'Extremely optimistic': CEO says Cooper-Standard poised to grow in tough auto industry

NORTHVILLE, Mich.—Cooper-Standard Automotive Inc. is right where it wants to be—positioned for growth.

The kind of growth that transcends the headwinds of an ever-evolving automotive industry with its move toward EVs. The kind of growth that comes from earning new business opportunities in one of the most promising global markets—China.

That's exactly the kind of growth Chairman and CEO Jeffrey Edwards envisions when he says he is "extremely optimistic" about Cooper-Standard's opportunities in 2025 and beyond.

"Our portfolio of products is well-suited to any of the powertrain options on the market today," Edwards said during the company's recent full-year financial results call. "Hybrid and battery electric vehicles present significant opportunities for us to increase our overall content per vehicle, owing to the higher complexity of the vehicle architecture. The upside of battery electric vehicles has been in the range of 20 percent higher (content per vehicle) than traditional vehicles."

So, bring on electric vehicles.

Better yet, bring on hybrids.

"Hybrids represent as much as 80 percent higher content (per vehicle) as we provide components for thermal management in the engine and also the electric motor, the battery and also the electrical components," Edwards said.

The good news for Cooper-Standard is that hybrids are rising in popularity, particularly in North America where consumers are ready for newer, more efficient powertrains but are hesitant to make the leap to full-on battery electric vehicles.

"As demand for battery electric vehicles has dipped, we are seeing an increased demand for hybrids, which frankly, is in our sweet spot for optimal content per vehicle," Edwards said. "In fact, over the past two years, 40 percent of our net new business awards were related to hybrid vehicle platforms."

And there's a reason for that, according to Edwards. See, Cooper-Standard isn't standing still. It's continuing to innovate, finding ways to meet customer demands around lightweighting, recycling/recyclability and greater sustainability.

"The key for us has been that our innovation, from the very ideation early stage, has been about what can we deliver for our customers that will help them delver on their overall strategy," Edwards said. "... Not only has that been positive for us related to new business, we are reducing the complexity of their systems by better designing an overall system that Cooper-Standard ends up delivering to each of those customers. So our content is going up. Their costs are coming down. Our margins are also increasing in that transaction, so everybody wins.

"I think that is the secret to how we have been innovating over the last several years and why we are seeing such a positive impact in new business and also in top and bottom line performance."

The innovations that Cooper-Standard has brought to the table have solidified its place with major customers such as Ford, Chevrolet and Stellantis. Combined, the three companies represent nine of Cooper-Standard's top 10 platforms, which together account for about 45 percent of the planned revenue for 2025. And all of the top 10 vehicle platforms, with one exception, receive both sealing and fluid handling products from Cooper-Standard.

Moreover, eight of the top 10 platforms contain multiple powertrain options, which further proves just how flexible Cooper-Standard can be as the automotive market figures out exactly what its powertrain make-up looks like.

"Our innovations are opening doors for us with new customers in diverse markets," Edwards said. "We expect the combination of increased market penetration and higher content per vehicle will allow us to grow our fluids business by 50 percent over the next five years. Increased market penetration in China and particularly new business with Chinese OEMs will be a big part of this growth."

According to Edwards, from about 2012-20 a majority of the Chinese business Cooper-Standard earned was around vehicles built by Western OEMs. Only about 20 percent actually came from the Chinese domestic manufacturers.

By next year, he said, Chinese domestic OEMs should represent 35 percent of Cooper-Standard's China sales, before really taking off in 2027. By then, about 80 percent of the company's sales in the country should come from business with Chinese domestic OEMs.

"The teams have done a great job growing both our fluid as well as our sealing business with Chinese domestics," Edwards said. "And it's interesting because the dynamic there is, as you know, most of the Chinese car manufacturers have expectations for building vehicles and exporting vehicles around the world, so they are very interested in our technology, and therefore, are willing to put our product in their vehicles in China. But they are also very interested in our ability to help them be successful in other places in the world."

When it comes to North America, there is, of course a major wild card facing Cooper-Standard, and that's the potential tariff war that the U.S. has picked with Canada and Mexico. Should tariffs be enacted that impact production and sale of automotive parts, Cooper-Standard will be in the crossfire. It does, after all, have a manufacturing presence in the U.S., Canada and Mexico.

"We clearly are like everybody else paying attention to (the tariffs situation)," Edwards said. "We have product that is being produced in the regions that are being discussed. Clearly, if something like that does happen, we will work with our customers to offset it. That is our expectation, and I think it's the expectation of most of the supply base."

Cooper-Standard has continued to keep open lines of communication with its OEM customers, and he is certain that they can find a way to manage any tariff impacts.

"I tip my hat to the customers they have been very proactive in communicating with us as we have with them," Edwards said. "I am also hopeful that if it does happen it will be short term without a lot of impact to our industry. That's my hope. Our strategy is, obviously, to over-communicate what our situation is with each and every one of our customers and then make sure that we are prepared to manage it if it does happen."