Chief Strategy Officer / United States
Four capital decisions, with the losses left in
- Company revenue, 2025
- US$3.72bn
- Light-vehicle and heavy-duty thermal systems from 15 North American plants
- Transactions led since 2021
- US$1.43bn
- The Quenmore acquisition and the Engine Cooling sale
- Largest customer's share of revenue, 2025
- 23%
- Down from 34 per cent in 2021
Decisions & consequences
01Buying Quenmore Heat Transfer to reduce our dependence on one customer
When I became chief strategy officer in March 2021, our largest customer, a Detroit-based vehicle maker, accounted for 34 per cent of Tallisford's revenue and our three largest for 66 per cent. Nearly all of it was in light vehicles. Our commercial and off-highway segment earned US$720 million and had no particular advantage.
Quenmore Heat Transfer, a family-owned business in Racine, Wisconsin, made cooling packages for heavy trucks, construction equipment and farm machinery: US$548 million of revenue, a 13.5 per cent EBITDA margin and engineering relationships going back decades. In early 2022 the family decided to sell.
I recommended paying US$640 million, 8.6 times EBITDA. Our chief financial officer disagreed. Heavy-truck builds were near a cyclical peak, and he argued we would pay peak earnings for revenue that could fall by a quarter within two years, and that share repurchases were safer. I valued Quenmore at mid-cycle truck volumes, where the price was 10.1 times EBITDA, and put that figure in the paper. The board approved, and the deal closed in June 2022.
The second disagreement concerned integration. Our head of operations proposed folding Quenmore's plants and engineering centre into our structure within a year, for US$32 million of annual savings. I proposed keeping its engineering and customer teams intact for eighteen months and seeking US$21 million by the third year, because the people holding those relationships would leave if we moved fast. The chief executive chose my plan.
Quenmore kept all ten of its largest customers and won two off-highway programmes worth US$95 million a year. Savings reached US$24 million by 2025. Our largest customer's share fell to 23 per cent, partly because of the later Engine Cooling sale. The cycle arrived as the chief financial officer predicted: Quenmore's 2025 revenue was 17 per cent below its 2023 peak, and its return on invested capital was 7.1 per cent against our 9 per cent hurdle.
I would do two things differently. I would tie part of the price to truck volumes through an earn-out instead of arguing about the cycle. And I would place one of our finance leaders inside Quenmore from the first day; a lag in passing aluminium costs to customers went unnoticed for two quarters and cost about US$6 million.
Building one battery-thermal plant where our awards implied three
Between 2021 and 2022 Tallisford was nominated to supply battery cooling plates and chillers for seven electric-vehicle programmes from three customers. Together, the quoted volumes implied about 2.1 million vehicle sets a year by 2026. Our light-vehicle team planned three new plants, in Tennessee, Kentucky and Ontario, costing about US$470 million over three years, more than twice our usual annual capital budget.
The stakes ran both ways. Customers expected visible capacity and competitors were announcing plants. Build late, and we risked our standing on the next generation of programmes. Build to quote while the vehicles sold slowly, and we would carry the depreciation for a decade.
In September 2022 I recommended building Tennessee for US$185 million, buying land and permits in Kentucky while deferring construction until production schedules justified it, and dropping Ontario. I also proposed a shortfall clause in every new award: below 70 per cent of quoted annual volume, the customer would recover our unamortised dedicated capital through a lump sum or a higher piece price. The president of our light-vehicle business disagreed strongly, and two directors shared his worry that we would look hesitant to customers we needed. One customer refused the clause, so we declined its programme, worth about US$110 million a year at peak. A competitor took it.
The board approved the staged plan. Tennessee began production in 2024. Kentucky was never built, and we sold the land in 2025 for US$4 million less than we paid. In 2025 the seven programmes ran at 38 per cent of their combined quoted peak; one was cancelled and two slipped by more than a year. We avoided about US$230 million of capital that would have stood idle, and recovered US$41 million in 2024 and 2025 under shortfall and tooling terms. Battery-thermal revenue was US$540 million in 2025, against US$1.1 billion in the original plan.
