In nine years at BorgWarner Inc., former Goodyear executive John Fiedler shifted the maker of engine and drivetrain components into a higher gear-even though it meant getting out of the manual transmission business.
On Feb. 5, a day after the Chicago supplier reported record 2002 sales and profits, Mr. Fiedler, 64, gave up the CEO title, although he remains chairman until he retires.
When Mr. Fiedler turns 65 on May 22 and his contract expires, he is expected to hand over full responsibility to new CEO Timothy Manganello, 53.
The transfer of power comes as BorgWarner enjoys Wall Street's applause while much of the North American industry suffers profitless prosperity. BorgWarner shares are trading at about $53 and have regularly outperformed the Dow Jones Auto Parts Index over the past five years.
Mr. Fiedler's vision and quick action led BorgWarner to bet big and early on technology, which allowed the company to ride the boom of four-wheel-drive systems, and demand for fuel economy, emission control and safety products. He diversified the company's business beyond North America, and now Peugeot, Honda, Renault, Hyundai and Volkswagen are BorgWarner's fastest growing customers.
``As a growth story, BorgWarner is one of our favorites,'' said analyst David Leiker of Robert W. Baird & Co. in Milwaukee.
That growth story required wrenching decisions by Mr. Fiedler. He sold BorgWarner's manual transmission business in 1997-a product line that harkened back to the company's origins in 1909-to reinvest in faster-growing businesses.
Shifting for growth
BorgWarner grew from $800 million in sales in 1993, the year before Mr. Fiedler joined as president, to $2.73 billion last year. BorgWarner ranked No. 22 on the Automotive News list of top 150 original-equipment suppliers to North America.
That growth required tough decisions, Mr. Fiedler said. It meant ``getting rid of manual transmissions, improving the company's financial condition to grow and to execute a steady growth plan.''
Mr. Fiedler reduced the company's dependence on the Big 3. ``We wanted their market share to match up with their share of our sales,'' he said. ``It's like a stock portfolio. We don't want to be overinvested in anyone nor do we want to be underinvested in anyone.''
BorgWarner's product portfolio also needed to be rebalanced. In 1997, just 15 percent of the business was related to engines. So Mr. Fiedler acquired the automotive turbocharger business from AG KKK in 1998. Then he bought Kuhlman Corp., a leading supplier of turbochargers.
Those deals boosted BorgWarner's share of the turbocharger business in time to catch the boom in turbocharged diesels in Europe.
But not all of Mr. Fiedler's acquisitions worked. He concedes he stumbled when he bought the powdered-metal connecting rod business from Federal-Mogul Corp. and was forced to resell.
Merrill Lynch analyst John Casesa in New York gives Mr. Fiedler's efforts high marks.
``He was very realistic about finding investments that paid off, but he never got caught in the trap of buying growth for growth's sake,'' Mr. Casesa said.
Wall Street was less happy with BorgWarner's return on invested capital, a measure of the efficiency of management and the viability of product lines. That number was low because of Mr. Fiedler's heavy spending on new plants and equipment worldwide.
Now those investments are paying off. The company expects to add $1.2 billion in business in the next three years, including $240 million from General Motors Corp. for four-wheel-drive systems and other transmission systems business.
``Fiedler did a good job thinking about what was next,'' Mr. Casesa said. ``The company today is very well-positioned.''
Mr. Fiedler exudes confidence but none of the aggressive styles often found in the top ranks. ``Some CEOs are defensive, but he's not like that,'' Mr. Casesa said.
That's not surprising given Mr. Fiedler's upbringing. The six children of Leon and Betty Fiedler of Cuyahoga Falls, Ohio, learned to compete around the dinner table. From their earliest years they debated sports, politics or about anything else their father tossed out.
Honing their style and teamwork during raucous debates paid off in extraordinary ways in the annals of American business: Four of the six Fiedler children grew up to become presidents or CEOs of major companies.
First-born John went on to become executive vice president of Akron-based Goodyear after a stint as president and CEO of the tire maker's Kelly-Springfield Tire Co. subsidiary. Another brother, Lee, also became president of Kelly. (He is now mayor of Cumberland, Md., where Kelly had its headquarters.)
But after 29 years with Goodyear, John Fiedler quit.
``I was seriously disappointed at being No. 2,'' he said. ``I wanted to be a CEO.''