As Head of Asia Operations for Lotus Engineering, Geraint Castleton-White’s current role has a major focus on the strategic development of the third party engineering business in China.
What kinds of things are you working on at the moment?
My role is very diverse and covers many aspects of Lotus Engineering activities. We are developing Lotus Engineering China (LEC) at the moment and consequently there are numerous facets to my day. I can be involved in a long-term strategy meeting and then flip to solving a short term project issue, arranging customer visits, interviewing new staff or resolving a finance issue. In the main the local team runs the day to day Chinese operations and my role is to support their growth and ensure they have support from HQ.
It is a very exciting time at the moment as we are transitioning from a sales office in China to a local engineering delivery centre. This brings with it a number of challenges. I am based in the UK at our HQ in Hethel but travel extensively, mainly to China, so the time difference of eight hours is an added challenge. I am probably based in Hethel for around 50% of my time, but that varies according to needs. There is a lot of time travelling, not just between the UK and Asia, but also within the region. We have clients spread all over China.
When I am in the UK my day starts at around 05:30 when I wake up and check overnight emails. I try to deal with any immediate issues on my way to the office work over the phone and then the morning is usually a mixture of conference calls and sorting day to day urgent business. The afternoon when China goes home I use to close any open issues. The time difference has some advantages; if there is something really urgent I can talk to someone in China at the start of their working day, so late UK time and then pick it up at the end of their day when I wake up. It is not quite 24-hour working, but when it works well it is a very efficient way to work.
How do you see the general business environment in China currently?
It’s very busy for us as an engineering services provider to the automotive sector. Vehicle sales growth in China may have slowed but the desire of OEMs in China to develop new product is very buoyant. The local OEMs wish to rapidly increase their engineering capabilities, and foreign joint ventures are also localising product. It seems like everyone needs our support somewhere.
Can you describe the main customer types for Lotus Engineering in China?
The market is very interesting because there are a number of different players with slightly different requirements. There are some very large State owned OEMs who have very strong relationships with JV partners and at the same time are developing their own indigenous product. We work with these companies to help accelerate their in-house capabilities and develop their engineering teams.
We also work with Western OEMs who wish to localise or build unique Chinese products, and then there are smaller privately owned OEMs who have great ambition and wish to compete at the highest level as quickly as possible. Our work with suppliers tends to be limited, and associated with developing specific components or systems for projects we are already working on.
The engineering team’s work is very much the same with all types of customer, although with the local and private OEMs there is a greater emphasis on knowledge transfer.
Can you describe the range of work that you are undertaking in China and how it is conducted?
Lotus Engineering in China has had a great deal of success with delivery of projects based around our core competency of driving dynamics; these can range from a simple vehicle assessment, to a benchmarking exercise and to full chassis tuning projects.
We have also undertaken a number of vehicle/power train integration exercises. This is particularly relevant in China where local component content is very important, so adapting existing vehicles to accommodate cost effective, localised sub-systems is very desirable to our customers.
Manufacturing support has also proved very popular. We have undertaken supplier development for example, and our manufacturing engineers have project managed an entire factory build and commissions through to a few days consultancy at the customer plant.
An increasing amount of work is now delivered in China and this is driving our strategy to build up an engineering team in China.
Work on alternative power trains, EV and HEV projects are usually undertaken by the expert teams in the UK, often with the client’s engineers embedded in the team.
Are there particular segments of the Chinese automotive market where you are seeing a lot of growth and demand for Lotus capabilities?
The car buying public in China is becoming more discerning and is demanding higher quality and performance targets in a great variety of segments. This has led to an increase in the demand for Lotus Engineering’s services. The common theme is that as the products are maturing rapidly, there is a desire to have new product on the market quickly.
How is Lotus Engineering resourced in China?
Our main office is in Shanghai and is in transition from a Sales and Representation Office for work to be undertaken outside China, to a Wholly Foreign Owned Enterprise (WFOE) which will allow Lotus to deliver engineering projects locally. Our ideal mix of staff is around 10-20% expats to lead and guide teams of experienced local engineers. Of course, we will, where necessary, call on the vast experience based in our UK and USA centres for the more complex projects.
From an operational viewpoint, how self-contained are Lotus’ Chinese operations?
It is not our intention to make Lotus Engineering China a standalone organisation. There will be an increasing level of local delivery, particularly driving dynamics, chassis and powertrain integration projects. There are some areas where we will rely on our expertise in the UK or the USA. It is possible that in the future LEC will become a centre of excellence and will then export its services to other parts of the Group.
China’s auto industry is obviously developing rapidly. How do you see the level of local engineering capabilities currently and how will that develop in the future?
The local capability is increasing quickly and we are able to fill capability gaps in most programmes. What is still lacking are local engineers with 10-15 years plus experience and engineers who have worked through more than two or three new vehicle cycles. The current local engineering base has a very good academic grasp of automotive engineering but lacks some of the real-world experience that engineering demands. One of our key roles is to support this wealth of talent and impart some of our experience gained from having worked through and solved all sorts of engineering concerns. Lotus is in a particularly fortunate position as we develop and manufacture our own vehicles so our engineering teams have first hand experience of vehicle production.
I have the impression that there is very little collaborative activity in R&D between Chinese companies currently – for example in areas like fuel cell technology, or EV batteries. Do you see any sign of that changing?
