ALLENTOWN, PA — This week, we hear from Sean Stanic , vice president, sales and marketing Siemens VDO Service & Special Solutions, one of the world’s leading suppliers of automotive electronics/electrical systems and components. An 18-year veteran of the automotive aftermarket, Stanic was appointed to this position in December 2004 and has been responsible for managing the company’s sales, marketing, engineering services and tech support departments in Allentown , PA. Stanic also sits on the board of AAIA and is active in the government affairs committee.

Join us as Stanic talks about the company’s role in the global aftermarket, the company’s core competencies and new product offerings.

In the past year, the automotive industry has been extremely focused on globalization and emerging markets like China and India . What are the benefits of being a global player both for Siemens VDO and its customers?

First and foremost, the fact that Siemens is currently established in many of these countries, whether it be through local sales offices, manufacturing facilities or service organizations, makes us very competitive and gives us the ability to deliver exactly what our customers need. As a supplier, we can be extremely flexible and efficient because we have the latitude to choose which sourcing and manufacturing assets will best help us to meet the customer’s particular requirements, whether they are for quality, pricing, availability, delivery, or all of the above.

Recently, there has been a big push by some of our customers for manufacturing that’s low cost but still meets the OE standard. If Siemens VDO and our competitors in the industry are doing our jobs properly in getting competitive quality product, designed, developed and manufactured to the OE standard, then our customers don’t need to set up internal departments of their own to do product sourcing. We have been able to easily meet those criteria because we are now sourcing from, and producing in, virtually every major industrial country in the world.

Does Siemens VDO manufacture product in the global market through partnerships or strictly as a stand-alone company?

Primarily, we acquire our product from Siemens VDO-owned manufacturing facilities, both on the OEM side as well as on the aftermarket side. Siemens VDO is also an OEM supplier for most of the products it provides for the aftermarket and that translates almost immediately to OE level quality and efficiency. On the aftermarket side, we have several Siemens VDO engineering competence centers around the world, as well as dedicated independent aftermarket manufacturing facilities. Most of them are strategically positioned in low-cost countries, which really help us expand our product offering and provide competitive pricing for our customers. When we do align with other manufacturers to make the products we need to fill gaps in application coverage or availability, we make sure that those products are produced in ISO-certified facilities to the same standards that Siemens VDO supplies to its OE customers.

Going forward, what do you think the aftermarket landscape will look like as more and more North American companies look to do business globally?

I see the landscape as being significantly different from what it is today. Global sourcing and manufacturing will continue to rise in the aftermarket for the foreseeable future. As we, and many of our peers in this industry, have quickly learned, you can become very competitive by going to low-cost countries for manufacturing. Of course, you have to make sure that those products make the grade for quality and performance. We are confident in our ability to deliver that because we have the product management, engineering and quality resources in place to make certain it happens.

Speaking of globalization, in the past few years the word ‘off shoring’ has been bandied about quite a bit and often with a negative connotation, but today that negative stigma seems like it has gone away…

Exactly. It’s not Asia of the 1970s. Now, you can get consistent quality, solid engineering, and a steady supply of product, whereas in the past it was unpredictable at best. Now, Asia , as well as some of the other low-cost countries, such as Brazil , has been able to provide us with the high level of quality and assurance that we need to confidently sell our products in the North American market.

Siemens VDO has significantly expanded many of its product lines in the past year. Could you give us an update on this?

One of the key products that has done very well for us over the past year has been our tire pressure monitoring system (TPMS) replacement parts program. The federal government launched the TREAD Act several years ago, mandating that all new cars must be equipped with a low tire pressure warning system by September 2007. As a result of an early compliance by automakers, there are millions of TPMS-equipped vehicles already on the road today, and this program has really taken off. (Editor’s Note: Siemens VDO manufactures OE Tire Pressure Monitoring Systems.)

Basically, each tire is equipped with a sensor located inside the tire, incorporated into the tire stem. The system monitors air pressure in the tire and sends a warning to the driver if the pressure falls below a pre-determined threshold. Systems such as this, help both from an economic standpoint, by increasing gas mileage and minimizing tire wear as well as from a safety perspective, by helping to maintain vehicle stopping performance and handling.

