THE HANSEN REPORT ON AUTOMOTIVE ELECTRONICS. A Business and Technology Newsletter

VOL. 14, NO. 8◆◆ RYE, NH USA OCTOBER 2001

Electrical Drowsy-Driver Warning The National Highway Traffic Safety tects driver alertness. The survey also as- Engineering at Risk Administration is aggressively developing sessed drivers’ comfort level with having a a drowsy-driver detection and warning camera-based monitoring system in their As the Big 3 struggle to make them- system for commercial trucks. That work, vehicles: 18% responded they were “very selves more competitive, some in the in- including forecasting the safety benefits of comfortable;” 49% were “somewhat com- dustry worry that electrical and software drowsy-driving monitors, should be com- fortable.” Another part of the Emerging engineering competence in the United pleted by 2004 and could lead to signifi- Technologies Study gave consumers a list States is in decline, or at least not up to cant adoption of the devices by the of ten possible features (each at a cost of the tasks before it, especially as automo- trucking industry. If drowsy-driver warn- at least $100) that could be included in a tive electronics increases in complexity. ing systems are shown to save lives, reduce hypothetical vehicle personalization and Faced with low profits and higher costs, accidents and reduce injuries, they could monitoring system. The respondents were both GM and Ford shed their in-house significantly move into passenger vehicles asked to select which options they would electronics suppliers: GM got rid of as well. be interested in. A driver-alertness moni- Delphi Automotive Systems, including Consumers are showing interest, ac- tor was the third most popular feature. Delco Electronics, in 1999, and in the cording to J.D. Power and Associates’ (Personalized vehicle settings ranked first, summer of 2000 Ford spun off Visteon. 2001 Wave I Emerging Technologies followed by authorization for entry into GM, Ford and are taking addi- Study. That survey revealed a surprising the vehicle.) tional measures to lower costs. They are 66% of new vehicle owners/lessees would Drowsy-driving monitors have been laying off workers, promoting early retire- be “definitely or probably interested” in around at least since the mid-nineties ment (even among seasoned electrical owning a vehicle with a system that de- when a number of Japanese firms made engineers), and they are handing off a their developments public. In 1995, Drowsy-Driving Facts greater share of engineering work to key road tested a drowsy warning de- suppliers. ◆ According to a National Sleep Foundation vice that monitored the driver’s eye move- Had electrical and electronics systems survey announced in September 2001, ment and frequency of blinking. Nissan remained relatively uncomplicated, one-half of all American adults, also showed a drowsy/inattentive warning carmakers might have found it easier to particularly young males, admitted to system on a concept vehicle at the 2000 operate with limited engineering capabil- driving drowsy in the past year. Motor Show. In 1997, ity. But automotive engineering is getting ◆ In the , more than 100,000 Electric was developing a system that kept more difficult, as sophisticated E/E fea- crashes each year are tied to drowsy track of eye closures. continues to tures are added to vehicles and more soft- driving, says NHTSA (the National research drowsiness monitors, but has ware code is required. Systems integration Highway Traffic Safety Administration). nothing in production today. In Europe in continues, and electronic control units are ◆ NHTSA says that each year roughly 1,550 1995, announced that it had de- becoming more interdependent as they people are killed in drowsy-related veloped a monitor that used an infrared are connected to multiple communica- crashes and 71,000 are injured. camera to keep track of the length of time tions networks. ◆ Drowsy drivers are often unaware of their eyelids are closed. Ben Baker, a top electrical engineer at deteriorating condition. Even when they actually put a ‘Wandering Sens- , and Tim Donovan, a top are aware, they often keep driving. ing Device’ in some production vehicles electrical engineer with Ford, confirmed ◆ At the National Truck Safety Summit in . Honda’s approach, introduced in that there is a growing trend to have sup- (1995), drowsiness was named the the 1998 Accord as a factory-installed op- pliers do more of the engineering work. number-one truck-driving problem. tion, uses the navigation system’s gyro Explained Mr. Baker: “We [at GM] have ◆ As cited by the Insurance Institute for sensor and speed sensors to detect any ab- tried hard to push a lot of engineering Highway Safety, FMCSA (Federal Motor errant zigzag driving pattern or wandering work down to our first-tier suppliers. That Carrier Safety Administration) estimates between lane markers, assuming such frees us to do more systems integration that fatigue contributes to 15 percent of driving patterns indicate drowsiness or and to work more on strategic technolo- all fatal and nonfatal injury crashes inattention. The driver is alerted by an gies.” Mr. Donovan concurred, “We have involving large trucks. FMCSA is part of audio alarm and a warning on the naviga- maintained technical specialists in-house the U.S. Department of Transportation. tion display. Turn to Engineering, page 8 Turn to Drowsy, page 3 Delphi Performs Poorly Since its spin-off from General Motors, price, $10.59 at day’s end, September 19, merchant market as fast as it lose in February 1999 when it became a pub- 2001. With 560 million shares outstand- General Motors’ business. licly traded company, Delphi Automotive