GKN
Delivering Sustainable Growth
Powder Metallurgy
Andy Reynolds Smith
Manfred Weber
GKN Capital Markets Day – 12 April 2011
Agenda
GKN Powder Metallurgy overview
Key global drivers
Value creating growth – design for PM
Powder Metallurgy strategy summary
GKN Capital Markets Day – 12 April 2011
2
Powder Metallurgy – 2010 Sales £759m
Hoeganaes
Powder
Production
Sinter Metals
Component
Manufacture
220,000 tons of powder
per year
6 billion parts
per year
plenty of applications
US no 1 and
22% global share
World no 1
16% global share
GKN Capital Markets Day – 12 April 2011
Customers
Over 3,000 customers
globally
75% Automotive
3
PM Increasingly Competitive vs Alternative Technologies
 Aligns with long term material and energy constraints
Process
Material Utilisation
Energy Consumption *
PM
Casting
Extrusion
Forging
Chip Machining
100%
75%
Primary Yield Losses
Secondary Yield Losses
Finishing Yield Losses
Raw Material Utilization
GKN Capital Markets Day – 12 April 2011
50%
25%
0%
0
25
50
75
Primary Energy (MJ/kg)
Secondary Energy
Finishing Energy
* Finished part
4
Advanced Process Technology - The Differentiator
Powder
Benefits:
•Increased productivity
•Increased quality
• Advanced low cost alloys
• High quality processability
• Global availability
Adaptor/ Press
• CNC controlled
compaction of complex
shapes
• High precision and
efficiency
Design for PM
• Standard CAD/CAM
• Tool shops
• IP protection
Furnace
Benefits:
• Controlled heat treatment
• HT-Sintering
• Energy saving
•Less energy consumption
•Increased productivity
GKN Capital Markets Day – 12 April 2011
5
Powder Metallurgy Division
Total divisional sales by
region of origin
Sinter Metals global
market share
Sinter Metals sales by
customer
GKN
Sinter EU
38%
Non
Automotive
• Good progress to develop
balanced sales in the regions
• Absolute share in AP and SA still
modest, actions developed to
exploit opportunity
GKN Capital Markets Day – 12 April 2011
• Top 8 cover more than 50%
of total market
• Top 20 customers cover 50%
of business
• 25% industrial customers
6
GKN Powder Metallurgy – Global Presence
GKN Capital Markets Day – 12 April 2011
7
Unmatched Global Engineering Capability
400 engineers
135 active patent families resulting in more than 500 patents globally
Design, simulation, development and validation capabilities
Dedicated PM machining service centre
Stand alone R&D centre with full size production equipment
Advanced materials laboratory
27 core development programs
Radevormwald, Germany
GKN Capital Markets Day – 12 April 2011
8
Powder Metals Operational Segmentation and Restructuring
Eleven plants closed and
four new plants opened
in India and China
Bonn
Bruneck
Cape Town
Milan
Radevormwald Conventional
HC exited two lossmaking product lines and
reduced fixed cost
structure
GKN Capital Markets Day – 12 April 2011
Bad Langensalza
Radevormwald Forge
Radevormwald Filters
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
CLOSED
Sinter breakeven
reduced through
substantial cost reduction
Bad Brückenau
Sutton
Lichfield
Romulus
Argentina
India
Move/
Expansion
Additional
Plant
Owosso
Zeeland
Kolsva
Worcester
Ridgway
OPENED
Sinter plant scale and
focus; 30% in 2005, 80%
in 2010 and >95% in
2015
Oberhausen
Emporium 2
Riverton
Sinter
China
New Plant
Powder
China
New Plant
9
PM market share
30
20
18
25
16
20
14
12
15
10
10
20
5
18
8
6
4
2
16
0
2007
2010
Europe
0
14
2007
2010
North America
12
Europe
North America
10
8
6
4
2
0
50
2007
45
2010
40
8
7
Global
6
35
Global
30
5
25
4
20
3
15
10
2
16
5
1
14
0
2007
2010
0
12
2007
India
India
2010
China
10
8
China
6
4
2
0
2007
2010
Brazil
GKN market share of
addressable China target PM
market
Brasil
GKN Capital Markets Day – 12 April 2011
10
PM Sales and Margin Progression
14.0%
1,000.0
12.0%
800.0
10.0%
% ROS
6.0%
400.0
4.0%
£m Sales
600.0
8.0%
200.0
2.0%
-
0.0%
-2.0%
(200.0)
2005
2006
2007
2008
ROS%
GKN Capital Markets Day – 12 April 2011
2009
2010
2011 Q1
Sales
11
Foundations of PM success
Global Customers
Global Drivers
Climate Change - a Key Global Driver
BRIC
Global Customers
BRIC Emerging Markets
Challenge and Chance for our Future
15
5
4
EXTERNAL
GETRAG
Best Sinter Supplier 2010
Success!
