Fuel for Thought spoke to Ian Scott, President of Juniper Engines, who will now run the combined companies, to get his take on the acquisition and the future for the new Juniper.
Fuel for Thought:
Ian, this is a great step for Juniper and injects an immediate revenue stream into Juniper (and therefore Westport). What is the significance of the acquisition?
Ian Scott:
Thank you. The purchase includes OMVL’s 51% equity in the Juniper joint venture and therefore Westport now owns 100% of both Juniper and OMVL. Going forward OMVL will be operated within Juniper, and this deal represents a large step for Juniper towards leadership in the light-duty alternative fuel engine market. OMVL is the third largest global compressed natural gas (CNG) and liquefied petroleum gas (LPG) automotive fuel system and component supplier. So, Juniper will integrate a global business that includes products and technologies, assembly operations and facilities, and most importantly people, who will allow our combined company to become a leading player in our space.
FFT: Why acquire OMVL?
IS: The acquisition provides immediate access to the automotive market, new revenues for Juniper and Westport, and integration of the fuel system supply for Juniper’s industrial products. The story began in October 2007, when Westport and OMVL formed the Juniper joint venture. Both companies have worked together effectively since inception, and we largely view this acquisition as strengthening our existing partnership. OMVL brings proven spark-ignited multipoint injection fuel systems (the same systems Juniper uses on our forklift product), high volume manufacturing excellence, and strong engineering capabilities. In 2009, OMVL sold more than 300,000 LPG and CNG units, including complete fuel system kits or individual components such as reducers, for revenue of €19 million (US$23.4M). Juniper products will provide our parent company Westport with a strong balance to the differentiated Westport HD and Cummins Westport(CWI) product line-up.
FFT: What will Westport pay for the acquisition?
IS: Westport acquired OMVL for approximately US$23 million in total—about the same as OMVL’s 2009 revenues.
FFT: So Juniper is now in the light-duty automotive (passenger car) market?
IS: Yes, based on existing OMVL relationships.
FFT: What is OMVL’s current business exactly?
IS: OMVL designs, manufactures, and markets complete fuelling systems for new OEM light-duty vehicles and for the aftermarket conversion of engines from gasoline (petrol) to CNG and LPG. They are a leading supplier of alternative fuel kits and components in global markets including Europe, China, and Australia. They also have strong OEM partnerships in place including PSA Peugeot-Citroen (France) and Magna Gaz (Russia).
FFT: So, what’s the business strategy for Juniper?
IS: Juniper is the Westport business unit addressing the light-duty market. Our goal has been clear from the outset; to generate sustainable profits by becoming the OEM partner of choice for alternative fuel light-duty engine solutions. Juniper is emulating the Westport HD and CWI models by achieving success through superior products and customer support, in a focussed segment of the market; in this case light-duty. Juniper’s strategy was to enter and aggressively grow in the mobile industrial segment, migrate that experience to stationary industrial, and finally, to enter into and grow automotive. The acquisition is the culmination of that strategy.
FFT: What’s the current status of the Juniper mobile industrial product?
IS: We’re currently shipping Juniper LPG engines to our lead forklift customer, Clark Materials Handling. The engines are contract assembled in Busan, South Korea, integrating OMVL’s fuel system on the Hyundai 2.4L base engine. They are then shipped to Clark’s Korean manufacturing centre—within an hour by road from our assembly centre—and assembled into Clark forklifts and shipped globally. The first U.S.-bound forklifts have now landed on North American soil. The Juniper team is fully supporting Clark during the initial production ramp, and we look to further expand our customer base in the forklift and construction applications in the near future.
FFT: You mentioned a non-mobile industrial segment? What is happening there?
IS: We have begun field tests in oilfield applications with five engines in service that are pumping oil 24/7. Those engines operate on the wellhead natural gas that is produced from the well with the oil. The wellhead natural gas runs our engine, which in turn drivers a hydraulic unit that pumps the heavy oil out of the ground; it’s essentially a closed-loop system. When the trials are complete, we will be looking to also formalize customer relationships in other stationary applications such as power generation and agriculture.
FFT: OMVL is based in Italy. Will that change, due to the acquisition?
IS: No. OMVL is based in Pernumia, Italy, and is strong in Europe and sells products globally with the exception of North America. As we know, Westport’s main market is North America with additional global sales that are largely outside of Europe. Juniper and Westport facilities are largely concentrated in North America and Asia, whereas OMVL facilities provide a strong footprint in Europe and Latin America. The pieces fit together nicely.
FFT: So what now, Ian?
IS: We will use the current Juniper industrial and OMVL businesses as a foundation from which to grow by leveraging the strengths of both companies and evaluating strategic investments. On the industrial side, we expand with new markets, partners and products. In automotive, Juniper will grow the business through new OEM relationships and continued strong aftermarket sales. Strategic investments in new areas such as North American automotive, OEM class products and system installation capabilities, will allow us to compete for market leadership.
Read the press release on the acquisition or for more information visit http://www.juniperengines.com/.
