing it with our ‘Next Generation Mobility’ strategy.