eaton’s industrial sector: targeting focused growth ...pub/@eaton/@corp/documents/... ·...

© 2017 Eaton. All Rights Reserved..

Eaton’s Industrial Sector: Targeting focused growth opportunities

Uday Yadav - Chief Operating Officer, Industrial Sector February 24, 2017

2 © 2017 Eaton. All Rights Reserved..

• Focused on addressing the broader megatrends driving our business • Our products and customer-oriented solutions are aligned with major megatrends

• Our mechanical and fluid power portfolio is evolving with embedded intelligence

• Developing technology that is safe, reliable, efficient, connected, and intelligent

• Leveraging our enterprise-wide and electrical capabilities to position us for the future

• We are positioned to capture growth on Aerospace military platforms • Wins on key platforms will drive growth in the military OEM segment

• Aging fleets and mission readiness requirements provide near-term aftermarket opportunities

Industrial Sector growth – today’s themes


The Industrial Sector serves a diverse set of end markets

$7.1B 2016 sales United

States 58%

Geographic mix

Rest of World 42%

Aerospace • Commercial transports • Regional jets • Business jets • General aviation • Civil rotorcraft • Commercial aftermarket • Military transports • Military fighters • Military rotorcraft • Military aftermarket

Hydraulics • Construction & mining • Agriculture • Oil & gas • Commercial vehicles • Discrete manufacturing • Material handling • Industrial processing • Recreation • Filtration • Hydraulics aftermarket Vehicle • Commercial vehicles • Passenger vehicles • Medium-duty trucks

• Light-duty trucks • Agriculture • Construction & material handling • Vehicle aftermarket

End-market mix


Industrial Sector overview Aerospace Hydraulics Vehicle

• Hydraulic pumps, motors & valves

• Conveyance & fittings

• Valves & valve actuation • Transmission & clutches • Torque & power controls

• Hydraulic pumps, motors & valves

• Fuel pumps & valves • Conveyance & ducting

Key applications

Industry-leading portfolio

Megatrends

• Commercial aircraft (65%) • Military aircraft (35%)

• Mobile equipment (65%) • Stationary equipment (35%)

• Commercial vehicles (50%) • Passenger cars (50%)

$1.8B 2016 sales

$2.2B 2016 sales

$3.2B 2016 sales

Intelligent & connected

Environmental concerns

Energy efficiency

Population growth

Demand for superior value solutions


Megatrends are impacting all of our businesses

Light weighting Increased power density Electrification Blended power solutions

Precise control & automation Autonomous operation Health & usage monitoring Asset management Secure connectivity

Vehicle Hydraulics Aerospace Electrical Energy efficiency & increased regulations

Intelligent & connected

Environmental concerns

Software & embedded intelligence

Our enterprise-wide capabilities enable us to deliver solutions that address today’s megatrends and reduce total cost of ownership


Hydraulics

Mechanical valves

Intelligent digital valves

MOEM electro-hydraulic

Vehicle

Transmissions

Powertrain integration

Hybrid & electric vehicles

Aerospace

Hydraulic pump

Digital gauging & fuel management

Hydraulic power pack

Megatrends

Our product portfolio is evolving to support our current and future customer needs

Our leading industrial portfolio combined with our electrical capabilities uniquely positions us to provide best-in-class blended power solutions

Intelligent & optimized

Past Today & Future

Blended power solutions

Safe, reliable & energy efficient


Industrial Sector long-term strategic organic growth initiatives

SUPERIOR VALUE

STRATEGIC GROWTH

INITIATIVES

• Modification and upgrade products & services

• Strategic partnerships with industry participants

• Channel expansion with market segment specialization

• Authorized partner services & advantage programs

• Intelligent & connected

• Power efficiency & density

• Advanced applications

• Electrification

• Additive manufacturing

• Mature and modular products • Regionally adapted applications


Today’s growth topics

Intelligent products within the Vehicle business

Intelligent control technology in mobile hydraulic applications 1

2

3 Positioned to grow on Aerospace military platforms and in the aftermarket through modifications and upgrades


Intelligent control technology improves and optimizes mobile application performance

Mobile controls are a $2B market; growing at ~3% CAGR • Customers desire solutions that:

• Enhance efficiency and productivity • Lower operating costs

• Adoption of intelligence within the industrial market is accelerating

• Growing 3 to 4 times faster than the general mobile controls market

• Eaton’s technology optimizes and simplifies design, setup and operation

Wide range of mobile applications

•Eaton’s intelligent control technology is redefining the customer experience


Eaton’s intelligent boom stability control technology solves customer challenges

Boom stability control • Subsystem that minimizes oscillation of

large structures • An adaptive system:

• Advanced algorithm embedded within intelligent valve solution

• Processes over 20,000 sensor readings and decisions per second

Customer challenges • Operating costs and reliability • Performance and safety

Boom stability control concrete pump truck

• Customer benefits: • 16% productivity improvement • 50% labor reduction • 45% reduction in component wear • Improved speed to market from

months to days/weeks Boom stability control technology reduces oscillation on

mobile applications that use extensions

https://upload.wikimedia.org/wikipedia/commons/0/02/Schwing_Boom_Pump.JPG


Future growth of this technology

Our electrical capabilities enhance our solutions with embedded intelligence and robust/secure connectivity

Power of One Eaton

• OMNEX Trusted Wireless products • Enables remote operator to control

the machine at the point of use • Improves visibility • Personnel safety • Machine efficiency

Remote communication

& control

Online technical services & analytics

Intelligent controls





2



Our Vehicle product portfolio is evolving with intelligence and connected technology

Improving power creation in a regulated environment

Power creation Efficiently distributing power from

creation to use

Power distribution Optimizing flow and use of power

for diversified applications

Power optimization

Procision Engine transmission harmonization

Auto-docking assist Autonomous

IntelliConnect

Predictive services

Designing technology that improves power efficiency, ease of driving, and lowers total cost of ownership


Intelligent transmissions enable enhanced power distribution and optimization

Intelligent transmission technology

• An adaptive system:

• Software connects and communicates with other intelligent systems

• Senses conditions and optimizes engine performance

• Makes 100 decisions per second

• Enables advanced features - health and monitoring prognostics, over-the-air programming, autonomous operation

• Customer benefits: • 8 to 10% better fuel economy • Lower total cost of operation and improved safety features • OEMs are closely compliant with upcoming regulations

• Launched in 2016 and expecting $120M in mature year sales • Key wins: Daimler, Navistar, Blue Bird, IC, Temsa

Positioning customers for the future with innovative technology

Procision dual-clutch transmission

Electrical, wiring, software & controls

Gearbox

Clutch & damper


Providing autonomous solutions by leveraging our core strengths

Electronic Steering

Active Braking

“Ultra” Creep Mode

Adaptive Cruise Control

Stop & Go

Traffic Assist

Urge to Move

Cameras and Image

Recognition

Blended Pedal

Crash Mitigation

Lane Keeping

Platooning

V2V / V2I

Self-Docking

Radar / Lidar Self-

Coupling GPS

Look Ahead

Core Eaton features Advanced Driver Assist Systems (ADAS) enabling features

Autonomous solutions landscape

• Unique IP for commercial vehicles • Software algorithms sense and control the

truck’s movement with minimal sensors • Reduces customer costs:

• Prevents trailer and loading dock damage, related downtime

• Reduces driver training time • No additional dock infrastructure

Autonomous auto-docking solution

Our autonomous features are targeted. Our intelligent transmission technology enables all solutions.

16 © 2016 Eaton. All Rights Reserved.

Truck of tomorrow

0

50

100

1990 2016 2024

Kw

Eaton is well positioned to address future power distribution & optimization needs

Loads Engine

Intelligent connected electrical distribution

Transmission & control unit

Electrical Power

Alternator/ generator Inverter & battery Management

Fans

HVAC

Brakes

12v loads

Truck of tomorrow is intelligent, efficient and has smart power distribution • Eliminating power inefficiencies will be

necessary to meet increasing regulations, driving higher electrical demands

Estimated electrical distribution efficiency improvements: • Internal combustion engine: 0.56 gallons/day • Electric vehicle: 0.5 miles range extension

Optimized power distribution

Increasing electrical demand trend in Class 8

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwii2vuIjYPSAhWlC5oKHV28BSMQjRwIBw&url=http://www.fleetalternatorstarter.com/alternator_international_truck.aspx&bvm=bv.146496531,d.bGs&psig=AFQjCNFQYuE3NnX8UiQd965SRSPouiHZiQ&ust=1486732700500081

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwipzK3pjIPSAhVFCZoKHTW6BO8QjRwIBw&url=http://www.kenworth.com/news/news-releases/2014/march/bendix-md/&bvm=bv.146496531,d.bGs&psig=AFQjCNFqReiQ3PDRiQE2QzsEQTysbrxUDA&ust=1486732601582578