ing, that put Delphi’s total market value Even Delphi’s Electronics and Mobile Systems Corporation has not performed at just $5.9 billion dollars, only one-fifth Communications sector (formerly Delphi well. In the first half of 2001 Delphi suf- of sales. Delphi’s stock price was $19 when Delco Electronics) is losing market share. fered a net loss of $265 million as sales it was first offered to the public in Febru- While the worldwide demand for automo- declined to $13.5 billion, compared with ary 1999, and it reached a 52-week low of tive electronics grew 6.7% per year be- $15.6 billion in the first half of 2000. $10.50 back in December 2000, well be- tween 1995 and 2000, according to The From 1998 through 2000, Delphi’s annual fore the September 11 World Trade Cen- Freedonia Group, Delphi’s Electronics sales have grown slowly, from $28.5 bil- ter bombing and the subsequent stock sector sales was totally flat. In 2000, the lion in 1998 to $29.1 billion, a 1.2% an- losses. Electronics sector had sales of $5.3 billion nual increase. As of June 30, 2001, net Delphi’s stock price is likely to go down (the same as in 1997) and operating in- liquidity, measured as cash and cash even further. The company has already come of $470 million, down 18.5% from equivalents less total debt was minus $2.7 stated that sales will decline at least by $577 million in 1999. billion. It appears that Delphi will not 10% in 2001. Sales for the year 2002 and To show investors its success in one up- meet its goal of 5% profit margin by 2002. beyond won’t get much better, unless and-coming market, Delphi has been Last December, Delphi decided it production suddenly takes off. Putting breaking out sales for its Mobile Multime- needed to fix, close or sell businesses that even more pressure on Delphi is the up- dia business from the Electronics sector in 2000 generated $4 billion to $5 billion coming expiration of an agreement with results. Mobile Multimedia develops prod- in sales. As a part of that portfolio review, General Motors that gave Delphi prefer- ucts that bring the Internet, telematics, Delphi is in the process of weeding out ential treatment over its competitors. entertainment and mobile communica- unpromising businesses, which together When that agreement expires on January tions technologies into vehicles. While account for $900 million in sales. Sched- 1, 2002, Delphi will have to bid for GM Mobile Multimedia sales have multiplied uled to be completed by March 31, 2002, business on the same basis as its competi- from $40 million in 1999 to $322 million this restructuring will eliminate 11,500 tors. The playing field will finally be level, in 2000, the business had an operating positions, worldwide. Nine plants, two of and Delphi will have to learn how to loss of $23 million in 2000. In the first- them in the U.S., will be sold, closed or profit even as its business with General half of 2001, Mobile Multimedia had consolidated. (During the period from Motors declines. In 2000, General Motors $213 million in sales, with a $10 million 1992 to the spin-off from GM in 1999, accounted for 71% of Delphi’s sales; GM operating loss. Slow to emerge, the Delphi sold businesses representing over accounted for 59% of telematics market isn’t likely to blossom $6 billion in sales.) Delphi’s total sales. It is unlikely that until 2004 or 2005. ◆ Given all the bad news, it’s no wonder Delphi will be able to pick up enough that Delphi’s stock is trading at such a low market share from the more competitive

THE HANSEN REPORT ON 3.2 Million VICS Units in Use in Japan AUTOMOTIVE ELECTRONICS Launched in 1996 in Tokyo, VICS (Vehicle tion equipment sold in Japan today is VICS- © 2001 Paul Hansen Associates, 11 Went- Information and Communication Service) compatible, and the free service continues to worth Road, Rye, NH 03870, USA; Tele- now provides real-time traffic information to grow in popularity. phone: 603-431-5859. Fax: 603-431-5791. drivers in Japan’s major cities. Most naviga- E-mail: [email protected]. All rights Cumulative Car Navigation reserved. Materials may not be reproduced Shipments and VICS Units in Japan March Cumulative Cumulative in any form without written permission. The in millions of units Hansen Report on Automotive Electronics is 8 Navigation VICS Units Units published 10 times a year, monthly; July/ 7 Navigation Shipments 1993 80,000 0 August and December/January are com- Cumulative Total 1994 160,000 0 bined issues. The annual subscription rate is 6 3/97 to 3/01 $617 (North America), $657 (elsewhere). Annual Growth: 39% 1995 490,000 0 5 VICS Units 1996 1,106,391 0 Back issues are available for $45 each; see Cumulative Total 1997 1,902,255 128,482 our online index at www.hansenreport.com. 4 3/97 to 3/01 1998 2,796,199 442,492 Paul Hansen Associates is a strategy and Annual Growth: 115% 3 1999 3,931,365 1,019,659 market research firm consulting to the elec- 2000 5,352,386 1,815,431 tronics industry. 2 2001 7,200,325 2,804,190 Publisher/Editor Paul Hansen 1 June 01 7,600,000 3,170,000 Senior Editor Heather Parker Managing Editor/ Brianne Wolfe 0 Source: Japan Ministry of Land, Infrastructure and Circulation Manager 3/93 3/94 3/95 3/96 3/97 3/98 3/99 3/00 3/01 6/01 Transport, Road Bureau; VICS Center, Tokyo ISSN 1040-1105

