With the recently completed renovation of its Waukesha headquarters, Husco International Inc. now has a building that reflects “the high-tech, innovative, cutting-edge global company that we are,” chief executive officer Austin Ramirez said in an interview with BizTimes.
“I think this is the first time in the last 30 years we stepped back and really tried to make the whole facility coherent and connected,” Ramirez said.
The facility at 2239 Pewaukee Road is home to 390 of the company’s 1,400 global employees. Prior to the renovation, Ramirez said only 20 percent of employees could see a window from their office.
“After the renovation, just about everybody has access to natural light,” he said. “We’ve got a great cafeteria area where employees can gather; It’s just a more open, welcoming, positive physical environment for us.”
The $9.4 million renovation was part of an $85 million investment into the company’s global facilities. Husco manufactures powertrain components for off-highway and automotive markets, and most of the investment went toward capital expenditures for new business launches.
Ramirez said he’s excited about Husco’s prospects both next year and over the next five years, but he also cautioned there’s “at least a meaningful probability that we’re going to dip into a recession at some point next year” and memories of 2008 and 2009 are still fresh for many businesses.
“Nobody wants to be overleveraged or overexposed going into a recession, so I think we’re thinking very carefully about new capital investment and what resources we’re going to bring on board,” he said. “Just making sure that we’re in a position that if the economy does tip down that we are ready for it.”
The new tariffs implemented by the Trump administration and ensuing retaliation by China have been among the major issues Husco has had to confront in recent months. At an event in October, Ramirez said the tariffs were hurting Husco’s profitability to the tune of around $1 million per month. In the interview, he said the bigger issue is that Husco now has to incorporate the higher costs brought on by the tariffs in its cost structure.
“So when we’re quoting new programs it makes us less competitive, especially versus our competitors in Germany and Japan, which just happen to be where our biggest competitors are,” he said.
Ramirez added that customers are currently making decisions about programs that will go into production in two or three years and run for seven to 10 years.
“Decisions that are being made today will impact us for the next 15 years, and I think we’re at more of a disadvantage now than we were nine months ago because of these tariffs,” he said.
Exposure to a changing automotive industry also provides challenges for Husco. The shift in consumer preferences away from passenger cars and sedans and toward trucks and SUVs does not have a major impact on Husco.
“We make powertrain components, so whether that engine or transmission goes into a Ford Fusion or Ford F-150 for us doesn’t really matter too much,” Ramirez said.
The electrification of vehicles does have the potential to impact Husco’s business, but Ramirez said he sees the trend as more hype and marketing currently.
“There certainly are things happening in the electrified vehicle space, but it’s still less than 2 percent of vehicles are pure battery electric vehicles,” he said. “My opinion is it will be decades before that changes in a really meaningful way.”
Ramirez said internal combustion engines will continue to get better, faster, cheaper and more efficient, and more hybrid vehicles will emerge with start-stop batteries or more robust hybrid systems.
In the short-run, Ramirez said there is a chance automotive markets will begin to soften.
“We’re starting to see that in our order books a bit and I think you’re hearing that in the rhetoric from the big automakers that they’re expecting that we’re at or near the top of U.S. market demand and they expect to see some softening next year,” he said.
Besides the potential challenges and headwinds, Ramirez is optimistic heading into the new year.
“Other than the risk of a mild recession next year, I feel really excited about Husco’s prospects as we look out not just to 2019, but over the next five years,” he said. “Having the Waukesha facility, we really now have a building that reflects the sort of culture that we’ve had for the last 20 years.”
