1
00:00:02,480 --> 00:00:06,800
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,080 --> 00:00:09,280
Speaker 2: Let's go to Berlin right now, Bloomberg's Oliver Crooks semi

3
00:00:09,280 --> 00:00:11,880
Speaker 2: blind with an interview with a key player from the

4
00:00:12,039 --> 00:00:13,920
Speaker 2: under pressure auto industry.

5
00:00:13,920 --> 00:00:16,279
Speaker 1: Only that's right, Tom, and listen, it's not just the

6
00:00:16,320 --> 00:00:18,159
Speaker 1: auto industry, because this is the sort of story that

7
00:00:18,200 --> 00:00:20,360
Speaker 1: sits at the very center of the biggest sort of

8
00:00:20,400 --> 00:00:22,080
Speaker 1: stories we've been talking about for the last few months,

9
00:00:22,120 --> 00:00:26,200
Speaker 1: whether it's AI semiconductors, the auto industry, terrorists, and of

10
00:00:26,239 --> 00:00:28,319
Speaker 1: course the German economy. So I'm very pleased to be

11
00:00:28,480 --> 00:00:30,720
Speaker 1: to speak to somebody who really sits at the heart

12
00:00:30,800 --> 00:00:33,600
Speaker 1: of all of all of these stories brought together. It

13
00:00:33,680 --> 00:00:36,199
Speaker 1: is the CEO and chairman of BOSH. Because Bosh, we

14
00:00:36,240 --> 00:00:37,600
Speaker 1: should just say, in addition to being one of the

15
00:00:37,640 --> 00:00:40,839
Speaker 1: biggest companies and employers in Germany, it's technology that it's

16
00:00:40,880 --> 00:00:43,479
Speaker 1: in half of all the smartphones, it's almost in everybody's home,

17
00:00:43,520 --> 00:00:46,000
Speaker 1: and it's in literally almost every single car on the planet. So,

18
00:00:46,120 --> 00:00:48,879
Speaker 1: chefon Hatoon, thank you so much for your time. Today.

19
00:00:49,240 --> 00:00:51,000
Speaker 1: We should start in the auto industry because we have

20
00:00:51,080 --> 00:00:53,720
Speaker 1: more difficult news out of Volkswagen today and probably your

21
00:00:53,840 --> 00:00:56,360
Speaker 1: order book is one of the clearest indications of what

22
00:00:56,440 --> 00:00:58,440
Speaker 1: is to come in terms of demand for the auto sector.

23
00:00:58,600 --> 00:00:59,520
Speaker 1: What are you seeing there.

24
00:00:59,720 --> 00:01:02,200
Speaker 2: We are still growing in the older industry also this year,

25
00:01:02,240 --> 00:01:05,199
Speaker 2: but let's be very honest, the OLO industry didn't grow

26
00:01:05,280 --> 00:01:08,280
Speaker 2: as much as we anticipated. So the overall production of

27
00:01:08,360 --> 00:01:10,000
Speaker 2: vehicles will be pretty much flat.

28
00:01:10,080 --> 00:01:11,440
Speaker 3: It will be a very small growth.

29
00:01:11,880 --> 00:01:14,760
Speaker 2: Just few pockets are left of growth, like India for example,

30
00:01:14,840 --> 00:01:17,480
Speaker 2: or the Chinese export. There's still some growth in the

31
00:01:17,480 --> 00:01:20,240
Speaker 2: better electric vehicles, but we see a big shift actually,

32
00:01:20,319 --> 00:01:22,679
Speaker 2: not only that there is no volume growth, but the

33
00:01:22,720 --> 00:01:25,720
Speaker 2: shift is away actually from the big growth numbers of

34
00:01:25,800 --> 00:01:28,560
Speaker 2: bettery electric cars to plug in hybrids. So that is

35
00:01:28,680 --> 00:01:32,120
Speaker 2: challenging in this industry because if you change production programs

36
00:01:32,160 --> 00:01:34,160
Speaker 2: in this industry, that's a big thing.

37
00:01:34,480 --> 00:01:36,000
Speaker 1: It takes a very long time. So do you see

38
00:01:36,000 --> 00:01:37,840
Speaker 1: any reason to be sort of more optimistic about things

39
00:01:37,880 --> 00:01:39,680
Speaker 1: turning around or do you think we're in this for

40
00:01:39,760 --> 00:01:41,480
Speaker 1: at least another two years or so.

41
00:01:41,720 --> 00:01:44,480
Speaker 2: Well, long term, we know things will change towards a

42
00:01:44,480 --> 00:01:47,640
Speaker 2: better electric vehicles and that's a good thing, but definitely

43
00:01:47,640 --> 00:01:50,680
Speaker 2: the ice technology, so the engines will be needed longer.