Page 2, October 2001 The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com Drowsy... Continued from page 1 Suppliers in the U.S. have also shown then had the University of Pennsylvania mize curves and keep their vehicles safely interest. In 1999 TRW Automotive Elec- conduct double-blind laboratory tests of on the road. tronics and Biosys () collaborated each technology against one of the best “The magic in the PERCLOS monitor to develop a drowsy warning system based standards for measuring fatigue, the psy- is in the way the face is illuminated by on Biosys’ technology. Johnson Controls chomotor vigilance test or PVT. infrared light,” said Dr. Grace. “Our and Circadian Technologies (Cambridge, In the laboratory PVT, people were marching orders from NHTSA were to Massachusetts) developed a drowsiness kept awake for 42 hours and every two make a device that works at night.” The monitor that measures head movements hours they were given a battery of tests PERCLOS monitor does—by using two associated with drowsiness. that measured performance at various different frequencies of IR illumination. Johns Hopkins University’s Applied stages of sleep deprivation. In the test, The first video camera picture is acquired Physics Lab is working on a drowsy detec- people were asked to respond as quickly as using infrared illumination of 850 nm (na- tion system that uses low-power Doppler they could to a light turned on and off nometers), which produces the “red eye” radar. The product is small enough to be roughly once every ten seconds, but ran- effect, that is, a distinct glowing of the mounted in an overhead panel and mea- domized over a period of 20 minutes. Over driver’s pupils. The second image is illu- sures eye-blink frequency and duration, time, people tended to respond more minated with a 950 nm source, which pro- eyelid movement and general fidgeting. slowly, a sure sign of loss of attention. duces an image that is identical to the One of the technologies tested, a first, except the pupils are dark. A third PERCLOS Method PERCLOS (percent closure) monitor, image calculates the difference between In the United States, drowsy-driver which keeps track of the percentage of the two images, enhancing the bright-eye warning systems have been getting a big time the eyes are closed during a specified effect, while diminishing other bright boost from NHTSA, which could spend a period, correlated almost perfectly with lights, for example, headlamp reflections few million dollars before it is finished the PVT analysis. “PERCLOS was able to on the driver’s eyeglasses. The two frames developing technology and determining, predict the PVT response times to about are shot within 20 milliseconds, and after validating and analyzing the safety ben- the 90% level,” said Carnegie Mellon re- a third of a second, the process repeats. efits of such technology. NHTSA has searcher Dr. Richard Grace, a senior sys- If drowsiness is detected, a gauge shows done a number of studies relating eye clo- tems scientist. “The next-best technique the driver the level of fatigue and an au- sure with fatigue and has already outfitted had only a 60% prediction rate.” dible alarm is sounded. The warning sys- a number of trucks with drowsy monitors Carnegie Mellon researchers ruled out tem is designed to be installed on the for field testing. lane wandering as an indicator of fatigue dashboard, just to the right of the steering NHTSA hired Carnegie Mellon among truck drivers operating at night. wheel. University’s Robotics Institute to do much Dr. Grace: “We had a problem with per- Given the success of the PERCLOS of the research, with additional funding formance-based measures (lane-keeping monitor tests, Carnegie Mellon had a coming from the Federal Motor Carrier and steering-wheel monitors) because number of drowsy-driver monitors built Safety Administration. Carnegie Mellon’s truck drivers perform differently late at for actual field testing. DaimlerChrysler assignment was to pick the most appropri- night than do car drivers. Truck drivers purchased a system about one month ate drowsy-driver technology and develop don’t respect lane barriers even when ago. For more information about the a vehicle-based detection and warning they’re wide awake.” Since there is much PERCLOS monitor, or to purchase system. Carnegie Mellon researchers se- less traffic, truck drivers tend to straddle samples of the device, contact Dr. Richard lected six candidate technologies and lanes, using the whole highway to - Grace, [email protected]. ◆ Electrical/Electronics Recalls If a vehicle or any item of motor vehicle equip- amplifiers mounted behind the rear seat, the tran- tana, Pontiac Transport and Oldsmobile Silhouette, ment is shown to have a safety-related defect or is sistor in the speaker amplifier could overheat, re- from MY 1997 to 2001. found to be in violation of a federal motor vehicle sulting in smoke or possibly a fire. Ford has recalled more than 1.1 million MY safety standard, a safety recall can be ordered by BMW recalled 17,000 M3s, MY 1997-1999, be- 1999 – 2001 Windstars, Mercury Cougars, Con- the manufacturer or NHTSA (National Highway cause the side system is unduly sensitive to tours and Mystiques due to fires in wiper motors Traffic Safety Administration). NHTSA monitors all non-crash impacts, such as hitting a large pothole and climate control systems. recalls. The following electrical or electronics- or curb, which can cause unintentional deployment. Honda recalled 10,600 MY 2002 TLs to replace related recalls, issued from November 1999 to Dealers will reprogram the central computer control window-lift controllers that are associated with the September 2001, are a small sample of the total. module to correct performance. power-up feature. The window-lift mechanism Motors recalled 16,231 MY 2001 Optimas In 2000, General Motors decided to recall about could either fail outright or fail to automatically to check the door wiring harness. Misrouted wiring 225,000 MY1999 Cadillac DeVilles to replace crash reverse. in the door could lead to damaged wires, which sensor modules that could cause the side In September 2001, Chrysler Truck recalled could prevent the side airbags from deploying. to deploy for no good reason. GM also recalled the MY 2002 PT Cruiser for a software error in the Filed in February 2001, Honda recalled 47,158 477,011 equipped with passenger-side instrument cluster microprocessor. The error could Legends, MY 1991-1992, because in cer- power sliding doors that close but may not latch; make gauges, illumination and warning lamps in- tain and coupe models equipped with a models included Chevrolet Venture, Pontiac Mon- operative. ◆ Bose audio system that has separate speaker

