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In the Driver’s Seat
by Katie Sosnowchik
Ford, GM, Chrysler, Honda, Hyundai—the
average consumer shopping for a new car recognizes many of
these popular brand names. But to loosely paraphrase an old
adage, behind every great automaker is a great automotive
supplier, the company that provides the behind-the-scenes
integrated technology solutions that customers want—and
even demand—in their automobiles.
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Standing behind these and other well-known automotive giants is
Visteon Corp., a company with a not-so-famous name that currently
ranks number two in the $500 billion global marketplace it serves.
It has earned this standing in part because of an unparalleled commitment
to reducing its environmental impact, says chairman and CEO Peter
Pestillo, who emphasizes that there can be no distinction between
good business initiatives and sound environmental ones. And with
$1.6 billion in net new business this year from more than a dozen
automakers in every region of the world, it’s apparent that
Visteon is comfortably positioned in a driver’s seat that is
not only environmentally friendly, but technologically advanced
as well.
Few people can hold an intelligent discourse on the advantages
of such systems as PZEV Plastic Fuel Tanks, Long Life Filtration,
Energy Efficient Thermal Systems, Laminate Insert Molding or CO2
Refrigerant Systems, yet Visteon is banking on these and other such
developments to grow its business as the second largest automotive
supplier in the world. Collectively, what these and other similar
developments demonstrate is Visteon’s commitment to environmental
stewardship, a priority clearly identified in its corporate mission
statement:
“To increase shareholder value by delivering systems solutions
that help our customers exceed their goals, are safe and environmentally
responsible and distinguish Visteon as the supplier, employer and
community citizen of choice.”
As a result, says chairman and CEO Peter Pestillo, regard for the
environmental impact of all its products and processes is standard
operating procedure for the Dearborn, MI-based company, which currently
has approximately 80,000 employees in 25 countries. All of its eligible
plants around the world have completed ISO 14001 certification,
the framework for integrating environmental responsibility and management
standards into everyday business operations.
This regard for environmental initiatives, Pestillo says, stems
from the company’s history. It was officially launched as a
separate entity in 2000, a spin-off from Ford Motor Co. where it
had 80 years experience in accomplished integrated systems. With
its independence, Visteon has expanded its non-Ford business and
now works with nearly 20 automakers. And while automotive systems
continue to claim the largest share of its annual revenues, Visteon
is also involved in the Automotive Aftermarket and Architectural
Glass fields. Technology affiliates include leading-edge, consumer-focused
companies such as SpeechWorks International, Dow Automotive, Microsoft,
Intel, Nintendo, Bang & Olufsen, Texas Instruments, Fujitsu,
Sirius Satellite Radio, XM Satellite Radio and Motorola.
Eleven “Blue Sky” attributes clearly spell out priorities
that Visteon has identified in its strategy for conducting its business
in an environmentally and socially responsible manner. Attributes
range from eliminating the concept of waste to thinking smaller
is better, from leaving a “no trace” mentality to increasing
natural resource productivity, from respecting people and ecosystems
to being transparent to the communities in which it operates. But
attributes also spell out priorities that go beyond the typical
aspects of conducting a business by referencing the desire to “improve
brilliantly and passionately” and “celebrate achievement.”
A recent conversation with Pestillo revealed a deeper insight into
the company’s environmental agenda and the steps it is taking
to arrive at its desired destination.
Visteon’s Environmental Commitment
states, “Environmental stewardship is among Visteon’s
highest corporate priorities.” How did the environment become
SUCH a high priority?
PESTILLO: We come from a rich
history of support for environmental initiatives, so we started
the company with the understanding that we’re going to run
it in a way that was responsible and make it part of our overall
process. In my view, if you don’t disassociate [the environment]
from what you do, you tend to do better. We ought not to have business
initiatives and environmental initiatives. We ought to have solid
business initiatives that embrace environmental considerations.
Who or What drives environmental policies
at Visteon?
PESTILLO: I’d like to think
all the people at Visteon do. Our mission statement is, hopefully,
a simple, clear expression. Take, as an example, waste. The determination
to deal with waste embraces three things: it saves costs; it means
behaving responsibly; and it also spares you having to deal with
the shortcomings that you’ve got at the end of the day. So
if we say that the elimination of waste is an absolute objective
of the Visteon corporation, that’s pervasive—you don’t
have to explain that to somebody. Beyond that, you don’t have
to quantify it; the guy who saves just a little is as important
as the one who develops a great breakthrough.
