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The transformation of the automotive industry requires a high level of adaptability from engineering service providers. Explanation of Dr. Holger Jenny, Managing Director of Segula Technologies in Germany.

Dr. Holger Jenny, Managing Director of Segula Technologies in Germany.

(Photo: Balsereit/Segula)

Mr. Jenny, how successful is Segula Technologies during the two years of the Corona outbreak?

At the beginning of 2020, the Corona pandemic also slowed us down. But by the end of 2020, we have noticed that customers are increasingly requesting our services. That’s why fiscal 2021 went so much better. This increased customer interest has continued so far, even if the Ukraine war and coronavirus-related lockdowns in China once again create uncertainty.

Does Russia’s invasion of Ukraine directly affect Segula Technologies?

Since we do not have a location in Ukraine and are not a manufacturer, the fluctuating production volume of OEMs has no direct impact on our business. Instead, I think there are indirect consequences in the case of longer hostilities. This could result in potential cost-cutting programs for customers and could delay planned development projects for vehicles and components.

On the other hand, shifting risk assessments for Eastern Europe or East Asia may shift production from there or back. Because Segula Technologies is also strong in the areas of manufacturing engineering, tooling, and supplier integration, we can support OEMs and suppliers in these transitions.

How did the main characters evolve in 2021?

In 2021, we increased our sales compared to the previous year. However, growth in sales does not mean increased profits. In particular, the OEM times-approved wage level cannot always be reconciled with the cost structure of the engineering service provider (Segula acquired parts of the Opel development center in Rüsselsheim in 2019. Editor’s note).

It is particularly gratifying that a quarter of that sales were made with new customers, mostly German OEMs. In 2020, only about four percent of revenue was from customers outside of Stellantis. In the first quarter of 2022, we are already registering a third of our sales with new customers. Perhaps by the end of the year we will achieve a balanced arrangement between Stellantis and new customers.

How did the year 2021 affect employment?

At the end of March 2022, we employed nearly 1,000 people in Germany. Unfortunately, last year we had to lay off some employees in areas where there were no future prospects due to a lack of new orders.

We are currently working on a detailed restructuring program that will determine the growth and future areas for Segula Technologies in Germany to invest in. The goal is a sustainable and healthy company, and for this we need a future-oriented structure, a competitive cost structure and, of course, qualified personnel.

Where do you still see the need to improve in terms of competitiveness?

Our way of thinking is still heavily influenced by the OEM way of thinking, which has both advantages and disadvantages for the engineering service provider. On the other hand, our OEM genes are a competitive advantage, since we are aware of the responsibilities in a downstream project and know the sticking points in the operations very well. Our customers appreciate that we think like an OEM and speak to them as equals. On the other hand, we have to absorb the service provider’s self-image better and deal with customers more proactively. We also have to embrace new thinking and new skills for new ecosystems such as the smart city, autonomous driving and connectivity. However, the entire global auto industry must face this challenge.

What arguments do you currently use to persuade new clients?

The multifunctional test center in Rodgau-Dudenhofen provides optimal conditions for global testing of the vehicle and system.
The multifunctional test center in Rodgau-Dudenhofen provides optimal conditions for global testing of the vehicle and system.

(Photo: Sigula)

We have a few Chinese customers who choose the comfortable and well-equipped Rodgau-Dudenhofen Test Center to prepare their vehicles for European approval or conformance. If there is also a need for development, as a full service provider, we can take on the upcoming tasks at the same time. Our goal is to contact these partners early in the development process. To this end, we are taking action on site with our colleagues in China.

… and with suppliers?

We continue to see untapped potential for orders from suppliers, which is why we have created a new master account structure for large international Tier 1 suppliers.

How do you deal with important German OEM customers?

With German OEMs, we benefit from our past. When client-side developers realize our OEM focus from development to chain support in the initial conversations, trust is created. This may be an important reason why we have won several major projects from German OEMs in recent months – for example to validate software for combustion engines, where we have such a high level of efficiency that our engineers used to write GM’s engine control software/ Opel themselves.

How is the non-car business in Germany?