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjo46jwi4PSAhXEDpoKHag3C8gQjRwIBw&url=http://www.ebay.com/sch/A-C-Compressor-Clutch-for-Mack/33543/bn_1430749/i.html&bvm=bv.146496531,d.bGs&psig=AFQjCNHPHRBYWk7sb0jHn6Kppy4Vnt7pzQ&ust=1486732377156863





2



The military OEM and aftermarket are attractive end markets Why we like the military: • Higher market stability vs. commercial

• Resilient to macro economic shocks

• Government funded development

• Changing geopolitical landscape

Eaton’s military growth will be driven by: • Key wins on ramping platforms: F-35, KC-46A,

KC-390, A400M, CH-53K

• Aftermarket growth from aging fleets and mission readiness requirements

Source: Teal Group, SIPRI, Forecast International Oct. 2016

-20%

0%

20%

40%

Civil jetliner market performance vs. global military spend

Commercial Military

$0$5

$10$15$20$25$30$35$40

Legacy platforms

F-35

A400M KC390

New military deliveries (2016 $B) CH-53K


Key wins on ramping platforms will drive growth in the military OEM segment

UH-60 CH-53K

7x

F-18 F-35

2x

C-130J A400M

2x

Eaton is actively engaged on several U.S. and foreign military development programs

$6B life of program value awarded for next generation military platforms

A400M Picture, Copyright: Airbus


$200

$400

$600

$800 Base Overseas contingency operations

U.S. defense budget stabilizing and international defense spending increasing

• U.S. budget stabilizing after a period of strong decline

• Potential for higher U.S. defense spending with new administration

• Regional instability driving growth in emerging markets

• U.S. focused on mission readiness and life extension programs for aging fleets

• Performance, reliability and affordability key to winning in the U.S. military aftermarket

U.S. military discretionary budget ($B)

$547

$243 $155

$416

$238

$140

Asia PacificWestern EuropeMiddle East / North Africa

Global defense budget growth ($B) 2014 - 2020

Source: President’s FY17 Budget Request & IHS Jane’s Defense Budgets Report


0

1,500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

• Many U.S. Air Force platforms projected to see service life >50 years

• Life extensions sustain spares sales, along with higher volumes of end of life part replacements

• Ability to offer product upgrades, increasing safety, reliability and affordability

Life extension programs for aging fleets driving modification and upgrade opportunities

• Leading-edge flap valve facilitates aircraft maneuverability

• Delayed fleet retirements create opportunities due to 25+ years of operation

• Upgrade to safety critical unit

• Replacement valve has longer life and higher reliability

• Scheduled for implementation on 700+ U.S. aircraft and 800+ international aircraft

Opportunity for Aftermarket sales

USAF F-16 drawdown estimate 2007 vs. 2016

Eaton LEFV

F - 16

Activ

e ai

rcra

ft


• Roughly 50% of Navy’s 600 F/A-18C "legacy" Hornets out of service1

• Less than 1/3 of the USMC’s F/A-18s are ready to fly2

• Backlogs at military depots offer potential to generate spares and repairs growth

Mission readiness of aging platforms remains top concern for U.S. military

• Engine driven pump powers hydraulics on the aircraft

• Eaton’s pump provides higher reliability vs. existing pumps

• Reduces operational lifecycle costs • Targeting implementation on 500+ U.S.

aircraft and 350+ international aircraft

Eaton EDP

F - 18

40%

45%

50%

55%

60%

65%

70%

75%

80%

'06 '08 '10 '12 '14

FA-18A/D Hornet

FA-18E/F Super Hornet

Navy mission capable rates

0102030405060708090

100

'12 '13 '14 '15 '16

Navy F/A-18 airframe depot backlog

1 Senator Roger F. Wicker, Chairman, U.S. SENATE, subcommittee on seapower, committee on armed services, March 25, 2015 2 Aviation Weekly, February 8, 2017

Source: US Naval Institute News Source: The Virginian Pilot


• Focused on addressing the broader megatrends driving our business • Our products and customer-oriented solutions are aligned with major megatrends

• Our mechanical and fluid power portfolio is evolving with embedded intelligence

• Developing technology that is safe, reliable, efficient, connected, and intelligent

• Leveraging our enterprise-wide and electrical capabilities to position us for the future

• We are positioned to capture growth on Aerospace military platforms • Wins on key platforms will drive growth in the military OEM segment

• Aging fleets and mission readiness requirements provide near-term aftermarket opportunities

Industrial Sector growth – today’s themes

eaton’s industrial sector: targeting focused growth ...pub/@eaton/@corp/documents/... ·...

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