CHARLESTON TOWNSHIP, MI –
Next time Eaton Corp. needs to make bold organizational changes, Vehicle Group President Ken Davis said the company won’t wait for another Great Recession.
In 2009, Eaton Corp.’s Truck Group in Charleston Township and the Automotive Group in Marshall were combined into one Vehicle Group. Davis, who was president of the Eaton Corp.’s American automotive operations at the time, was promoted to president of the global, combined vehicle group in 2010.
“You wait for a major downturn to make that decision but it was a great move,” Davis said of combining the automotive groups in Southwest Michigan. “It was a lesson learned: Don’t wait to make bold moves. We realized some synergies around common customers we weren’t expecting, like taking traditional products and putting out larger versions in the truck market.”
“We were able to expand our product lineups,” Davis said. “We learned that being one unit, we’re able to better transition automated technologies and move talent, such as engineers, to both (truck and car) businesses, giving them more exposure to different parts of the company.”
The 30,000 square-foot facility near Galesburg is the vehicle group’s research and development headquarters, where engineers test transmissions for semi and medium-sized trucks in test cells, electric labs and truck garages.
Eaton is focused on power management in electric, hydraulic and mechanical power for commercial fleet vehicles and automotive cars. The combustion event that creates emissions is partly created in an engine valve and Davis prides the company on creating innovative valve technologies that help manage emissions.
By creating hollow valves, valves that operate at variable heights during an engine cycle and refined superchargers, which are used to help boost power in smaller engines, Eaton’s automotive division is providing power solutions for most major automakers.
In March, Eaton and Cummins Inc. released a new powertrain package for heavy duty trucks that uses Eaton's Fuller Advantage Series automated transmission and the new Cummin's ISX15 SmartTorgue2. The powertrain delivers 3 to 6 percent fuel economy improvements.
One of the main enhancements Eaton made with its Fuller Advantage Series transmission is the elimination of the cooler, which helps to reduce the overall package weight and improve reliability. The new transmission weighs 75 pounds less than Eaton's UltraShift PLUS LAS base model.
“Customers across the globe continue to put value in efficiency,” Davis said. “We think the cost of energy in general will go up and requirements for reduced emissions will go up. Our technology helps our customers manage that event and power. It’s key technology to help reduce emissions.”
The new Vehicle Group has come a long way since the recession, Davis said. The Cleveland-based company announced cutting 25 positions in Galesburg in January 2009 as part of a 5,200-worker reduction company wide.
In Oct. 2010, the Vehicle Group employed just over 400 people in Galesburg and had a net income of $3.6 billion. In 2012, Davis said the Vehicle Group contributed about 25 percent in revenues to the company that grossed $16.3 billion in sales in 2012.
The company now employs about 650 people near Galesburg, 230 people in Marshall and 225 people in Southfield, Mich., where Eaton’s automotive sales and innovation teams are located.
Muted growth
Davis said one of the company’s biggest challenges stems from a growing truck driver shortage. Customers who would otherwise be purchasing more fleet trucks are holding off on making purchases to analyze truck driver pools.
According to the U.S. Bureau of Labor, national demand for truck drivers is projected to rise by 330,000 jobs by 2020. In 2012, it calculated there were 1.6 million tractor-trailer and heavy-truck drivers in the United States, including 48,220 in Michigan.
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“Underlying demand should be higher and yet there’s a muted growth,” Davis said of trucking companies. “It’s interesting because truck tonnage isn’t down, you can usually correlate with tonnage and the number of trucks selling on the market. So customers are unwilling or uncertain to make purchases.”
Federal driver-safety rules that went into effect July 1 mean that truckers cannot drive more than 70 hours in seven days. Truckers had been allowed to drive 82 hours under the former rules.
“That regulatory change had an impact on various fleets, because now companies need more drivers for the same trucks,” Davis said. “We would have hoped that we would see a faster rebound in the global economy but what we continue to see is economic and regulatory uncertainty, it’s muting our customers confidence in making big orders, especially in trucks.”
Ursula Zerilli covers business for Mlive.com/Kalamazoo Gazette. Email her at uzerilli@mlive.com or follow her on twitter.