We are currently clearly focused on cars. We will use some synergistic effects for the rail, space and energy technology markets. For example, we work closely with an elevator manufacturer and oversee projects not related to cars with fuel cells and hydrogen. Let me put it this way: cars are a must, and everything else is currently optional.

How did the individual engineering fields perform last year?

Our services are in great demand for the further development of internal combustion engines, as the Euro 7 emission standards are pending. For this purpose, we have upgraded some test benches in advance so that we can reliably demonstrate very low emission values ​​for Euro 7 and with the smallest measurement tolerances. We are one of the first providers in the certification process for this solution and are already working on development projects.

At the same time, we have converted other test cells in which we develop and test electronic drives, as well as check the health of batteries and software. In the foreseeable future, we will have the same number of development and validation facilities for combustion engines and battery electric motors.

What potential do you see for a fuel cell?

It is currently difficult to estimate the success of the fuel cell engine and hydrogen power carrier on the market. I see some niche markets. We have made strategic investments in our test benches for fuel cells and other infrastructure. The deciding factor will be whether Europe and Germany in particular agree on a strict hydrogen policy from eco-friendly green electricity generation to market-oriented subsidy programmes.

Aside from driving technology, where do you focus?

Definitely in automated and autonomous driving! We are building a new infrastructure for this at our test center in Rodgau-Dudenhofen. Together with network specialist Cellnex Telekom, we are equipping the site with a private 5G network so that we and our customers can benefit from a secure and lag-free vehicle-to-X connection in the future.

We also want to prepare different test tracks and urban streets where automated and autonomous driving functions can be realistically tested in realistic daily traffic situations. Last but not least, we are creating a workshop, laboratory and additional office spaces where our clients can immediately evaluate test results, protect them from the public, and implement them in further development steps.

That’s a lot of devices. What about the program?

I’ve learned in recent years that software development, digitization, and networking are worlds apart from classic vehicle and driving development. People think very differently there and work and collaborate with other methods. If Segula Technologies is to be successful, we have to think innovatively like the industries the program is driving.

That is why we have established the Software and Digitization Department. All of our software-related activities are grouped there, complemented by it, and mapped the above networks at all levels. Last but not least, new agile processes must be implemented in this department and spread to other areas of our company.

This transformation into a software-based service provider and network specialist is viewed favorably by our customers. We recently asked an OEM about a strategic partnership and won a major development order for autonomous and automated driving functions from another manufacturer.

What business areas does Segula Technologies still want to open? Which ones can be abandoned?

In our view, electromagnetic compatibility, or EMC for short, in hardware and software is a prerequisite for automated and autonomous driving. At the beginning of the year, we ran a new antenna lab, where we outlined the full scope of modern vehicle antenna testing. This laboratory ensures the effectiveness and correct design of the world of wireless communications, which includes mobile communications, W-LAN networks, radar, Bluetooth and many other technologies.

We have to take a closer look at highly competitive areas of business where we cannot operate sustainably with our German cost structures, especially when high investments are on hold.

Do you still see potential for applications for engineering service providers beyond Euro 7?

In my view, combustion engines running on gasoline and diesel fuel will continue to roll off the production line in ten years, especially in countries with less developed infrastructure. In addition, there may be e-fuels, although CO2 is accounted for2Continuing neutrality in the emission of pollutants. Therefore, even after the introduction of the Euro 7 emission standard, there will still be a lot of calibration work on the combustion engine, which many OEMs will probably be happy to outsource to a competent service provider.

How will companies assess specific risk factors and locations in light of the pandemic and war?

In the future, companies will be keen to improve the dose of their activities in countries and regions with high risk factors. So the focus of the new software and digitization department will be in Rüsselsheim, with satellites in the Baltic states, for example. In addition, India is moving more in our focus.

What sales development do you expect for Segula and individual business lines in the next few years?

I don’t want to name specific sales targets. But the distribution of sales between the “car” and “driving” divisions is currently roughly balanced. Within five years, these two divisions as well as “Software and Digitization” should contribute a third of all Segula Technologies sales in Germany. After that, it is clear that software and digitization will be the strongest field of work. However, we want to grow in all areas.

(No.: 48290042)

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