44
00:01:50,840 --> 00:01:53,160
Speaker 3: That's what we always thought. So there is a.

45
00:01:53,120 --> 00:01:56,920
Speaker 2: Technology open approach now coming by the consumer, because the

46
00:01:56,960 --> 00:02:00,000
Speaker 2: consumer freely decides what he wants to buy. Our first,

47
00:02:00,160 --> 00:02:02,560
Speaker 2: you see with a flat production line that the consumer

48
00:02:02,800 --> 00:02:05,680
Speaker 2: decides less, so it just waits and takes the car

49
00:02:05,680 --> 00:02:07,760
Speaker 2: a bit longer, which is bad for the industry. On

50
00:02:07,760 --> 00:02:10,120
Speaker 2: the other end, the consumer is deciding to buy more

51
00:02:10,120 --> 00:02:12,880
Speaker 2: pluck in hybrids, which is more to see neutral. But

52
00:02:13,000 --> 00:02:16,080
Speaker 2: in the long run, I'm still optimistic full electricfication will happen.

53
00:02:16,120 --> 00:02:18,000
Speaker 1: And I'd like to also get your broader picture in

54
00:02:18,040 --> 00:02:20,360
Speaker 1: terms of global demand. Because you're in obviously homes, you're

55
00:02:20,400 --> 00:02:23,560
Speaker 1: in consumer goods, you're in obviously cars, you're in smartphones.

56
00:02:23,600 --> 00:02:26,000
Speaker 1: What is the sort of picture of global demand across

57
00:02:26,040 --> 00:02:27,200
Speaker 1: all of your different businesses.

58
00:02:27,520 --> 00:02:30,200
Speaker 2: Well, if you look at consumers, which drive most of it, right,

59
00:02:30,600 --> 00:02:33,720
Speaker 2: which is our home kitchen appliance business, but also a

60
00:02:34,120 --> 00:02:37,200
Speaker 2: power towards consumers are hesitant on spending. You see that

61
00:02:37,280 --> 00:02:39,160
Speaker 2: in China and Europe. You see it less in the US.

62
00:02:39,200 --> 00:02:42,000
Speaker 2: By the way, the US consumers always much more resilient

63
00:02:42,000 --> 00:02:44,880
Speaker 2: in this terms, right, But you see in these two

64
00:02:44,960 --> 00:02:48,400
Speaker 2: sectors are quite strong resilience, so people wait a moment

65
00:02:48,440 --> 00:02:48,760
Speaker 2: to buy.

66
00:02:48,800 --> 00:02:50,600
Speaker 3: Also for cars, so on all the doorables.

67
00:02:50,600 --> 00:02:53,920
Speaker 2: You see that hesitation which comes from unclear regulation or

68
00:02:54,160 --> 00:02:57,120
Speaker 2: unclear view. If this is good, if it's a good

69
00:02:57,200 --> 00:02:59,639
Speaker 2: case for the consumer, they calculate, right, they don't just

70
00:02:59,680 --> 00:02:59,799
Speaker 2: do it.

71
00:02:59,840 --> 00:03:02,400
Speaker 1: More things And one of the things that are obviously

72
00:03:02,400 --> 00:03:03,679
Speaker 1: going to be paying attention to as well as the

73
00:03:03,720 --> 00:03:05,840
Speaker 1: election in the United States, how prepared are you for

74
00:03:05,919 --> 00:03:08,320
Speaker 1: potentially ten twenty percent terrorsts in the event of a

75
00:03:08,360 --> 00:03:11,080
Speaker 1: Trump administration. Does that make you look at your manufacturing

76
00:03:11,080 --> 00:03:12,640
Speaker 1: and production footprint?

77
00:03:12,840 --> 00:03:13,320
Speaker 3: Well, definitely.

78
00:03:13,360 --> 00:03:15,360
Speaker 2: I'm not a big fan of terrorsts, right, that's clear

79
00:03:15,360 --> 00:03:18,640
Speaker 2: because terrors kind of hinder the global collaboration and that's

80
00:03:18,720 --> 00:03:22,160
Speaker 2: important for technology. But you know, the election brings also

81
00:03:22,280 --> 00:03:24,880
Speaker 2: certain clarity. So over the next month some clarity will

82
00:03:24,880 --> 00:03:27,960
Speaker 2: come what the direction is, and then industry will adjust.

83
00:03:28,000 --> 00:03:30,840
Speaker 3: Everybody will be able to adjust. Allo, that's a good thing.

84
00:03:30,880 --> 00:03:34,000
Speaker 2: By nation of the election, how the policy actually will

85
00:03:34,080 --> 00:03:36,880
Speaker 2: work we have to see. But in general, the US

86
00:03:37,000 --> 00:03:40,840
Speaker 2: is still the strongest figures, i would say, globally, so

87
00:03:41,040 --> 00:03:43,480
Speaker 2: probably the recovery is coming there fastest, The gross is

88
00:03:43,480 --> 00:03:45,800
Speaker 2: coming the most eminent, so you have to be there.

