Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on January 14, 2011

Keynote Address:

Lennart Jonsson
Chief Technology Officer,
Eaton Corporation

As Cleveland-based Eaton Corp. celebrates its 100th-anniversary this year, the staid vehicle component supplier you thought you knew no longer exists. "We used to be a quiet North American company," Eaton's chief technology officer told OVA members at their monthly luncheon in January. But today, just over half of the company's business is outside of North America, and it's involved in some of the most interesting technical challenges on the planet.

While once largely a component supplier—most famously of axles to major automakers and truck manufacturers--in the last decade or so the company has moved into the systems and solutions side of the business, steadily moving higher up the client value chain. In 1998, the company sold its worldwide brake and axle business to Dana Corp., and Eaton now focuses mostly in power management and related control technologies (software embedded in control systems). It now does business in 150 countries, and supplies parts for everything from Audi superchargers to the new Boeing 787 Dreamliner, the next-generation jet.

The company's current emphasis, Mr. Jonsson explained, is on being global thought leaders in four vital niches: energy efficiency, fuel economy, emissions reduction and safety. "We want to be thought leaders in a sense that we want to partner with our customers...we have a number of large accounts where we actually are a combination of a consulting/engineering firm and also the provider of systems and components." The company is internally organized into two groups—electrical and industrial. But he noted that the two sides are increasingly working together and sharing solutions.

Eaton also does significant business in the area of data centers. "All the power that goes into the data center goes to heat. There is nothing coming out—only information," he said. Only a few years ago, only about one-third of the power that entered a data center was ever used by the servers, "so two-thirds of the power kind of disappeared on the way, by cooling systems, power distribution and so forth. So we have developed a very high-efficient, uninterruptible power system that is now our centerpiece" in that market. Now, only about 20-30% of the energy is lost.

Eaton remains dominant in one legacy category, transmissions for heavy duty trucks, where it commands about 80% of the North American market. But it's also quite active on the commercial side of hybrid engines, operating a test fleet of about 1,200 hybrid buses at the Chinese Olympics. One especially promising technology in this sector, Mr. Jonsson noted, is hydraulic launch assist. It involves capturing brake energy, and reusing it on getting the vehicle moving. Test vehicles using this technology have shown about a 30% improvement in fuel economy, and it also has implications for vehicle maintenance, due to less wear on the brakes.

The Boeing 787 Dreamliner has been on hold for some time, and suppliers such as Eaton probably won't be getting any revenue from the project for two more years, despite having put all the R&D investment into it already. That's just the nature of the business, and you have to plan for those kinds of things, he said. On the other hand, the positive part of the equation is that "once you're in [on these sorts of projects], you're really in. It's going to provide a revenue stream for the next 30 to 40 years."

More information:

Webcast from the Meeting:

Click on the image below to view the entire presentation as video.

Video Webcast from Recent Meeting
Webcast produced by Tom Kondilas.

Upcoming Meetings:

March 11, 2011
Bill Sanford

April 8, 2011
Mike Bunker

Early Stage Partners
Steve Spoonamore
ABS Materials
Jason Rottenberg
Arsenal Venture Partners

May 13, 2011
Charles Stack
Sideways LLC

June 10, 2011
Venture of the Year Award
Now Accepting

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