The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com October 2001, Page 3 The Company Profile... Unisia JECS

Thumbnail Sketch Unisia JECS Non-Consolidated Sales Unisia JECS by Fiscal Year* in ¥ Millions ($ Millions) Sales by Product Line Headquarters: 1370 Onna, Atsugi-shi, Kanagawa-ken 243-8510 Japan; FY 1997 to FY 2000* FY 2000 Consolidated Sales: phone 81 46 225 8025; fax 81 46 223 1177; Annual Growth: –5.6% ¥195.5 billion ($1.64 billion) www.unisiajecs.co.jp Others, 4.4% Brake, 4.1% FY 2000* Sales (non-consolidated): ¥175,471 million ($1,474.5 million), of which Steering, Engine, 18.3% 20.8% ¥17,200 million ($144.5 million) is sales from 208,792 185,019 185,640 175,471 products that are under license from Bosch (1,754.6) (1,554.8) (1,560.0) (1,474.6) Suspen- FY 2000 Operating Profit: ¥2,501 million sion, 8.4% ($21 million), or 1.4% of sales Drivetrain, FY 2000 Net Income: ¥2,727 million ($23 1997 1998 1999 2000 14.2% million), or 1.6% of sales Powertrain Control, 29.8% Automotive Products (42% of total sales): Net Income Mainly components and systems for engine 1997 ¥1,161 million ($9.8 million) control, valve-timing control, as well as 1998 – ¥1,168 ($9.8 million loss) Brief Corporate History components and systems for drivetrains, 1999 – ¥13,965 ($117.4 million loss)** ◆ In 1956, Atsugi Motor Parts Co. was suspensions, steering and brakes 2000 ¥2,727 ($23 million) established, and shares listed on the Tokyo Top Customers: 63.7% of shipments go to Stock Exchange. st Nissan Motor Co. *Fiscal year ends on March 31 in the next calendar year. ◆ In 1972, Japan Electronic Control **Loss is the result of the Nissan restructuring plan, Ownership: Nissan Motor Co., 25.3%; which called for a 29% reduction in costs. Most expenses Systems Co. (JECS) was established as a Ltd., 16.7%; GmbH, were associated with special retirement allowances. of Robert Bosch GmbH, 10.1%; Bosch and Hitachi have representa- Nissan Motor Co. and Corporation. tives on the Unisia JECS Board of Directors. The company, with manufacturing fa- ◆ In 1988, Automotive Electronic Control Shareholders: As of March 31, 2001, there cilities in North America and Japan, real- Systems, Inc. (AUTECS) was incorporated were 8,538 shareholders, a decrease of 220 izes that carmakers are global, so Unisia as the U.S. operation; ownership was from the end of the previous term. JECS uses ZF Lenksystems GmbH (50 –50 Robert Bosch with 51% and JECS with R&D: 6.24% of consolidated sales JV of Robert Bosch and ZF) and 49%. Employees: 4,904, a decrease of 1,117 Kolbenschmidt Pierburg AG for European ◆ In 1989, Atsugi Motor Parts Co. was from the previous year; the number of production of some of its products. Unisia renamed Atsugi Unisia Corporation. employees decreased largely because of JECS will also look for other companies to ◆ In 1990, Unisia USA was incorporated. normal retirement without replacement and form alliances with in order to pick up ◆ In 1993, Atsugi Unisia Corporation voluntary retirement encouraged by an early manufacturing capability in Europe. merged with Japan Electronic Control retirement program. The company has 11 overseas subsid- Systems Co. and renamed itself Unisia JECS Corporation. *Fiscal year 2000 ended on March 31, 2001. iaries; most serve both automotive and non-automotive activities, and five make ◆ In 2000, Unisia USA became Unisia Background mostly automotive electrical and electron- North America, and Unisia JECS added the While Unisia JECS is a leading auto- ics parts or systems. (See table on page 7.) name “Unisia” to the names of all subsidiary motive component and systems supplier In addition, the company has overseas companies to raise corporate awareness, worldwide—42% of total sales is automo- administrative offices for sales and mar- facilitate recognition and reinforce the unity tive—the company also makes precision keting in the U.S., the U.K., Korea and of the group. machinery, computer software, sporting Belgium. There are 11 manufacturing ◆ In 2000, Unisia JECS agreed to set up equipment and medical equipment. In plants in Japan, all make materials and a JV called Valeo Unisia Transmissions K.K; addition, the company runs a number of parts used in the , as Valeo is the majority shareholder with a 66% services, among which are insurance; se- well as some parts for other Unisia JECS stake; Unisia JECS transferred its clutch curity guard; rental of cargo containers; businesses. business to Valeo. civil, building and waterworks construc- ◆ In April 2001, Unisia JECS and Bosch tion; businesses related to translation and Financial Fallout from Braking Systems Co. established Unisia interpretation; and real estate leasing, Nissan Restructuring JKC Steering Systems Co. an 80%—20% brokerage and management. The In 1999, Renault bought 36% of joint venture, to develop, manufacture and company’s consolidated base had sales of Nissan Motor Co. and , who sell hydraulic and electric ¥195.5 billion ($1.64 billion). joined Renault in 1996 and served as ex- systems for passenger and trucks.