89
00:03:45,840 --> 00:03:49,080
Speaker 2: And that's why we shift and bought big time towards

90
00:03:49,200 --> 00:03:52,839
Speaker 2: US investments. We did the investment for the semiconductor in California.

91
00:03:53,240 --> 00:03:58,960
Speaker 2: We bought JCI and Titachi for the condition business, and

92
00:03:59,000 --> 00:03:59,920
Speaker 2: that's the strategy to go.

93
00:04:00,280 --> 00:04:02,280
Speaker 1: And the other question is, of course the Chinese economy,

94
00:04:02,320 --> 00:04:03,920
Speaker 1: where we've seen a lot of distinct weakness. But I

95
00:04:03,960 --> 00:04:05,760
Speaker 1: have a theory I'd like to test on you, which

96
00:04:05,800 --> 00:04:08,640
Speaker 1: is that when demand comes back within the Chinese economy,

97
00:04:08,920 --> 00:04:11,280
Speaker 1: is it really for the same items that we've been

98
00:04:11,320 --> 00:04:13,760
Speaker 1: talking about historically because it's been demand's been out for

99
00:04:13,800 --> 00:04:16,599
Speaker 1: about four years. Is it for German ices? And is

100
00:04:16,640 --> 00:04:18,960
Speaker 1: it for really the same components because China has really

101
00:04:18,960 --> 00:04:21,279
Speaker 1: been trying to make its own component industry as well.

102
00:04:21,560 --> 00:04:25,239
Speaker 2: Now China is changing from a pure production manufacturing based

103
00:04:25,279 --> 00:04:28,800
Speaker 2: system and a market for importers right towards the technology

104
00:04:28,800 --> 00:04:32,240
Speaker 2: based system, which is driving its own innovation and bringing

105
00:04:32,279 --> 00:04:33,560
Speaker 2: great product in China for.

106
00:04:33,520 --> 00:04:34,200
Speaker 3: The Chinese people.

107
00:04:34,240 --> 00:04:38,400
Speaker 2: The consumer is extremely demanding, very high tech driven, loves

108
00:04:38,520 --> 00:04:41,400
Speaker 2: high tech functions. So you see way more level two

109
00:04:41,440 --> 00:04:44,000
Speaker 2: plus driving, which is full automated driving, but you are

110
00:04:44,040 --> 00:04:47,040
Speaker 2: still responsible. So it's a thing which is much cheaper

111
00:04:47,080 --> 00:04:49,839
Speaker 2: but still very comfortable. And you see these things in China,

112
00:04:49,920 --> 00:04:52,600
Speaker 2: So the most advanced functions are now asked by Chinese

113
00:04:52,640 --> 00:04:56,400
Speaker 2: consumers and customers, and that's actually a change. So we'll

114
00:04:56,480 --> 00:04:58,040
Speaker 2: China be the same when demand comes back.

115
00:04:58,040 --> 00:04:58,560
Speaker 3: Definitely not.

116
00:04:59,040 --> 00:05:00,880
Speaker 1: And then the other question I also for you is

117
00:05:00,920 --> 00:05:02,000
Speaker 1: that you said that this is going to be a

118
00:05:02,080 --> 00:05:04,200
Speaker 1: very challenging year for you the road ahead, and that

119
00:05:04,240 --> 00:05:07,119
Speaker 1: obviously where demand is absent than cost cuts need to happen.

120
00:05:07,160 --> 00:05:08,720
Speaker 1: Are there going to be more cost cuts at BOSH?

121
00:05:08,720 --> 00:05:11,000
Speaker 1: Where are looking to cut costs? Our jobs on the table,

122
00:05:11,040 --> 00:05:12,280
Speaker 1: You're going to have to cut some jobs now.

123
00:05:12,320 --> 00:05:14,800
Speaker 2: Most important for us are not the cost management questions

124
00:05:14,800 --> 00:05:17,320
Speaker 2: of our plan. The real core thing of the plan,

125
00:05:17,400 --> 00:05:21,640
Speaker 2: which includes cost management right is the innovation plans. Because

126
00:05:22,000 --> 00:05:25,320
Speaker 2: we go for new innovation to face with better value

127
00:05:25,360 --> 00:05:28,279
Speaker 2: to the consumer in different areas. So we've forced to

128
00:05:28,360 --> 00:05:30,680
Speaker 2: go more to the US. We forced to go more

129
00:05:30,720 --> 00:05:34,080
Speaker 2: into new product, new innovation and be on the forefront

130
00:05:34,120 --> 00:05:36,839
Speaker 2: on these new trends, also in China, also in Europe,

131
00:05:36,880 --> 00:05:37,720
Speaker 2: but also in the US.

