Molinaroli discusses Johnson Controls strategy at Executive Summit

Alex Molinaroli Johnson Controls
Molinaroli discusses his strategy for Johnson Controls Inc. at an event in Milwaukee in October.

Johnson Controls Inc. chief executive officer Alex Molinaroli discussed the strategy behind the recent flurry of divestments, acquisitions, joint ventures and a spin-off at the company at RSM’s 2015 Executive Summit this morning at the Italian Community Center in Milwaukee.

Alex Molinaroli Johnson Controls
Molinaroli discusses his strategy to narrow the focus at Johnson Controls Inc.

Molinaroli has undertaken a massive overhaul at the Glendale-based company since he became CEO in 2013 to remain competitive globally and to allow the core business segments access to resources and capital to help them grow. He also didn’t want an activist shareholder to put pressure on the firm, like activists have done at several large companies of late.

“We decided that we didn’t want to have an activist show up in our business,” Molinaroli said. “It was my goal to not have anyone except our management team and our board of directors decide what’s best for our business.”

Over the past two years, Johnson Controls has sold its $3 billion automotive electronics business to Visteon Corp.; sold its HomeLink business to Gentex Corp. for about $700 million; entered a joint venture with SAIC’s Yanfeng Automotive Trim Systems Co. Ltd. for automotive interiors; acquired Hart & Cooley Inc.; entered an air conditioning joint venture with Hitachi Appliances Inc.; sold its Global WorkPlace Solutions unit to CBRE Group Inc.; and announced plans to spin-off its automotive business from the rest of the company.

The change in the company has been dramatic, Molinaroli said, and employment has gone from 172,000 when he took the reins to 130,000 today.

Since the automotive business is cyclical, it made sense to create a separate company for that segment to allow it to define its own future, he said.

“Such a large part of the business being automotive, it put a huge drag on the rest of the business,” Molinaroli said. “Two years ago, we decided to be our own activists.”

The Hitachi joint venture gave Johnson Controls a larger foothold in China, which is immensely important to the future growth of the firm, he said.

“If you want to be successful, you can’t underestimate the importance of China,” Molinaroli said. “We have no choice—none—absolutely no choice. It’s a question of us making it a priority.”

Molinaroli, who has recently become embroiled in a Ponzi scandal, declined to address his “personal issues” during question and answer session following his presentation, and also with a reporter individually.

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Molly Dill, former BizTimes Milwaukee managing editor.

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