People Training
Plans
Almost 100 %
Retention and
Succession
Super
Leadership team
Regional
Strategy
€ 105m Europe
New business
wins since 2009
Design for PM
Received
Customer Awards
Benefits:
Benefits:
• Zero PPM
• Reduced CNQ
• Elimination of machining operations
• Higher number of strokes/min.
Technology
Powder Metallurgy
- Technology without limit
• Advanced low cost alloys
• High quality processability
• Global availability
Base
Base Core
Core Business
Business
Technology
Technology // Capability
Capability
• Standard CAD/CAM
• Tool shops
• IP protection
Hearts of Gold
Winning new
Business
Operating
Model
5
GKN Capital Markets Day – 12 April 2011
Design
Design for
for PM
PM
Bearings
Powder
Development
Pulleys
Development
Center
Con Rods
Best in Class
PM Process
Carriers
Value
Value
Creation
Creation
Bevel Gears
Adaptor/
Adaptor/ Press
• CNC controlled compaction
of complex shapes
• High precision and
efficiency
Planetary
Pumps
Design for PM
Energy Reduction
OBD Business
Processes
6
Growth rate
> 10%
Teamcenter and
Program
Management
PM Process KH
Product Quality
Advanced Process Technology –
The Differentiator
10% ROS
80% Cash
Conversion
Improved Account
Management
RPPC
Engineering
Resource
Performance Improvement
For Production & Business
Process Excellence
Powder
Achieved
KPI’s
New Vision and
Mission
Process
Development
Capability
Technology Innovation
Operational Excellence
Business Excellence PM 2010
Teamwork
Customer Service
82
Clear Strategy
Controlling
Processes and
Execution
Preferred Supplier
2010
GKN Sinter Metals – President Awards 2010:
INTERNAL
CI Planning
Corporate Standard
People Involvement
Financial Success
Customer Relationships
2
Furnace
Benefits:
Benefits:
• Controlled heat treatment
• HT-Sintering
• Energy saving
• 50°C higher temperature
doubles belt speed
• 1250°C allows material
cost reduced by 50%
Bearing Caps
cus ip
er Fo ersh
tom Lead
Cus logy tion
no
va
Tech Inno
Variable Valve
Trains
POWDER METALLURGY – UNLOCK THE POTENTIAL
27
12
Agenda
GKN Powder Metallurgy overview
Key global drivers
Value creating growth – design for PM
Powder Metallurgy strategy summary
GKN Capital Markets Day – 12 April 2011
13
Low Carbon Agenda Impacts the Industry Drivers
Industry Drivers
Reduce climate impact
► Improve energy efficiency
► Increase renewable energies
Light Weight Structure
Intelligent Alternator
GKN Capital Markets Day – 12 April 2011
Industry Technology Drivers
► High efficiency power trains
► Fuel efficiency
► Weight reductions
► Electrification
► Vehicle management systems
► Energy recuperation
► Alternative propulsion
Electric Pumps
Start-Stop Automatic
14
Industry Technology Drives PM Technology
Industry Technology Drivers
High efficiency power trains
► Fuel efficiency
► Weight reductions
► Electrification
► Vehicle management systems
► Energy recuperation
► Alternative propulsion
GKN Capital Markets Day – 12 April 2011
Powder Metallurgy Technology
► Design for PM
► High performance gears
►Net shape
► Filters and substrates
► Soft magnetics
► Fine powder technology
► Light weight materials
15
Global PM Market Growth 2010 – 2014
Millions
5.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.5
0.0
0.0
0.0
0.0
F'Cast (Jan 11)
YOY Growth (%)
4.0
2008
68.2
2009
2010
2011
2012
2013
2014
2015
2016
60.0
74.2
78.3
83.9
89.6
93.4
97.0
99.3
-12.0
23.6
5.5
7.2
6.8
4.2
3.8
2.4
Source: IHS Automotive Forecast, January 2011.