Page 4, October 2001 The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com The Company Profile Continued

Unisia North America AUTECS Thumbnail Sketch AUTECS Sales by Product Thumbnail Sketch 2000 Sales: $115.9 million Headquarters: AUTECS (Automotive (formerly Unisia JECS USA) Electronic Control Systems), Highway 81 at Throttle chambers, 17% Headquarters: 25775 Meadowbrook Road, I-85, Anderson, South Carolina Novi, Michigan; phone: 248-697-0000; fax: Hot-film airflow 2000 AUTECS Sales: $115.9 million Engine 248-697-0002; www.unisia-na.com meters, 9% 2001 AUTECS Sales: $106.7 million control FY 2000 North American Sales: Unisia (estimated) units, Airflow meters, North America: ¥501 million ($4.2 million); 53% 3% Employees: 296 in 2000, 250 in 2001 Unisia of Georgia Corporation ¥1,269 billion Major Products: Electronic control units ($10.7 million) Automatic transmis- Ownership: Bosch has 51% of the com- Products: Unisia North America: Marketing, sion control units, 18% pany; Unisia JECS, 49%. sales and quality assurance in N.A.; R&D for VTC (valve timing controls), water pumps Unisia JECS’ Strategy to In the future, Unisia JECS will be and oil pumps. Regain Profitability challenged to perform up to par with the Unisia of Georgia Corporation: Manufactur- To cope with Nissan’s demands for cost world’s best suppliers. In the past, Unisia ing and sales of purge control valves, crank reductions, Unisia JECS has prioritized its JECS has had preferential treatment from angle sensors (Hall) and VTCs. automotive products, sold its clutch busi- Nissan. For example, the carmaker used to Employees: Unisia of North America: 21; ness, acquired a die-cast maker to give Unisia JECS “information about Unisia of Georgia Corporation: 70 strengthen basic technologies and is relo- specifications, target costs and timing ... cating some domestic production sites. to develop our products earlier than oth- ecutive vice president until June 1999, The company intends to expand its cus- ers,” the company noted in a recent letter became chief operating officer of Nissan. tomer base worldwide and sell more inte- to The Hansen Report. That is changing. On October 18, 1999, Mr. Ghosn an- grated systems. While 75.5% of total Nissan suppliers will have no better access nounced a huge restructuring plan for shipments went to Nissan in 1996, cur- than Renault’s traditional suppliers to the Nissan, including the reduction of the rently just 63.7% do, and Unisia JECS first shared Nissan-Renault platform for number of keiretsu companies tied by expects that only 55% will go to Nissan the and the , cross stock-sharing from 1,400 to just four. five years from now. due in 2003. To be profitable, Unisia Selling off the stock Nissan currently held In FY 2000, product lines increasing JECS feels it must market more products in its keiretsu companies would generate their sales in Asian markets were ABS, globally, yet as Unisia JECS observed in much-needed cash. While some Unisia valve timing control systems, power-steer- its annual report, “There will be continu- JECS stock went to Hitachi in 1999, ing gears and in North America, fuel ing severe global-scale competition for Unisia JECS is still not certain whether pumps. However, total FY 2000 sales de- survival in the automobile and automo- Nissan will sell more shares of the com- creased by 5.5%, due largely to the trans- tive parts industries.” pany in the future. fer of drivetrain products (clutches and Continued on following page. Among his most painful fixes, Mr. flexible flywheels) to Valeo in April 2000. Ghosn has ordered a steep reduction, from Also troubling, current liabilities ex- Unisia JECS Major Customers 1,145 to 600, in the number of parts and ceeded current assets by ¥10,982 million materials suppliers by 2002, and a 20% ($92 million) at fiscal year-end 2000. Ranked by sales: reduction in purchasing costs for the next Unisia JECS’ restructuring is showing #1 Nissan Motor three years. Nissan also restructured its some positive results. Price per share has #2 Fuji Heavy Industries purchasing policy, which was based on increased slightly since late 1999, and #3 Trans Technology country-by-country decision-making, to a profit per share has gone from a loss of #4 central and global policy based on perfor- ¥91.17 ($0.77) in FY 1999 to ¥17.8 #5 Nissan Diesel mance and cost reduction. ($0.15) profit in FY 2000. Operating As a result of Nissan’s restructuring, profit in FY 2000 was ¥2,501 million ($21 Others, not ranked: Unisia JECS’ fiscal year 1999, which million), or 1.4% of net sales; net income Hitachi ended on March 31, 2000, saw net income was ¥2,727 ($23 million), or 1.6% of net Yamaha Motor fall from a loss of ¥1,168 million ($9.8 sales. The company pointed out in the FY Motors Nissan Kohki million) in FY 1998 to a loss of ¥13,965 2000 annual report that net income ben- Honda Motor Bosch K.K. million ($117.4 million), while sales re- efited from a one-time gain of profit from Bosch Automotive mained flat. The company has been un- the sale of the clutch business, and at the Renault S.A. Systems Corp. able to pay dividends to its shareholders same time, net income was hurt by ex- Ford Motor Nissan Trading Co. since FY 1999. traordinary losses associated with the PSA Koyo Seiko early-retirement incentive program. Fuji-Xerox