Our Siemens VDO OE replacement parts program includes everything needed for proper TPMS service, from complete sensor assemblies to component parts. We currently have a comprehensive program of sensor and service parts solutions and anticipate offering a complete program within the year.

And if I may note, when I say program, I include training in that scenario. As with all programs, we believe manufacturers are obligated to provide not just the product, but the solutions and support that goes along with those products. For TPMS, that means training, and it is a very critical issue. TPMS is a new product to the industry, and as we have quickly learned, it does not fit in the simple, "produce and release" product category. The traditional aftermarket and the tire industry will need the manufacturers’ help with this one. At Siemens VDO, we have initiated some of our own training activities within the tire industry and retail aftermarket, as well as partnering with the Tire Industry Association (TIA) to provide training for automotive service technicians. For example, for the second year, we have participated in TIA’s “Tires at Two” information and training forums held during the SEMA Show in Las Vegas . This year, our program included a representative from Chrysler, one of our major customers.

Engine management is also a growing category for us. In addition to our fuel modules, fuel pumps and fuel sensors, we have added and already expanded our line of racing fuel injectors. On top of this, we offer Siemens VDO OE sensor applications for most of the engines on the road today. As future engines are subjected to added emissions regulations, the need for more sensors will increase significantly, and we will be ready when our customers come calling.

Over the years, we’ve dramatically grown our electric motors line, and would like to be known as the competence center for any type of electric motor used in today’s cars. We have added and increased our application coverage for window lift motors and cooling fan assemblies as well as offering the most complete door lock actuator program in the market.

Wiper motors, sunroof motors and seat actuators are also some of the products on our radar. Cars are coming off the line with more and more electric motors — whether it’s minivans with electric motors for sliding doors or rear hatch electric motors. These are all products that we make OE; so introducing them to the automotive aftermarket is a natural progression.

And I must mention our world-class instrumentation offering. Siemens VDO gauges deliver world-class quality and innovation for every application from hot rods to harvesters. They’re built with the same precision and rock-solid reliability we put into the OE instrumentation we make for automakers and equipment manufacturers around the globe. We offer a range of styles, applications and advanced features.

What has the reception been like in the marketplace for these new product lines, thus far?

We’re getting a very positive reception from our customers, and a changing perception at the same time. For years, we’ve had an excellent reputation as a provider of world class rotating electrics and instrumentation. Now that we have dramatically increased our offerings by bringing additional OE products to the aftermarket, our customers are asking us to take the lead in determining the viability and availability of our other OE products for full line Siemens VDO aftermarket programs. Additionally, we are working with our co-manufacturing customers to determine product fits to fill out their aftermarket programs.

Siemens VDO Service & Special Solutions also expanded its Allentown, PA, aftermarket operations facility in 2005. What necessitated this move? Is this expansion an indication of future, anticipated growth?

In the past, we had two locations in Allentown . While the buildings were close to each other in proximity, we wanted the team to be together under one roof. Plus, we were in need of more office and distribution space because we were growing and continue to grow. Additionally, we’ve expanded our personnel in product marketing, engineering, tech support and customer service. Our new facility is twice the size of our previous two locations combined. All this expansion was necessary to support our aggressive growth plans. It’s very exciting.

In early 2006, Siemens VDO announced several important appointments in its management team. Were these executive promotions part of a new overall management strategy for the company?

Our core business areas are electric motors, engine management and instrumentation. In the past, a lot of people in our organization wore several different hats and worked on all of the lines. Although these product lines grew well over the years, I knew we could achieve and were ready to achieve even more. In order to be able to provide the proper focus needed to sustain future growth, we had to have a dedicated leadership and product management team for each of our three primary product areas. The teams are responsible for growing the individual product businesses, addressing new opportunities, and resolving technical issues. Although it is a very entrepreneurial approach, the results have been very rewarding. Our people are experts at their jobs, and they have the formidable resources of Siemens VDO behind them. Our end goal is to substantially grow our business and at least double the size of our current organization, both in terms of sales and headcount, within the next three to five years.