AI interviews Kjell Nilsson, CEO at Semcon and Stefan Ohlsson, President, Automotive R&D

Together with its customer such as BMW, Daimler, Jaguar Land Rover, MAN, Opel, Porsche, Saab Automobile, Scania, Volvo Cars, Volvo Trucks, and VW, Semcon develops future technologies, products and information solutions for creating new business opportunities. 

An important part of Semcon’s business concept is to be active where its customers are active and be able to provide resources and services from a global perspective.
In the automotive industry Semcon provide services to manufacturers of cars, commercial vehicles like trucks, buses and plant machinery including forestry machinery, dumper trucks and excavators. With a total of 2 600 employees and an extensive offering in Germany, Sweden, Brazil, India, China, Russia, Spain and the UK, Semcon has built solid relationships with the world’s leading automotive OEMs during many years 

AI: How has the market for engineering services changed during the last few years and how do you see the market evolving in a more long-term perspective? 

“We have seen a larger focus and greater consolidation in the field of engineering services in the last few years, with large OEMs acquiring engineering suppliers focusing on in-house development as well as consolidation of suppliers. VW’s recent acquisition of ItalDesign is one example of this together with Semcon’s merger with German IVM Automotive and Swedish Caran. In a wider perspective I believe that we will see a continued consolidation of smaller engineering suppliers on the European market to get access to the large OEMs and reach necessary volumes. Another important change will be the race about the high quality engineering professionals coming years” says Kjell Nilsson, CEO at Semcon. 

Stefan Ohlsson, President Business Area Automotive R&D continues: “The intense product development with shorter development cycles and demands for more models together with more complex products has changed the demands from engineering services from specific mechanical engineering towards electronics and system architecture skills. Close customer relationships and presence will be even more important and this is one of Semcon’s advantages with a global spread with infrastructure that enables cross market deliveries and long-term relations of independent. 

AI: Where do you see growth in your automotive business in a geographical sense? What emerging markets does Semcon hope to expand its base in?

“We expect the growth to continue in Germany, Sweden and BRIC countries. Semcon in Germany has 40 years of experience in the field since the acquisition of IVM Automotive 2007. After the acquisition of IVM and the Swedish firm Caran, Semcon became one of the world’s largest suppliers of engineering services to the automotive industry.“ says Stefan Ohlsson . After the recession we now see an increasing demand on both the Swedish, and German markets and not the least in the BRIC countries, which will soon contribute over half the world’s growth. 

It is the customers’ demands for expertise, innovation, ability to supply and market adaptation encourages the independent Semcon to constantly be at the cutting edge in keeping a close eye on emerging trends in this area and quickly moves to provide the right skills. Semcon’s customers are active in many different development-intensive industries, which provide extensive industrial expertise that benefits all customers. The local presence also benefit the customers by getting access to highly skilled staff around the world as complete projects are teamed up specifically to meet the demands fast. 

“If we look at the world’s leading manufacturers current model portfolios and add their planned investments up to 2010 the conclusion is that automotive manufacturers will, over a relatively limited period, annually increase investments by many billions of EUR. Many of Semcon’s customers have major investment plans for the coming years. Annual growth for the automotive industry is estimated at around 2.6 per cent until 2015, which means that the industry’s ability to add value in production and product development amounts to around EUR 903 billion, compared to today’s EUR 645 billion. A result of significantly higher levels of qualified engineers means that manufacturers’ own development centers and external development companies like Semcon will be well stocked with assignments for a long time to come,” says Kjell Nilsson, CEO at Semcon. 

AI: What are some of the challenges that currently face automotive OEMs and how does Semcon help meet these issues? 

It is the fact that Semcon has a global presence and highly skilled teams with a long-term relationship that enables us to meet the OEMs challenges such as the higher demand on cost effectiveness and price pressure as well as faster development and shorter development cycles. 

The development of BMW‘s Z4 is one example of this. BMW needed a car that conquers – the rebirth of roadsters. Semcon led the development team and designed and developed the car’s body work and some 60 individuals from Semcon met the challenges including schedule cut short, late production changes and thereby setting a new norm at BMW how overcome these kinds of challenges. For Semcon, this was yet another receipt of its position as one of the leading automotive engineering services suppliers in the world. 

The fact that Semcon provide both engineering services and services within product information enables our customers to benefit from a wide functional and industry experience. Within the automotive industry and the product information area specifically Semcon has a long term experience from providing solutions within the after market area of for example owner’s information, diagnostics and service information, parts engineering and accessories information, as well as training solutions. With several customers i.e Jaguar LandRover, Semcon also has strategic partnership agreements (managed services) within which Semcon takes on the full responsibility of all activities related to the development and production of after market information solutions. 

AI: You have identified growing eco-consciousness in the auto industry as a huge business potential – what are Semcon’s strengths in this area? 

Semcon is helping develop hybrid installations for the large-scale automotive industry. The company says that it keeps a close eye on emerging trends in this area and quickly moves to provide the right skills. “We know for example that the automotive industry is becoming increasingly interested in advanced after-treatment systems for dealing with exhaust gases from the fuel we still use. We have therefore already created a knowledge bank about diesel particle filters and catalytic converter systems. In more practical terms we are also trying to make things more efficient in the simplest way possible and designing answers for installing hybrid solutions into all types of cars, while trying to keep car prices as low as possible,” Kjell Nilsson continues. 

In 2007, Volvo Special Vehicles decided to come up with an eco-friendly car and it chose the Volvo C30 1.6 D DRIVe for modification. The company worked with Semcon and in a short 14 months Volvo had an eco-friendly vehicle. The Volvo C30 1.6D DRIVe turned out to be an extremely fuel-efficient car and with diesel consumption of 0.44 liters per 10 kilometers and CO2 emissions of 115 grams per kilometer, which was far superior to its competitors in the same segment at that time. The vehicle also has considerably improved road-holding properties compared to the original version. Through cross-functional, theoretical studies the team went through every part of the car including its parameters and the aim was set in stone – CO2 emissions cut from the existing 129 grams per kilometer to 119 grams per kilometer.