Isn't it a challenge to communicate that to 80,000 employees in
25 different countries?
PESTILLO: Sure it is, but if
it’s part of your essence, it gets easier. We have a simple
statement, and we declare it. We are for this without qualifications.
We’re not for it only if we’ve got the time or if we have
anything left at the end of the quarter. We’re for it because
it’s part of us.
Do you have priorities within your environment
mission?
PESTILLO: Everybody is able
to do something all of the time. As I’ve said, dealing with
waste is an ultimate consideration. Then you begin to deal with
things as you confront them. The thing I like most about the relationship
I have had with Bill McDonough over the years is this: you can view
Bill as an ethereal character who is only worried about things in
the distance. As a practical matter, the distance to Bill is that
period of time that allows you to plan for things and his view.
The principal thing he taught me is that if you start out wondering
what you can do better, you can more quickly build that into your
process rather than tinkering as you go along. Don’t start
with the assumption that you’re going to do a little bit better
than your last model. Start with the assumption you’re going
to do it right and then deal with impediments as you go.
Take plastics, for example. We use a lot of plastics. Early considerations
were color consistency and low price. New ones are energy, petroleum
use, costs in terms of the energy required to produce, recyclability,
lifespan and things of that kind. So you begin to weigh all that,
and you say, “Let’s go out and look for something else.”
We do a lot of interiors and our ambition is to do the ultimate
green vehicle. We recently did the interior in GM’s first fuel
cell vehicle. And we’ll be able to do better with more time.
But again, we’ve got some plastics in there and some forming
methods that are, to some extent, more energy efficient; and we’ll
find better compounds as we go. But we’ve embraced the notion
that we’re going to do this. So now we turn to guys like Bill
McDonough and say, “Tell us what’s out there that’s
better.”
We all started with a too simplistic notion of what environmental
responsibility was—we thought, let’s just get something
a little bit better. But now we know to go to the end of the vehicle’s
life. Before we didn’t worry much about bonding or what fabric
or interior contents did at the time you took them out or how difficult
they were to dispose of. However, if you’ve got a product that’s
disposable or, in fact, will return to its base form; but the energy
cost of doing so is colossal, you ought to be looking at that. Again,
that’s waste. We’re determined to get better—that’s
what continues to drive us.
Have you set specific goals to be established
within specific time frames?
PESTILLO: No because, again,
to me quantification is kind of a needless taxonomy. We should all
be working on everything we can all the time. So we’ve embraced
the notion that says, “Get on it and work at it to the extent
you can. Don’t be driven off by the fact that it’s difficult
or you’ve got two or three things to worry about, but enter
this into your business process.” If there’s one priority
for Visteon, that’s it; and I think it is pervasive.
Some of your "Blue Sky" attributes
talk about having fun and celebrating achievement. From where do
those influences come?
PESTILLO: People respond best
when they’re committed. You can drive people on fear for only
so long. And the extent to which people are committed, they’ll
go out and do things on their own, they’ll figure something
out. Much of what we say about having fun and being committed embraces
the great McDonough quote that says let’s not worry about enhancing
work, let’s worry about enhancing life. We’re entering
a generation that’s past the third phase. The first was to
ignore it, the second was to wonder about it and the third says,
let’s engage this in our process. Let us accept this responsibility
for the next generation and make it work. So I think the commitment
is in the mission statement. We don’t write things down that
we don’t believe in.
How do you partner with customers on environmental
initiatives? Do you bring technology to them, or do they come to
you with what they want to achieve?
PESTILLO: It’s a combination.
For example, the fuel cell vehicle for General Motors, which we
had a role interior-wise, was the product of a conversation I had
with Harry Pearce where we decided to do something together. There’s
no sense in having a fuel cell vehicle with a “dirty”
interior. Well, GM doesn’t do interiors the way we do, so you
engage in that. We’re also working on a project with Dow that
I’ll call the energy efficient interior. We’re very capable
at designing air conditioning management systems, and we’ve
got a modeling capability that will tell you the right place to
put the vents and about how much energy you’ll have to dissipate
to fully cool the vehicle in the most efficient manner. Also, if
we use solar resisting window panes rather than simple glass, you
allow less heat in and, therefore, you have less heat to dissipate.
We’ve got a new compressor that is six percent more energy
efficient, and that improves fuel economy. We’re also working
on CO2, a refrigerant that is a far less invasive gas. All of these
things are part of an energy management cooling deliverance system
that is environmentally responsible.