132
00:05:37,760 --> 00:05:39,920
Speaker 1: So let's not be totally pessimistic in terms of those

133
00:05:39,960 --> 00:05:42,680
Speaker 1: new trends. Where is BOSH right now spending the most

134
00:05:42,720 --> 00:05:44,200
Speaker 1: in R and D? Where are you seeing that sort

135
00:05:44,240 --> 00:05:44,720
Speaker 1: of promise.

136
00:05:45,000 --> 00:05:47,440
Speaker 2: Well, still a lot of money is spent for semiconductors

137
00:05:47,480 --> 00:05:49,680
Speaker 2: because that's an investment based approach. Right, you need to

138
00:05:49,720 --> 00:05:52,479
Speaker 2: build these factory first, right, there is one in the

139
00:05:52,560 --> 00:05:53,960
Speaker 2: US and there are some in Germany.

140
00:05:54,040 --> 00:05:56,080
Speaker 3: We still build. And then there.

141
00:05:55,960 --> 00:05:58,960
Speaker 2: Is obviously the electrification story because long term better electric

142
00:05:59,080 --> 00:06:02,159
Speaker 2: this wild be the way to go. And automation of vehicles,

143
00:06:02,960 --> 00:06:06,400
Speaker 2: including full automation, but majorly the trend is now not

144
00:06:06,480 --> 00:06:09,919
Speaker 2: going for full automation, which some players show, but the

145
00:06:10,080 --> 00:06:11,280
Speaker 2: semi automation, so we.

146
00:06:11,240 --> 00:06:13,720
Speaker 3: Are still responsible. The card does most of the work.

147
00:06:14,120 --> 00:06:16,039
Speaker 3: That seems to be the way where the next wave

148
00:06:16,120 --> 00:06:16,599
Speaker 3: is really coming.

149
00:06:16,600 --> 00:06:18,400
Speaker 1: We had a category where you think you could see

150
00:06:18,440 --> 00:06:21,000
Speaker 1: an acquisition, for example in bat because you said sort

151
00:06:21,040 --> 00:06:22,680
Speaker 1: of a number of times that you need to be

152
00:06:22,720 --> 00:06:25,120
Speaker 1: prepared for inorganic growth. Where are you sort of looking

153
00:06:25,160 --> 00:06:26,200
Speaker 1: at inorganic growth?

154
00:06:26,240 --> 00:06:27,919
Speaker 2: Well, I think on the inorganic side we are not

155
00:06:27,960 --> 00:06:30,120
Speaker 2: so much looking at the automotive because the automotive we

156
00:06:30,160 --> 00:06:32,000
Speaker 2: can do from our own We invest heavily on our

157
00:06:32,000 --> 00:06:32,880
Speaker 2: own capacities.

158
00:06:33,200 --> 00:06:35,080
Speaker 3: Right, But inorganic growth.

159
00:06:35,120 --> 00:06:37,000
Speaker 2: We did this now with the air condition because of

160
00:06:37,080 --> 00:06:40,040
Speaker 2: the heat pump business, which is also transforming the industry

161
00:06:40,560 --> 00:06:43,160
Speaker 2: and there in this non automotive side always we are

162
00:06:43,200 --> 00:06:45,440
Speaker 2: quite active. You saw that also with the building integration

163
00:06:45,480 --> 00:06:48,360
Speaker 2: where we acted in Canada and the northern US with Paladine.

164
00:06:48,760 --> 00:06:50,640
Speaker 2: And that's the right way to do it, because this

165
00:06:50,800 --> 00:06:53,200
Speaker 2: is the moves we need to do to shift more

166
00:06:53,200 --> 00:06:55,960
Speaker 2: to North America, to shift more to this non automotive businesses.

167
00:06:56,000 --> 00:06:58,440
Speaker 2: The automotive we are strong enough to shape this ourselves.

168
00:06:58,480 --> 00:06:59,960
Speaker 1: All right, Well, listen to seven Hart and thank you

169
00:07:00,080 --> 00:07:01,960
Speaker 1: so much for your time today. I really appreciate really

170
00:07:01,960 --> 00:07:04,520
Speaker 1: going around the world and around the different industries that

171
00:07:04,640 --> 00:07:06,440
Speaker 1: BASH is involved in, which is again in half of

172
00:07:06,480 --> 00:07:08,640
Speaker 1: the world's smartphones and in literally every single car, so

173
00:07:08,640 --> 00:07:11,200
Speaker 1: a really a very sort of thorough appraisal of sort

174
00:07:11,240 --> 00:07:12,400
Speaker 1: of demand in the global stage.