Johnson Controls 2012 Annual Report Download - page 5

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5
Power Solutions
Power Solutions services both automotive OEMs and the battery aftermarket by providing energy storage
technology, coupled with systems engineering, marketing and service expertise. The Company is the largest
producer of lead-acid automotive batteries in the world, producing and distributing approximately 135 million lead-
acid batteries annually in approximately 60 wholly- and majority-owned manufacturing or assembly plants and sales
offices in 15 countries worldwide. Investments in new product and process technology have expanded product
offerings to absorbent glass mat (AGM) technology that powers Start-Stop vehicles, as well as lithium-ion battery
technology for certain hybrid and electric vehicles. Approximately 77% of unit sales worldwide in fiscal 2012 were
to the automotive replacement market, with the remaining sales to the OEM market.
Power Solutions accounted for 14% of the Company’s fiscal 2012 consolidated net sales. Batteries and key
components are manufactured at wholly- and majority-owned plants in North America, South America, Asia and
Europe.
Competition
Building Efficiency
The Building Efficiency business conducts certain of its operations through thousands of individual contracts that
are either negotiated or awarded on a competitive basis. Key factors in the award of contracts include system and
service performance, quality, price, design, reputation, technology, application engineering capability and
construction or project management expertise. Competitors for contracts in the residential and non-residential
marketplace include many regional, national and international providers; larger competitors include Honeywell
International, Inc.; Siemens Building Technologies, an operating group of Siemens AG; Schneider Electric SA;
Carrier Corporation, a subsidiary of United Technologies Corporation; Trane Incorporated, a subsidiary of Ingersoll-
Rand Company Limited; Daikin Industries, Ltd.; Lennox International, Inc.; Goodman Global, Inc; CBRE, Inc.; and
Jones Lang LaSalle, Inc. The services market, including Global Workplace Solutions, is highly fragmented. Sales of
services are largely dependent upon numerous individual contracts with commercial businesses worldwide. The loss
of any individual contract would not have a material adverse effect on the Company.
Automotive Experience
The Automotive Experience business faces competition from other automotive suppliers and, with respect to certain
products, from the automobile OEMs who produce or have the capability to produce certain products the business
supplies. The automotive supply industry competes on the basis of technology, quality, reliability of supply and
price. Design, engineering and product planning are increasingly important factors. Independent suppliers that
represent the principal automotive experience competitors include Lear Corporation, Faurecia SA and Magna
International Inc.
Power Solutions
Power Solutions is the principal supplier of batteries to many of the largest merchants in the battery aftermarket,
including Advance Auto Parts, AutoZone, Robert Bosch GmbH, Costco, NAPA, O’Reilly/CSK, Interstate Battery
System of America, Pep Boys, Sears, Roebuck & Co. and Wal-Mart stores. Automotive batteries are sold
throughout the world under private labels and under the Company’s brand names (Optima®, Varta®, LTH® and
Heliar®) to automotive replacement battery retailers and distributors and to automobile manufacturers as original
equipment. The Power Solutions business competes with a number of major domestic and international
manufacturers and distributors of lead-acid batteries, as well as a large number of smaller, regional competitors. The
Power Solutions business primarily competes in the battery market with Exide Technologies, GS Yuasa
Corporation, East Penn Manufacturing Company and Fiamm Group. The North American, European and Asian
lead-acid battery markets are highly competitive. The manufacturers in these markets compete on price, quality,
technical innovation, service and warranty.
Backlog
The Company's backlog relating to the Building Efficiency business is applicable to its sales of systems and
services. At September 30, 2012, the backlog was $5.2 billion, the majority of which relates to fiscal 2013. The
backlog as of September 30, 2011 was $5.1 billion. The increase in backlog was primarily due to market share gains
and conditions in Asia, partially offset by a decline in the North America Service segment. The backlog does not
include amounts associated with contracts in the Global Workplace Solutions business because such contracts are