Still going strong

CEO of Johnson Controls, a maker of car seats, batteries and air-con equipment, remains bullish on China

Alex Molinaroli, the chairman and CEO of Johnson Controls Inc, is something of a rarity in today's business world - he has spent his entire 33-year career at one company.

"Anytime you've been in one place for 33 years, you experience opportunities and challenges. You work for a company of this size and scale and you get opportunities and you also find yourself at critical moments in your career," he says.

"What has kept me here through the ups and downs is the foundation of this company, the fundamentals and the people. In the end, that trumped any opportunity that might have seemed like a greener pasture."

Johnson has a long history in China, having opened a branch office in 1920. But it wasn't until the 1990s that it established manufacturing facilities in the country. Today, the company employs nearly 10,000 people at its consolidated operations on the mainland.

Based in Milwaukee, in the United States, Johnson is a diversified manufacturer of car seats and batteries, as well as heating, ventilation and air-conditioning equipment (the so-called HVAC sector) under the York and Johnson Controls brands.

This year, Johnson unveiled a merger plan with Tyco International Plc, a fire protection and security systems specialist based in Ireland. The mergers aims to strengthen complementary businesses such as HVAC and fire protection and security technology as the home-products industry shifts toward connected products known as the Internet of Things.

Johnson plans to spin off its automotive seating and interiors business into a separate company called Adient in 2017.

Molinaroli spoke with China Daily recently about Johnson's operations in China and its partnerships. Here are edited excerpts:

China is aiming for annual GDP growth of 6.5 to 7 percent this year. How has this affected Johnson Controls?

It's affected our three businesses in China differently. In our automotive business, we had a bit of a slowdown last summer because of extra inventory. Because of incentives put in place, we're now experiencing growth in our automotive business.

We're experiencing double-digit growth in our battery business, which is replacement and original equipment. Our air-conditioning business has probably been most affected. It has slowed, but there was some growth in the past few months. But in the prior six to nine months, it looks like there has been a lot of extra inventory out there from the slowdown in building construction.

What's your next big step in China?

We plan to open a second global corporate headquarters in Shanghai, which should be completed next year as part of our growth strategy for China and the Asia-Pacific region. The building is the first office block in China to receive the Excellence in Design for Greater Efficiency, a green building certificate from IFC-World Bank Group.

Have you readjusted expectations for the Chinese operations for 2016 because of the slowing growth?

We've had to readjust our planning cycle, for sure. It's affected the timing of our long-term investments - stretching them out a little more than what we expected. It requires us to be more careful, diligent and more specific. Our plans have to be a lot more robust in an environment that is not growing as rapidly or uniformly across the country.

What is Johnson's biggest achievement in China?

The fact we've been (manufacturing) there for the past 20 or 30 years, and the relationships we've established in China have been incredibly strong.

We don't have a strong consumer brand in China so a lot of people wouldn't know us. But if you talk to people in the automotive space, building space, and people in the battery and energy storage controls market, Johnson Controls is a well-known name, and we have some fantastic relationships. I feel as local as any multi-industrial can. But that's not a recent accomplishment, as that has happened over a long period.

How do you get along with your local partners?

We have incredible partners across the board. We can always learn, and we're always learning, but I think partnerships and relationships have been the key to our success.

How is your management team in China divided between Chinese and expats?

Over the past two to four years, we've shifted from being an expat-driven organization to probably more local Chinese than what we have had. We've been there long enough to be able to grow some of our talent, and we have been able to attract some new talent. We have a better mixture, and we still have expats, and I think we always will. But we have Chinese locals who are running most of our businesses in China. We also want to see if we can start exporting that talent and help them become a part of the larger Johnson Controls.

Is there a leadership style that is particularly effective in China?

It's a very relationship-based culture. It requires someone who is able to build relationships and also have the ability to work within the structure of a multi-industrial US company, and that takes a special person. You have to be able to be local and you have to be able to translate that to folks who don't spend all their time in China.

Will the Tyco merger affect Johnson's China operations?

It will be mostly helpful for the Tyco operation. Tyco is not as large in their fire and security products in China. Our brand, management capability and infrastructure are going to help them grow quite a bit with fire and security products. They are smaller than we are today.

During your visits to China, is there a place or area that has particularly impressed you?

I've spent so much time in the major cities and what really hit me was the disparity between the cities. I've also spent time on the road, and what is overwhelming is the opportunity.

As people talk about the economy changing and people talk about what the opportunity really is or isn't, and you just see the scale or infrastructure that's there and the infrastructure opportunity and the fact that the opportunities are migrating from east to west and people moving to the cities - that is what has been eye-opening for me.

It's always easy to fly into Shanghai and see how much things have changed over three or four months. But when you get a chance to travel inside the country you find out it's not unique to just Shanghai. The scale of opportunity is not going to go away. I am bullish on China.

What hobbies do you have?

My hobbies beyond work have been put on hold. The most important thing for me when I think about things outside of work is to live my life through my girls. I have two daughters, and I want to help them be successful and listen to them when they allow me to spend time with them.

Eventually, when this gig is over, I hope to get back to normal hobbies like golf and get back to a place where I can go fishing with my brother.

paulwelitzkin@chinadailyusa.com

(China Daily Africa Weekly 03/18/2016 page30)