Util Group is one of those companies that has done one thing extremely well for decades. Since its founding in Italy in 1959, it has been exclusively focused on producing high-quality components for brakes in vehicles, and it is widely recognised as a global leader in this field.
Key to its success has been its fine blanking technology, a metalworking technique that produces high-quality parts while saving time and reducing costs. It’s one reason why major car manufacturers across the world buy Util’s components.
The business model has served the company well. But Fernando Bertoni, who became President and CEO in 2019, says being a simple brake component manufacturer is no longer enough. With the automotive industry and various industrial segments undergoing a drastic shift towards electrification, he believes that Util must evolve into a global technology solutions provider.
“In the context we are living and working in today, we either change fast or there is no future.”
“The critical thing is survival,” he stresses. “In the context we are living and working in today, we either change fast or there is no future. Repositioning Util will allow us to go from being a strong component manufacturer to a lean and fast technology solutions provider, working with one clear objective: to anticipate and solve our customers’ problems.”
The Group, which has significant market share in North America, Europe and Asia, employs some 900 people and has technological and production sites in Italy, Canada, Mexico and China. To best capitalise on the rapid change that’s underway, Util’s leaders have developed a simple and robust strategy with four key pillars.
The first pillar involves ensuring that the company’s core business – the production of backing plates for brake systems – continues to strengthen. “Backing plates are a critical component of the braking system of a car today and on the electric car of the future,” Fernando says. “We are uniquely positioned for growth in this area.”
The next part of the strategy is to develop a wider range of products using its fine blanking technology. That means first producing other vehicle components beyond brakes and then looking beyond the automotive industry entirely to provide parts for industries like construction, energy equipment and agricultural machinery.
Util’s technology applied in these industries “makes a huge competitive difference in terms of cost and production time while maintaining the strictest requirements in terms of tolerance, flatness and overall quality,” Fernando adds.
Third, Util is focusing on the e-mobility market, an area where radical and fast-paced change is underway. As vehicles move away from internal combustion engines to electric ones, Util is developing solutions to add value in this space, not just for cars but also in numerous other “moving solutions” in areas like logistics, retail and agriculture.
The final part of the strategy is to expand the company’s manufacturing and technical capabilities, and develop a highly competitive cost structure. “We are investing more than ever before in new technologies and solutions to solve some of the largest and most challenging requirements of our times,” Fernando says. “Be it in terms of new materials, dimensions, tolerance or flatness requirements, both in large-scale manufacturing and in small production quantities and prototyping.
“As we continue to grow in diversified products and e-mobility solutions, we are in constant review mode and always challenging ourselves to optimise our production systems and overall cost structure across the Group.”
According to Fernando, all this has been made necessary by radical and disruptive transformation. “The transition to an e-world will require the adoption of new solutions, new technologies and a completely different approach to how we think about the future and grow our businesses,” he predicts.
“We need to adapt, innovate and collaborate with a broad array of market participants in a way that was unthinkable just a few years ago. The key to success will be the speed of change.”
COVID-19 has only accelerated this transition, bringing additional disruption. “In this scenario, we see a significant growth opportunity for Util Group and are determined to pursue it,” Fernando shares.
“We are developing, both organically and inorganically, a number of innovative technologies to accelerate our repositioning. Our four production and technology centres of excellence in Asia, Europe and North America, our technology partners and our long-term customer relationships give us the global reach, technical depth and the local market understanding needed for our strategy.”
One of the most difficult aspects of shifting gears like this has been ensuring that everyone in the company is on board with the changes. “The single biggest challenge we have faced is the internal resistance to change. The mentalities that say, ‘We are really good at what we do already’ or ‘we have always done it this way’ are the more common manifestations of that resistance,” he points out. “In my view, this represents a much larger challenge than those created by COVID-19.”
“We are investing more than ever before in new technologies and solutions to solve some of the largest and most challenging requirements of our times.”
To overcome this resistance, Fernando and his team have drastically redesigned the organisation, starting with the senior leadership and then working their way through the middle ranks of the Group to provide more transparency, visibility and empowerment.
One critical change was the transition from a regional, silo-based management approach to a global matrix organisation, which helped avoid bureaucracy while providing senior leaders with the opportunity to contribute across the Group and share best practices from around the world.
The company has brought in new senior leaders to challenge Util’s existing ones with new ways of thinking and bring a new perspective, and has also overhauled the way it assesses the performance of staff, changing both the performance metrics and the company values behind them.
“This is so our employees can fully understand what the objectives are, where the company is heading and why,” Fernando says. “In other words, we have brought clarity to the rules of engagement.”
Early this year, Util launched its Global Strategic Initiatives Organization (GSIO), which was born out of a study the company conducted in 2020. “This study corroborated that we are living in a period of fundamental and extremely fast change. One that we have not seen in over a century,” Fernando reveals.
He notes that the switch to electrified systems will be accompanied by a significant reduction in the use of fossil fuels in favour of renewable sources of energy, as well as the adoption of hydrogen as a fuel of choice, particularly in heavy vehicles. He also predicts the introduction, over time, of lighter, less polluting and more resistant materials.
“The single biggest challenge we have faced is the internal resistance to change.”
The GSIO was set up to help Util anticipate and be part of these changes. It has already started developing and co-developing new e-mobility solutions. “There’s a lot more to come on this in the near future,” Fernando confirms.
The company is also diversifying its technological offerings in both automotive and non-automotive industries through acquisitions. “We are producing and selling components that we could not offer before. We invested more than €5 million here, financed through internally generated cash flows,” he says.
Now that Util has begun its transformation, its mission in the coming months and years is clear, Fernando adds. “We will continue to execute our four-pillar strategy, heads down, with determination and a sense of urgency.”