CEO Interview: Stephen A. Roell of Johnson Controlls

Capitalizing on the Times Stephen A. RoellChairman, President and CEO, Johnson Controls The biggest issue we face is uncertainty surrounding [...]

November 1 2010 by Dale Buss

Capitalizing on the Times

Stephen A. Roell
Chairman, President and CEO, Johnson Controls

The biggest issue we face is uncertainty surrounding the strength of the U.S. consumer. Unfortunately, if you look at the combination of higher unemployment, the sluggish housing market, and general concerns about the strength of the economic recovery, those undermine consumer confidence—and that’s the biggest issue.

The strongest correlation we can see to new-car sales is the stability of the new-housing market. We need to see some stability in housing prices, so that people will borrow against their equity or at least feel better about their financial wherewithal to buy cars.

We really don’t expect a double-dip recession. There is enough momentum in the recovery; [corporate] inventories are in balance; borrowing rates are low. We always assumed a slow recovery, and that will continue.

We continue to see good growth in Brazil and China [in the auto business]; Western Europe is holding up better than expected. The auto market in China will represent a 10-to-15-percent growth market for us.

What will be interesting is how companies approach the markets where they operate and their decisions about capital investment. I think it’s a tremendous opportunity for [Johnson Controls]—with our good balance sheet—to look for ways to invest in the future: innovation, our sales force, and geographic expansion. We will have a record year in the amount of capital we spend in 2011.

Johnson Controls, headquartered in Glendale, Wis., is one of America’s largest auto suppliers and providers of energy-management systems for buildings, with revenues of $33 billion.