The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com October 2001, Page 5 Unisia JECS Shares from Nissan: Unisia JECS Products Hitachi Buys Equity In late 1998, Hitachi and Nissan ex- Brake Products Valve rocker arms Electronically Controlled Air- plored how they might work together ABS Water pumps Suspension Systems more closely: Nissan was looking for cash Anti-skid speed sensors Valve Timing Control Air suspensions & adjustable and Hitachi wanted a bigger presence in Decompression brake systems Systems dampers the automotive industry. About 40% of Hydraulic units with ECU VTC (valve timing Air tank units Hitachi’s automotive product sales already control) Compressor units went to Nissan, Unisia JECS’ largest Engine Products VVL (variable valve lift) Control units shareholder. In 1999, Hitachi and Unisia Electronic Engine Control Systems Height sensors JECS agreed to increase their joint devel- Air flow meters Drivetrain Products Pressure switches opment work in vehicle control systems Air regulators Automatic Suspension dampers for ITS (Intelligent Transportation Sys- Cam angle sensors control units tems). Hitachi increased its equity in Crank angle sensors Propeller shafts Steering Products Unisia JECS to 16.7%, the same percent- Engine control units Hydraulic Power Steering Systems age it holds today. Shares were transferred Front covers Suspension Products Control units to Hitachi from Nissan and from other Fuel injectors Active Damping Control Power steering pumps major shareholders. Hitachi’s equity in Fuel pumps Suspension Systems Power steering gears Knock sensors Actuators Reservoir tanks Unisia JECS is greater than that of Robert Oil pumps Adjustable dampers Bosch GmbH, which holds 10.1%, but Oxygen sensors Control units Others less than Nissan’s. In February 1999, Pistons Vertical acceleration Gas springs Nissan had 29.7% and on March 31, Throttle chambers sensors Printed-Circuit boards 2001, the company had 25.3%. Throttle position sensors Stroke sensors Hitachi has provided capital, as well as R&D and manufacturing personnel, to ture between ZF (Zahnradfabrik and dual-mass flywheels. Unisia JECS be- help develop these products for global dis- Friedrichshafen) AG, Germany (51%) lieves the two flywheel products will be tribution: powertrain, including next- and Unisia JECS (49%). The JV makes highly profitable, because they use ad- generation fuel injection systems, HEV conventional power steering gears and vanced technologies that the company (hybrid electric vehicle) and EV (electric pump products, not EPS (electric power has developed. A Unisia JECS goal is to vehicle) components, brake-by-wire sys- steering) products. Tim Clark, sales man- expand its customer base globally through tems, electric power steering systems, as ager for Unisia JECS North America, told the establishment of alliances with top well as vehicle control systems combining us, “The company has not decided if the companies around the world. Unisia JECS controls for powertrain, braking and steer- ZF joint venture or Unisia JECS alone concluded that transferring its clutch ing. At this time, Unisia JECS feels the will make EPS.” In 2000, Unisia JECS business to the Valeo joint venture fit in companies are working well together and and ZF jointly developed a small power- with that goal. Manufacturing is located considers their adaptive cruise control and steering pump. The two companies also at an existing plant with about 230 em- electromechanical brake products as most have a JV in Chachoengsao, Thailand. ployees in Atsugi, Kanagawa. With the JV, promising. Another joint venture, ZF Steerings Ma- Valeo will gain its first production base in laysia, supplies steering gears for Malay- Japan. Valeo and Zexel have formed an Joint Ventures and Business Transfers sian carmakers (Proton and ), for alliance in climate control and engine ◆ In April 2001, Unisia JECS and Assemblies and for cooling that will also be located in Japan. Bosch Braking Systems established an Ford in . The company also ex- ◆ AUTECS, set up in Anderson, 80% - 20% joint venture called Unisia ports products to Nissan and Mitsubishi South Carolina, in 1988, as a JV with JKC Steering Systems to develop, manu- car assembly plants in , Thailand, Robert Bosch (51%), produces engine facture and sell hydraulic and electric Philippines, Indonesia and Mainland control units, transmission control units power steering systems for passenger cars China. and throttle control products, mostly. and trucks. In addition to the investment ◆ On April 3, 2000, Unisia JECS Unisia JECS has decided to limit its in- that Bosch will make in the JV, Bosch agreed to transfer its clutch business to volvement in AUTECS; in the future Braking Systems will transfer its power Valeo, and set up a JV called Valeo Unisia only shared technology that already exists steering systems business to the joint ven- Transmissions K.K. Valeo is the majority will be used to create new AUTECS prod- ture. The company will locate in shareholder with a 66% stake. Unisia ucts. Unisia JECS wants the freedom to Kanagawa and expects to employ 1,500 JECS’ clutch business consisted of the sell anywhere in the world new products people there. manufacture and sales of clutches for based on its technologies. The agreement, ◆ ZUA Autoparts, Inc. (Oakwood, manual transmissions, lock-up clutches for under which AUTECS was established, Georgia), founded in 1990, is a joint ven- automatic transmissions, flexible flywheels limits the partners’ markets for products

Page 6, October 2001 The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com The Company Profile Continued

