Freudenberg Sealing Technologies is one firm that is taking a proactive approach to make sure that the fast-growing trend of electrification doesn't leave it behind, sealing deals that bring it the know-how to participate in this business of the not-so-distant future.
The firm analyzed its offerings last year and disclosed that it was in danger of losing 70 percent of its business to E-mobility, not just in automotive. Its answer has been to strengthen its knowledge base regarding batteries and fuel cell technology.
Last fall, Freudenberg purchased Elcore, a fuel cell system manufacturer out of Munich. And now it has taken majority control of Xalt Energy, a Midland, Mich.-based firm that makes lithium-ion technology solutions targeted for heavy-duty mobility applications. A year ago, Freudenberg first took a 30 percent share of Xalt, and said it will acquire the whole firm in the near-term.
Elcore and Xalt help form the core of Freudenberg's newest business unit, the Battery and Fuel Cell Division. Nils Martens, who leads the division, laid out the logic in plain and simple terms: Freudenberg needed to have in-house knowledge and capabilities in the battery and fuel cell applications just as it does for combustion engines and transmissions.
While electrification is expected to continue to grow quickly in the evolution of the automotive business, Freudenberg said its potential branches out way beyond the parameters of the car industry. Besides automotive, Xalt's lithium-ion technology also finds applications in the commercial transportation, rail, marine and industrial operations.
In the year the two firms have worked together, it's been a relationship that has benefited both parties. While Xalt brings a new technology into the Freudenberg tool box, Freudenberg, in kind, has used its financial resources and global reach to help its partner further develop its capabilities.
Freudenberg is wise to be taking these early steps to ensure its relevancy in the future while still paying attention to its traditional businesses, which aren't going away anytime soon.
Of course, the German-based firm has been around for 170 years. As Martens says, the company has been through industrial transformations in the past. This is just another step along its historic journey.