In the same way, the established European and Japanese OEMs are collaborating in certain areas of advanced technology, I think there will be more collaboration within China’s auto industry, especially for smaller OEMs. However, Chinese OEMs are fiercely independent and competitive so by working with Lotus Engineering, they are able to have access to world leading innovations without collaborations with other OEMs. We continue to be able to accelerate the knowledge of these OEMs by delivering engineering projects with significant levels of technology transfer.
Another factor to bear in mind is funding. As consolidation takes place, certain larger OEMs will be able to undertake more internal research. We see our role developing as in Europe and America, where we can lead or support a consortium of stakeholders to undertake research in specific areas. This can include government, OEMs, academic organisations and suppliers.
Do you think the JV foreign partners will eventually be shown the door as Chinese automakers develop their own models and brands or do you think they will still need access to Western technology and therefore keep them on?
No, I don’t think that there will be a “them and us” situation in the future. The motor industry is already global and I think that there will always be a place for JVs. The Chinese market has the potential to be able to accommodate a huge number of brands – already it has the most diverse car fleet in the world, a good mixture of European, American, Asian and locally designed product. Right now, the prestige of the Western type brands commands a premium and will probably do so for some time to come. However, customers will ultimately decide what they want.
Of course, it will not be long before Chinese car brands will arrive in Europe with products that the European customer wants to buy.
Do you think, in general, that they will follow the market-entry strategies of the Japanese and Koreans when looking to develop a presence in Europe? Build share with cheap low-end vehicles to begin with?
I don’t think it will be quite the same and I don’t necessarily think they will start with low-end products and move up. Look at Geely/Volvo and SAIC, for example. They have been able to develop a presence in medium and executive segments of the car market by purchasing brands. I also do not believe that the Chinese OEMs will be constrained to a certain segment when looking at export strategies; they will be well-placed to develop a range of products in different segments and look for opportunities across world markets.
Are you doing much work in the area of electric drive (including hybrids) in China?
There is a considerable amount of interest in alternative powertrains, but demand is still mainly for volume built on ‘conventional’ technology. In general, electric vehicles and hybrids also come with added cost. The OEMs are, however, very interested in employing the best of what can be done – in terms of low CO2 and efficiency – with conventional technologies and I expect those demands to increase. That’s where we can help.
Do you see electric vehicles as a big future growth segment in China?
Based on China’s size I believe there will be a considerable market, but as a proportion of the total vehicle fleet it will be relatively small and limited to captive local fleets – ‘city cars’ for instance. Right now, hybrids and pure electric vehicles are best suited to mature markets. There’s a need for more investment in battery charging infrastructure, too. There is an official strategy to support electric vehicles, but I see real significant growth for electric vehicles as mainly a long-term proposition.
What about the problems of chronic traffic congestion and problems of air pollution in major cities?
That is actually driving growth for innovative conventional powertrain solutions for vehicles. There’s a clear need for enhanced fuel efficiency, lower CO2, reduced emissions and the need for advanced engineering technologies. There are a lot of old vehicles on the road and replacement demand will be rising from the expanded vehicle fleet. It’s important to replace the older vehicles with cleaner ones. It’s also the case that new car demand is continuing to rise in China’s interior cities and it makes sense to develop vehicles that are cleaner, less polluting and more fuel efficient, while also meeting rising aspirations for mobility and motorisation as real incomes rise.
Vehicle emission regulations are moving in one direction only and the recent highly publicised air quality problems may add to pressures for a further tightening and incentives for cleaner, more fuel efficient vehicles.
From the point of view of working styles and patterns, how does working in China compare, say, with working in the UK? Are there cultural differences that make delivering engineering services very different, or are things basically the same?
The basic engineering is the same. When we talk with a mature Chinese OEM it is surprising how close our understanding of the engineering process is. They will also put in the hours and effort to get the job done – they have a very strong work ethic. The differences are not all that great, though in China you may find yourself socialising with the clients more in a formal way, at a restaurant, for example. This is something that is considered a natural part of the job.
As Head of Asia Operations for Lotus Engineering, Geraint Castleton-White’s current role has a major focus on the strategic development of the third party engineering business in China. The role is varied and encompasses meeting customers, building relationships, developing capabilities and supporting activities required to grow the business in a very challenging and dynamic region. The customer base in China is wide and varied.
After graduating in 1979 from Southampton University with an Honours degree in Mechanical Engineering and completing the Ford Motor Company Graduate Trainee scheme, he joined Engine Engineering at the Dunton Research and Development centre. During this period he was involved with advanced engine development.
In 1984 Geraint joined Lotus and was given responsibility for managing the engine development of the LT5 V8 engine project for highly successful General Motors Corvette ZR1.
This was followed by a move to the TWR Group as General Manager, where he set up an Engine Engineering Consultancy Division incorporating design, development and manufacturing capability. The division undertook a number of projects including, the engine for the Jaguar XJ220 supercar delivering a specific output of 159 bhp per litre with full emission compliance, at the time a first, and the engine for the original DB7. A number of other exciting high performance engine projects were also designed, developed and manufactured, the company achieved ISO 2001 and also produced the engines for the TWR racing teams.
His career then focused on General Management in manufacturing, working as Divisional Director for Automotive Products and then Manufacturing Director for Cosworth Racing.
Eventually returning to Lotus again in 2004 where he has worked in various roles including Head of Powertrain with responsibility for current and future technologies, including alternative fuels, low CO2 solutions and hybrid/electric vehicles.
Author: Dave Leggett
- Paul Pywell: Head of UK Operations Lotus Engineering (lotusproactive.wordpress.com)