So, I can sell it to you a couple of ways. I can give you six percent
better fuel economy if you put my system in. That’s useful
in selling cars in Europe. If you want it from a raw economic standpoint,
does a sufficiently large part of the population buy on that basis?
No. But is it a factor in the purchase decision? Yes—more and
more so. I think we will see a generation who will make that a determining
consideration. They’re almost there in Germany today, and we’re
becoming more so here in the U.S. You hope it will be cost neutral,
but if it’s a premium, to what extent can we defend it? We
went through this battle in a different era with airbags. They came
to be mandated. Well, this may not necessarily come to be mandated,
but it is going to be a purchase consideration. I believe GM is
thinking that if it can put that stuff in its cars and put a responsibility
certificate on it, if you will, then that’s going to bring
people in that it wouldn’t have otherwise. Beyond that, GM
is determined to do this because it’s right anyway. So we’re
emerging into a marketing consideration from a social one. And that’s
fine. We can do our business and do good at the same time.
What advancements in the auto arena do
you feel hold the most promise?
PESTILLO: There are a host of
exotic considerations, but there are some very practical near-term
ones, too. There’s thermal management, which we think we do
a pretty good job of with our compressor. There’s a lot we
do to make internal combustion engines more efficient. We’re
doing some work on the 42-volt integrated starter alternator systems,
which represent a better chance to get better fuel economy. And
to the extent to which we can get better fuel economy, we also can
reduce carbon dioxide—that’s a naturally valuable thing.
As fuel prices soar, it becomes a personal consideration, as well.
The guys who don’t do it because it’s right, do it because
it’s cheaper.
What are Visteon’s biggest challenges
as you move ahead?
PESTILLO: Keeping in focus and
not getting distracted by the burdens of these times, and I don’t
think we will. All our plants are ISO 14001, and to the extent to
which they stay responsible, manage their products, manage their
waste and the like, they’ll meet their business conditions
as well. But, our point very clearly is we’re not going to
accept a difficult business climate as a means for shirking these
responsibilities. We don’t accept that excuse.
Is it just younger consumers who are interested
in the environmental aspects of the cars they buy?
PESTILLO: It is to some extent
generational, but I think there are two things coming: a younger
generation that is aware and more interested, but also an older
generation that has grown concerned. There are some who want to
buy the responsible vehicle, and that’s it; but there are those
who say if you’ll do this a little better than the others or
show a concern for it, that’s important, too. Now the beauty
of this for us is we don’t have 18 million customers. We’ve
got 17, total, and to the extent to which we can engage manufacturers
in this process and find those who are more interested, we are going
to be okay.
My first thought is that it would be the German OEMs because of
the green movement in Germany and their ability to price a little
higher typically than their North American counterparts. But I give
GM great credit and Ford and Chrysler as well. They’re beginning
to pay more attention. I think the fact that we worked the [fuel
cell] vehicle with General Motors and plan to do more suggests that
they are not going to abandon leadership in this area.
Will consumers give up their SUVs to make
those kinds of choices?
PESTILLO: No, and that’s
an issue that Bill [Ford] has. You can argue that we can double
America’s fuel economy two ways. One way is to do as we did
in the past, take the fuel economy of the Ford Pinto and give it
to the Lincoln Town Car. Now, can we double the Town Car again?
Not with technology as we know it. Can we take everybody out of
SUVs and put them into smaller vehicles? Yes, but this is a country
built on choice; and the extent to which we continue to have a marvelous
highway system, a greater willingness to travel away from public
transportation and people who want to carry seven, eight or nine
people, there is going to be a market for those vehicles. Bill’s
point is one I would echo. I want to make them better than anybody
else does, more responsible. Can I make them ideal? Probably not,
given the physical constraints they bear. But I think we need to
keep dogging it. Bill’s looking for 25 percent fuel economy
improvements, better emissions controls, things of that kind. That’s
a great enhancement of fuel economy. So yes, those vehicles are
here to stay because they came here by choice. I don’t think
we’ll regulate them away, so that means let’s continue
to make them better. I think it’s the McDonough principle:
if you start out trying to make it great, don’t stop when you’ve
made it better, get on to making it great.
Do auto manufacturers have a responsibility
to educate consumers about the environmental impacts of the products
they sell?
