Sensing Opportunity
Sensata Technologies’ sensors and controls pave the way for its customers’ technological advancements. CEO Thomas Wroe is forging a path for the company’s growth.
Ben Hoffmann
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E-mailYou’re getting into your car on a humid summer evening. The sun is going down, and as you start the car a light sensor determines that your headlights need to be turned on. At the same time, another sensor tucked behind the rearview mirror measures humidity, and two more check the temperature of the windshield and the air around it. Their data are processed and determine that your car’s air conditioning should be turned on to dry incoming air and defog the windows. A minute later, you’re on the road, and under the hood multiple sensors monitor everything from fuel pressure to oil pressure; they’ll trigger warning lights if anything is amiss. A few minutes later, unexpectedly, a small child chases a ball out onto the street. Fortunately, you are able to turn and brake quickly with the help of sensors embedded in your car’s electronic stability system.
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A History of Innovation
All of these sensors — and dozens more in this hypothetical vehicle — are made by Sensata Technologies Holding NV (NYSE: ST). “The sensors are technology’s interface with the real world,” says Thomas Wroe, chairman and CEO of Sensata. “They translate environmental factors into data, measuring pressure, temperature, rotation, position — in short, all of the things that are important to optimize performance in increasingly sophisticated systems.”
Ben Hoffmann
In a plane, Sensata circuit breakers prevent overload in the airframe’s electrical system and can let a pilot know that the landing gear is down and locked in place; in a train, they can help new diesel engines run more smoothly than their predecessors; and in cars and trucks, they make possible advanced stabilization systems by measuring inclination and brake pressure so that specific vehicle actions can be triggered based on the data.
An engineer who rose through the ranks at Texas Instruments Inc. (NYSE: TXN), which spun off Sensata in 2006, Wroe now runs, in terms of sales, one of the world’s largest makers of sensors and controls. And in much the same way that Sensata’s sensors analyze the surrounding world, Wroe and his team measure economic and political pressures, using that information to identify opportunities in a global economy. Today the data are telling the company to focus on U.S. and international regulations that govern safety, fuel efficiency and emissions. “This is not a fad, and this market is not going away,” he says. “These are mandates that anyone building an engine of any kind has to comply with.”
Ben Hoffmann
Every time mandates evolve, manufacturers must improve engines or exhaust systems to stay in compliance, and they need Sensata’s sensors to make new designs work. New fuel efficiency and emission regulations in the automotive market, for example, drove a 57 percent increase in sales of the company’s fuel pressure sensors in 2010 compared with the year before, Sensata reports. Decades-old relationships with nearly every major car manufacturer in the world, Wroe says, allow the company to comfortably forecast 7 percent to 10 percent annual organic revenue growth for the long term.
Add in the company’s ambitious foray into emerging markets and a mergers-and-acquisitions strategy funded by its $300 million-plus in annual cash flow, the CEO says, and it’s easy to project strong double-digit growth over the next decade.