cost. Volume production is expected to Unisia JECS Main Electronics Facilities start in 2004. Floor Space (sq. meters) Employees Main Products Complete Fuel Pump System: This is a promising new product in development, Akita Plant, aka Unisia JKC Steering 73,718 929 Power-steering gears, pumps & according to Unisia North America. Systems (Yokote City, Akita) systems, fuel pumps, idle-speed Packaged together compactly in one control valves, fuel-injection components small, in-tank unit are the level sender Atsugi Plant #2 (Atsugi City, Kanagawa) 53,228 446 ABS, VTC, valve rockers (sensor), filter, pressure regulator and AUTECS (Anderson, SC, USA) 81,000 250 ECU, A/TCUs, airflow meters pressure sensor. North American sales Gunma Plant #1 (Isesaki, Gunma) 38,903 1,334 Fuel-injection systems, A/TCUs, manager Tim Clark told us that while ECUs, oxygen sensors, airflow other integrated fuel pumps are in produc- meters tion, the company believes its product is Gunma Plant #2 (Isesaki, Gunma) 14,653 270 Fuel-injection components, printed unique because it is very small, compact circuit boards and inexpensive. JECS System Research Co. (Isesaki, Gunma) 144 72 Development of auto electronics VTC Systems: In FY 2000, the com- and software Unisia Iwaki (Iwaki, Fukushima) 14,184 229 Suspension struts, shock absorbers, pany saw an increase in orders for VTC knock sensors, EGR temperature systems, although it saw a decrease in en- sensors, turbine sensors, throttle gine control units and other electronic sensors, VTC fuel injection products and control valves. Unisia of Georgia (Monroe, GA, USA) 20,000 70 Purge control valves, crank angle Performance data for the company’s VTC sensors, VTC systems, powered by hydraulics, show in- Unisia North America (Novi, MI, USA) 21 North American sales and marketing creased low-to-middle speed torque of for VTC, water pumps, oil pumps 10% or more, fuel economies of 4% or ECU=engine control unit; A/TCU= control unit; VTC=valve timing control; EGR=exhaust gas recirculation more, and reduced emissions for HC of 12% or less and for NOx of 30% or less. based on shared AUTECS technology. ABS and power steering gears. VTC systems, which offer tier-ones and Unisia JECS can’t sell AUTECS technol- Electromechanical Brakes (Brake-by- OEMs cost improvements, can be in- ogy in Germany, and Bosch can’t sell Wire): The system, with an electric mo- stalled on any engine without modifica- AUTECS technology in Japan. tor-driven caliper on each wheel and an tion, on both the intake and exhaust ECU, was developed in collaboration with camshafts, and can be combined with New Products and Hitachi. The new product is VVL (variable valve lift) and VVE (vari- The company’s “basic development expected to be released in 2006. able valve event). themes,” or objectives for new product EPS (Electric Power Steering): Unisia U.S. customers are most interested in development, are improved safety, driving JECS expects product release in 2003. EPS the VTC, and to a lesser extent, water comfort and environmental friendliness. has these advantages: simplified installa- pumps and oil pumps. Mr. Clark noted Goals include: tion, since the system is motor driven not that in Unisia JECS’ newly-designed ◆ Improving the performance of the belt driven; less fuel consumption, due to VTC, there are no pins, so it doesn’t have basic automotive functions of driving, better energy efficiency; and lower cost to return to the off position every time turning, and stopping in order to augment because the configuration is clutch-free. you turn off the car, unlike a typical VTC, the vehicle’s accident-prevention capa- Unisia JECS provides the complete sys- which has a pin that must lock in. Most bilities tem, including a DC brushed motor and competitors rely on oil pressure to power ◆ Ensuring excellent driving stability ECU. The company offers either column the pin in place; an electric stepper motor and comfort so that passengers feel safe assist-type EPS or pinion assist-type EPS. powers Unisia JECS’ newly-designed and secure Customers include Mitsubishi Motors and VTC. Mr. Clark explained: “With ours, ◆ Making products that can be re- DaimlerChrysler. you have much less risk of failure, quicker cycled, and protecting the environment Electric Water Pump: The company response time and it’s cheaper than con- through the use of safe technology. will soon offer a new electric water pump ventional VTC. ... The problem with the The company is an integrated systems for use in belt-less applications. It could be hydraulic VTC is that it has to wait for a manufacturer, as well as a supplier of parts used as a pump to assist cooling of power certain buildup of oil pressure before it and components for engines, drivetrains, electronics in a hybrid vehicle, or it can can actually phase, and you can’t put a suspensions, steering and brakes. Please replace the conventional belt-driven water monster oil pump on the engine to get it see products list on page 6. In FY 2000, pump in engines in small to mid-sized ve- to move at low RPM.” The VTC does not the company saw increases in orders for hicles. require a separate control unit if the VTC VTC (valve timing control) systems, Power-Assist Brake: Provides power- can be integrated into the carmaker’s en- control units for automatic transmissions, assist braking and hill holding at a reduced gine control unit. ◆