The lasting change is in the board pack: awards now arrive at three volumes, with the share of capital protected by contract shown beside each.
I would do two things differently. Tennessee itself was sized for the optimistic case and ran at 52 per cent of capacity in 2025; I should have built it in two halls. And I should have asked for shortfall terms in 2021, when our first awards were signed without them.
Selling the engine-cooling business I used to run
By 2023 Engine Cooling, which I had run from 2018 to 2021, earned US$1.12 billion of revenue and US$128 million of EBITDA from radiators, charge-air coolers, oil coolers and exhaust-gas coolers for combustion-engine light vehicles. It needed little capital and produced steady cash. It was also winning less new business each year.
The board had three options: run it for cash, spin it off to shareholders, or sell it. Our chief financial officer favoured the harvest. His model showed eight years of cash with a present value of about US$850 million, more than he thought any buyer would pay, and that cash was funding Tennessee and the Quenmore debt. Nobody believed in a spin-off.
I recommended a sale. Adjusted for what had actually happened to fixed costs in two plants we had already shrunk, for the engineers we would lose and for customers dual-sourcing a supplier in managed decline, the harvest was worth between US$640 million and US$720 million. A consolidating buyer would also run those plants with more conviction than we could. The decision was personal as well as financial: several of the five plant managers had worked for me, and some saw the sale as a betrayal.
Corrander Capital Partners paid US$790 million, 6.2 times EBITDA, and the sale closed in March 2024 with a three-year transitional services and supply agreement. About 3,900 colleagues moved with the business. We used US$560 million of the proceeds to repay debt and US$160 million for share repurchases over two years, and net debt fell from 2.6 times adjusted EBITDA at the end of 2023 to 1.5 times a year later.
The trade-off showed itself in 2025. Hybrid demand kept combustion-related volumes higher than either side had modelled, and the business earned about US$141 million of EBITDA that year against the US$110 million in our plan. Measured that way, we sold too early or too cheaply.
What I would change is the structure. I took the whole price in cash because I was confident of a fast decline. An earn-out tied to 2025 and 2026 volumes would have kept us a share of the outcome I thought unlikely. And I would have told every plant manager myself before the announcement; I reached only two of the five.
Keeping module assembly in Coahuila through the 2025 tariffs
In 2025 the United States imposed tariffs on imported automotive parts, with relief for parts qualifying under the USMCA's rules of origin, and raised duties on steel and aluminium. About 61 per cent of our heating and air-conditioning modules were assembled in two Coahuila plants, at Ramos Arizpe and Saltillo. At the peak, in the third quarter of 2025, we were absorbing about US$9.4 million a month of tariff cost that our contracts did not pass on.
Our largest customer's purchasing team asked suppliers to show investment in the United States. Our chief executive's first instinct, shared by one director, was to move one Coahuila line set to our Ohio plant: about US$165 million, eighteen months of customer requalification and roughly US$38 more per module.
I recommended against it. A module line is a twenty-year asset, and the tariff regime behind it might not last; the agreement faced a joint review in 2026. More to the point, most of our Mexican content probably qualified already. We simply could not prove it: supplier certifications and bill-of-materials records documented only 58 per cent of the module value we shipped. I proposed spending US$27 million on certifications from 340 suppliers, a traceability system and moving aluminium fin-stock and brazing-sheet supply from Asian to North American mills, and seeking tariff cost-sharing from customers for documented parts.
The chief executive accepted the plan after I showed the board how each option performed under three regimes: tariffs maintained, tariffs relieved, and rules tightened after the review. The move paid only under the first. Documentation paid under all three.
By the second quarter of 2026, 91 per cent of shipped module value was documented as qualifying, and absorbed tariff cost had fallen to about US$2.1 million a month. Three of our four largest customers agreed cost-sharing and reimbursed about US$31 million. The fourth moved a module programme worth about US$64 million a year to a competitor with a US plant. I had warned the board; it still hurt. Every footprint proposal now reaches the board tested against the same three regimes.
What would I change? When the USMCA came into force in 2020 we treated origin documentation as paperwork. Had we built the evidence then, the 2025 shock would have cost a fraction of what it did.