LV production growth 5.9 %
3.5
3.0
2.5
2.0
2010
2011
2012
2013
2014
PM growth c.1% above market
GKN Capital Markets Day – 12 April 2011
16
PM Content and PM Value per Vehicle
PM content per vehicle:
Global average c.8.5kg
2010
2011
2012
2013
2014
PM value per vehicle:
Global average c.£35
2010
GKN Capital Markets Day – 12 April 2011
2011
2012
2013
2014
17
Agenda
GKN Powder Metallurgy overview
Key global drivers
Value creating growth – design for PM
Powder Metallurgy strategy summary
GKN Capital Markets Day – 12 April 2011
18
250 years of GKN
125 years of the Car
50 years GKN in Powder Metallurgy
GKN Capital Markets Day – 12 April 2011
19
Industry Trends and Drivers
Industry trends
New Products
Energy
Efficiency
Start-Stop
Systems
Efficient
Transmissions
Dual Clutch Trans.
and Gears
Reduced
Emissions
Variable Valve
Timing
Driving
Dynamics
Electric Power
Steering
Electrification
Soft Magnetics
GKN Capital Markets Day – 12 April 2011
New PM Applications
20
Design for PM
Engineered
Powders
Multi-part
substitution
Extreme
Forming
3D Undercutting
Unique
Joining
GKN Capital Markets Day – 12 April 2011
21
Accelerated Trend Towards Design for PM
Efficient Transmission
Reduced Emissions
Energy Efficiency
Driving Dynamics
Industrial
Electrification
New products and
design for PM
increase to c.40%
of sales in 2015
GKN Capital Markets Day – 12 April 2011
22
Unique Powder Metal Technology Capability
Sinter Forged Differential Gears
Higher core strength  gear mass reduction feasible
Better surface metallurgy  elimination shot peening process
Better shape capability  net shape spline and retention groove
Traditional Design
Torque max:
4800Nm
Spherical Radius: 49.19mm
Mass/set:
2814 g
GKN Design
Torque max:
4800 nm
Spherical Radius: 40.48 mm
Mass/set:
1525 g
Gear Mass Savings = 46% !!!
GKN Capital Markets Day – 12 April 2011
23
Unique Powder Metal Technology Capability (Filters)
Hydrogen Purification
GKN Capital Markets Day – 12 April 2011
Inhalator Titanium Filter
24
Unique Powder Metal Technology Capability (MIM)
3D Geometry
800°C temperature resistance
High corrosion resistance
Finished surface
rpm up to 100,000
MIM: Turbocharger Systems
GKN Capital Markets Day – 12 April 2011
25
Agenda
GKN Powder Metallurgy overview
Key global drivers
Market and business segmentation
Powder Metallurgy strategy summary
GKN Capital Markets Day – 12 April 2011
26
Powder Metallurgy Summary
Key growth drivers
Value of PM content per vehicle outgrowing market
Continued market growth in Europe and North America with
accelarated growth in India, Brazil and China
Increasing penetration in Industrial markets
Unique parts and powder position supports rapid exploitation
of design for PM
Bolt on acquisition potential to strengthen global
positioning and new technology
Powder Metallurgy set to outperform market growth
with continued margin expansion
2 to 3% above PM market
GKN Capital Markets Day – 12 April 2011
27
GKN
Delivering Sustainable Growth
GKN Capital Markets Day – 12 April 2011