The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com October 2001, Page 7 Telematics Market Growth Engineering... Continued from page 1 2000 - 2006 who are dedicated to specific technolo- “The premium engineer out there right 2000 2006 Annual gies; but the general design work on the now is somebody with an RF background in $ millions Growth details, that work we give to our full-ser- and experience in both hardware and soft- System Revenue 537 3,542 36.9% vice suppliers.” ware development,” said Modern’s Mr. Service Revenue 296 3,815 53.1% GM and Ford rely more heavily on out- Sesnie. Modern Engineering is working on Total Telematics 833 7,358 43.8% side electronics and software suppliers an open requisition from interiors supplier Revenue than does Chrysler. Ford maintains some Intier Automotive, a subsidiary of Magna design expertise in house and tries to International, to provide 200 contract Source: Telematics Research Group outsource everything from system-level engineers by February 2002. In a report entitled Telematics: Technologies, designs to components. GM wants to hold The decline in electrical engineering Trends and Markets, published in September close to the vest all technologies that it capability is being felt throughout the in- 2001, the Telematics Research Group forecasts considers strategic—those that shape the dustry. Motorola vice president Neil total telematics revenue will reach $7.4 billion in character of the vehicle. Krohn, in charge of field engineering for 2006. The authors define telematics as “the Compared with Ford and GM, Motorola Semiconductor Products wireless exchange or delivery of communication, Chrysler is the most vertically integrated Sector’s Transportation Systems Group, information and other content between the auto of the U.S. carmakers. Huntsville Elec- elaborated: “I have witnessed this brain and/or occupants and external sources.” The study is available for $2,995 from tronics, which designs and manufacturers drain in our industry as my group responds Telematics Research Group, Minnetonka, powertrain control units, audio head units to technical questions. People are having Minnesota. For more information or to order, and instrument clusters almost exclusively trouble doing even basic things like bring- visit www.telematicsresearch.com or call 952- for Chrysler, is still a wholly-owned ing up computer-aided tools. People don’t 935-0400. Chrysler facility. Chrysler is determined to seem to understand things as they used to; maintain the ability to create electronics many are unable to do their own trouble- intellectual property within the company. shooting as production nears. We [at Estimated Annual Growth of Bob George, a top electrical engineer at Motorola] are doing lots more Vehicle Production by Region Chrysler, confirmed that Chrysler has handholding.” 2000 2006 Annual committed to “understanding” not only The engineers we spoke with from Growth software, but the technology of the parts it each of the Big 3 carmakers agree that (in millions of units) uses. Chrysler will continue to be the re- engineering capability is somewhat spotty North America lease engineer for software and for certain at the tier-ones. Ford’s Tim Donovan told Cars 8.37 9.01 key chips. Engineering for less sophisti- us: “Not all top-tier suppliers are necessar- Trucks 9.29 9.98 cated, non-crucial components and circuit ily equipped to take on the added respon- Total 17.66 18.99 1.2% board layouts will be done outside the sibility. We have had to spend more time West Europe company. than we want helping some of them with Cars 15.12 15.47 Not only are the carmakers pushing the designs. ... That is something we are Trucks 2.20 2.51 more engineering onto tier-one suppliers not going to be able to maintain, because Total 17.32 17.98 0.6% but the top tiers are passing it down the of the competitiveness in the industry.” Japan & So. Korea line as well, shifting more engineering Chrysler’s Bob George said he will Cars 10.96 11.03 work to the second tier. Often lacking suf- cope with ongoing engineering attrition Trucks 2.29 2.65 ficient skilled manpower, both top-tiers and inexperienced top-tier suppliers by Total 13.25 13.68 0.5% and some second-tier suppliers have been applying more design tools that increase Rest of World shopping for contract engineering talent. engineering productivity. “We need com- Cars 7.50 10.10 Donald Sesnie, who handles new business puter-aided design tools and a smart elec- Trucks 3.66 7.81 development for Modern Engineering, tronic architecture so we can reuse parts Total 11.16 17.91 8.2% (Troy, Michigan), a major supplier of con- many times, across platforms and across World Total tract engineers, told us: “Some tier-one vehicle models.” (Please refer to the June Cars 41.95 45.61 suppliers are tackling these programs 2001 Hansen Report article on tools.) Trucks 17.44 22.95 without the technology or brainpower to Salim Momin, in charge of Motorola Total 59.39 68.56 2.4% do it, which is why demand for contract SPS’ Virtual Garage and a key advocate of engineers from tier-one suppliers is on the automotive electronics engineering tools Note: The categorization of cars and trucks is rise. That has kept us busy, even as the Big agreed with Mr. George: “Given the com- becoming more difficult as vehicle registration 3 have laid off a great number of contract plexity and the shortage of experienced classification continues to change and as increasing engineers. ... This has been going on for engineers, one answer is model-based en- numbers of vehicles perform a dual purpose. For 18 months or so and is likely to continue gineering using tools. With models I can example, light trucks in the U.S. fall under the Truck category, even though about 95% of vehicles in the for the next five or six years.” release more robust specifications to my U.S. are for passenger use; about 5% of vehicles are Finding engineers, particularly electri- supplier. If the supplier is savvy and also is medium and heavy trucks and buses. cal and software engineers, willing to competent with tools, he can use that Source: Pemberton Associates, Rugby, Warwickshire, work in Detroit, has been especially hard. model to automatically generate code.” ◆ UK; Phone and fax: +44 1327 260374 Page 8, October 2001 The Hansen Report on Automotive Electronics, Rye NH USA www.hansenreport.com