The future chief executive officer of the Johnson Controls, Inc. automotive seating and interiors spinoff said capital constraints by the parent company has hampered growth in recent years, but the move to a standalone company will “turn the oxygen back on” to the automotive business.
Bruce McDonald, the future CEO, announced Tuesday at the Deutsche Bank Global Auto Industry Conference in Detroit that the new company will be known as Adient – pronounced ad – ee – ant – and will likely begin trading on the New York Stock Exchange on Oct. 3 under the ticker symbol ADNT. McDonald said the company will disclose detailed financial information in late March or early April. There will be an investor roadshow held over the summer.
He said the name was “a made up word” but there is a Latin interpretation that translates to accepting and advancing a situation or a stimulus.
“We’re pretty good at adapting and changing and prospering and so we’ve got a drive to continuously improve, so we kind of like that definition,” McDonald said.
The spinoff was announced in July 2015 and McDonald was announced as the future CEO. The company will occupy the 11th floor of the office building that Irgens is building at 833 E. Michigan St. in downtown Milwaukee. McDonald will be based at 833 East, but the company is not calling it the company’s headquarters, spokesman Fraser Engerman told BizTimes in December.
“When we sat down with our board … we really had a pretty simple decision to make,” McDonald said Tuesday, noting that capital constraints were placed on the automotive business as Johnson Controls moved into multiple industries.
He said the new company will be a more focused company with lower costs.
“First and foremost, we’re an automotive supplier, so we’re not spinning ourselves out of Johnson Controls to become a diversified company,” McDonald said.
The company previously disclosed that it expects to have sales for the automotive business decrease by between 2 and 3 percent in fiscal year 2016. McDonald said the fiscal year will end in September and the company feels good about how things are going so far.
He also added that things have been going well since the spinoff was announced. For starters, lower energy prices have meant more SUVs being sold. Vehicles with more seats means more business, McDonald said. He added that the popularity of crossovers, also with more seats and demands for more complex configurations, has helped.
For the business that will become Adient, McDonald said the pending spinoff has meant an opportunity to be more aggressive as the company plans to invest in growth.
“We’ve booked $1.6 billion in the last six months, which is a pretty significant number for us. I think it just demonstrates we know how to grow this business and we’re back on the growth trajectory,” he said.
McDonald said he doesn’t expect changes in the short-term like lighter seats or new materials will be “a huge breakthrough growth driver,” but he thinks a possible shift to autonomous driving has the potential to dramatically change the industry.
“People aren’t going to want to sit in a box facing one direction,” he said.
He said new entrants like Google or Apple could alter the industry, but the pace of that innovation remains to be seen.