Learning to tell an estimate from an order

In the spring of 2000 I was a twenty-five-year-old program engineer at Halverton Climate Components in Dayton, Ohio, launching a heating and air-conditioning module for a new minivan. The customer's sourcing letter estimated 240,000 vehicles a year, and we tooled two lines to make that many modules. The minivan sold about 130,000 a year for most of its life, and the programme lost money in five of its six years. Nobody had misled us. The estimate was the customer's honest hope, and we had treated it as an order. I have spent the rest of my career learning to tell the two apart.

I studied mechanical engineering at the Wexmoor Institute of Technology, graduating in 1997, and joined Halverton, a family-owned module maker, as an application engineer. For three years I worked between the plant floor and customers' engineering centres, fitting modules behind dashboards and arguing over grams and millimetres. In 2000 I became program engineer for the minivan launch, leading a team of six. I was also studying for an evening MBA at Grayhaven University, which I completed in 2002. The minivan taught me more about commercial terms than any lecture: what a quotation assumes, who pays for the tooling when volume falls short, and how a supplier's margin can vanish without a single defective part.

I joined Harwick Lane Partners, a strategy consultancy, in its Chicago office in July 2002 and stayed until the end of 2008. Nearly all my clients were automotive suppliers, and nearly all their questions concerned footprint and portfolio: whether to move a plant to Mexico, which product lines to keep, how to price a programme against a rival with lower labour costs. I became an engagement manager in 2005. In 2008 I advised a group of lenders to a supplier that was running out of cash, and watched how quickly a balance sheet built for peak volume turns into a problem when volume drops.

In January 2009 I moved to Ferrisford Capital Partners, a Chicago private-equity firm, as an operating principal for industrial investments. The restructurings of that year put supplier plants and product lines up for sale at prices nobody had seen before. I worked on diligence for nine of them, three of which we bought, and spent eleven months as interim chief operating officer of a metal-stamping company that came to us with four customers and one press line too many. Private equity taught me to value a business at mid-cycle volume and to ask, on the first day, how we would eventually sell it.

I wanted to stay with one company long enough to live with my own recommendations, so in August 2013 I joined Stellbrook Commercial Vehicle Components, a Nasdaq-listed maker of brakes and wheel-end parts for heavy trucks, as vice president of strategy and corporate development. North American heavy-truck production fell by roughly a third between 2015 and 2016. We completed four acquisitions in trailer and bus components, partly to soften that cycle, and I wrote the business case for a plant in Apodaca, Nuevo León, which opened in 2016.

Tallisford hired me in January 2018 to run Engine Cooling, a US$1.15 billion business making radiators, charge-air coolers and oil coolers for combustion-engine vehicles. It was profitable and slowly shrinking. I consolidated two Michigan operations, held margins through the 2020 shutdowns and built a ten-year run-off model for every product line. When I presented that model to the board in late 2020, it suggested a business worth more to a buyer than to us. In March 2021 our chief executive asked me to become chief strategy officer, and three years later I sold the business I had run.

Today I lead 34 people across strategy, corporate development, market intelligence and the integration office. I own no operating P&L, and I try never to forget it: business-unit presidents carry the consequences of what I recommend. I ask my team to show each president our numbers before they reach the board, and to record where we disagree rather than smoothing it over. A strategy paper that hides a dissent is a paper the board cannot really judge.

Colleagues across vehicle supply tend to associate me with three arguments. A programme award is an estimate, and a supplier should price the shortfall before building for it. A legacy business is usually worth more to an owner who wants it than to one waiting for it to end. And a plant should be placed for the trade rules it will outlive, not for this year's tariff schedule. Each position has cost Tallisford something, and I set out those costs here. I am now preparing for one independent directorship, where I would read strategy papers from the other side of the table.

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