PESTILLO: I think they do. To
some extent it’s a defensive education—the assertions
are bolder than the truth, necessarily, and so they have to deal
with the issue. And I think they are. I think they deal with it
in a couple ways: by defending their products and by supporting
environmental causes. I’ll go back to our Ford days because
we were far bigger then. We worked with Conservation International
and others to develop an agenda that was, to some extent, ameliorating
at least some of the other things that we did that were going to
be done anyway. I’m not saying that one should willingly confer
harm to the public and say, “Oh, everybody does it.” If
it’s wrong, you can’t do it. But I don’t think that
selling SUVs is, of itself, wrong.
With whom does Visteon work to help move
its environmental agenda forward?
PESTILLO: We go back to our
old Ford relationships, for example, the Conservation International
School—which was our creation. So we’ve got some informal,
non-chargeable prowling rights as we go around . . . we keep our
hand in even though we don’t pay or get paid for what’s
done. We’ve initiated of a lot of activities, which are now
bearing fruit.
And again, we don’t sell retail, so the broad, public engagement
really is for the OEMs. You know, Ford’s advertising budget,
in a good year, is larger than our net earnings.
Do you choose companies to work with that
share your environmental commitment?
PESTILLO: I think that one of
the measures of our excellence is the kind of people with whom we’re
associated—the likes of the Intels, the Microsofts, the Sonys—responsible
companies that embrace some of our technology to enhance their products
and allow us to use their technology to enhance ours. For example,
the car in Microsoft’s House of the Future is a Mercedes. It’s
got our technology in it. These companies have sufficient brand
recognition; they won’t deal with malefactors. I think that’s
what is important to us.
What differentiates Visteon from its competitors?
PESTILLO: I hope we’re
quicker to the market with good things. We do a lot of market research.
On a given day we’re the second largest supplier. We’re
in all three major markets: Europe, U.S. and Asia. We can do 40
percent of the car. So we’re big. It wouldn’t be for me
to say we’re good, but I would claim it.
How many of your employees are dedicated
to research and development?
PESTILLO: We spend six percent
of our budget—6.5 percent—on R & D. Some of that’s
commissioned research. I couldn’t take you from the total cost
of that to a translation of number of employees. Usually the figure
people use is the percent of your revenue spent on R & D; six-and-a-half
is high for a company like ours. Other parts of the industry might
be at three or four percent, for example.
Of which Environmental accomplishments
are you most proud?
PESTILLO: I’d hate to single
things out lest people who read it contend that their efforts were
less important, but I think ISO 14001 is, of course, very important
because it says the corporation is committed. It also sends a signal
to our communities—I think we were the first auto supplier
to become a Michigan Clean Citizen. It’s important for our
people to know that somebody is paying attention. It’s something
I can’t quantify, but when you’re recognized in the communities
where our people live—one of the values of corporate citizenship
is you get good people to come work for you.
What’s next on Visteon’s environmental
agenda?
PESTILLO: More of the same,
and finding that essentially great interior. We’d hoped to
have something ready for Frankfurt, but we didn’t. We have
to demonstrate our capabilities because that’s what sells.
We can talk all we want to manufacturers about concepts, but in
my view, it is of limited yield to do two-thirds of a car well and
then leave a third. Again, I’ll go back to McDonough. If that’s
the best you can do, do it—and get somebody thinking about
that last third. I believe you can get there with the right materials,
the right plastics, the right fabrics. Then work on fuel economy
because that’s important and something over which we have some
control, some leadership. We’ve got to find ways to continue
to sell manufacturers on that technology. We’re pressing all
initiatives. We do know a lot about plastics, and plastics play
a huge role in all of the environmental activities from evaporative
emission control on through recyclability, but we don’t know
enough about them.
Where do you find your inspiration? what
prevents you from being overwhelmed by all that needs to be done?
PESTILLO: You integrate this
into your business, and then you do your business—you do that
which you can control. I wouldn’t want him to think he’s
an inspiration because I like him, and I don’t want him getting
arrogant; but Bill McDonough has been great at giving me, personally,
a horizon, a time frame to figure out what’s out there and
keep getting better as we go. I think that’s been very helpful
in thinking about interiors. We’re not there yet, but it’s
a worthy concept. And I’ve watched, because he’s a friend,
Bill Ford dance the fine line between the environmentalists who
are his friends crowding him to do things that are imprudent business
decisions and striking a pretty good balance. And we look at companies
like DuPont and what it has been able to do in turning around its
processes. And BASF, which has found a way to take water-based paints
and give them luster, which is not easy to do. [I admire] guys who
refuse to accept a technical or physical impediment and just get
on with the determination to get it right.
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