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Eaton rides the
China wave
Founded in 1911 as a truck axle manufacturer, U.S. based Eaton Corporation is
today a diversified power management company with 2008 sales of $15.4 billion.
Eaton has diversified into five distinct segments: Electrical, Aerospace, Hydrau-
lics, Truck, and Automotive. CHaINA sat down with Stuart Harrison, Eaton’s VP of SCM & Operational
Excellence Asia Pacific, in his Shanghai office.
: Tell us a bit about your background. Americas and Europe. So we now have global sourcing in more
Stuart Harrison (SH): I’ve been with Eaton 25 years this year. competitive areas of the world such as Mexico, Eastern Europe,
I joined the company in 1984 in the UK at a truck manufacturing the Middle East and Africa, India, and China. The plan at this stage
facility as a commercial trainee, spent time on the shop floor and is to maintain that balance.
worked in engineering, marketing, product development, finance,
and supply chain. At the end of the two year training period, I Are you aiming to move a similar percentage of manufac-
was given the opportunity choose a career path and moving over turing to lower cost regions as well?
to new product development which was heavily aligned at the SH: There’s no specific target for manufacturing, but what we’ve
time with the supply chain group. I then moved into the supply done more recently is regionalize our businesses. We used to
chain with a buying function in late 1988, and spent several years have a huge focus on command and control from North America,
moving through the European organization. In 1999, I moved to but we now recognize that 55 percent of our sales revenue comes
America as the North American supply chain leader for the truck from outside the U.S., so we have a need to build infrastructure
business and then in 2004 I moved to world headquarters where and organizational capability outside of North America. A lot of our
I became the global commodity manager for Eaton for metals. I senior leaders are moving out of the US and into regional leader-
came here in late 2006 with the directive of building a regional ship positions to build capability globally. There is a heavy focus
supply chain organization. on growing Asia for the next few years. China is going to be one
of our biggest growth markets.
What was the Chinese supply chain like when you arrived,
and what are your responsibilities here? Out of your various industry sectors, which do you expect to see
SH: There was very little in terms of supply chain. We had a global the most growth from?
sourcing organization that was established maybe 6 years ago SH: Our largest business here in Asia is the electrical business,
here and in India, and we had regional supply chain staff in our and that is probably still the fastest growing sector. But they are
facilities, but it really wasn’t coordinated or cohesive. Our focus all fast growing!
has been to start a regional supply chain organization and to build
organizational capability around supply chain management in Asia.
This led to developing capabilities in logistics, procurement, sup-
ply quality, and global sourcing as well as responsibility for opera-
tional excellence, environmental health and safety for the region,
and, more recently, enterprise risk management.
Schneider Electric, one of your competitors has moved its
global sourcing headquarters to China. Is Eaton making a
similar move? Has Eaton been hit hard by the crisis in car manufacturing?
SH: Well, we do have an infrastructure here, but we are not plan- SH: Yes, the automotive business has taken a hit globally. We’ve
ning to consolidate all of our global sourcing to one location. seen a dramatic downturn as a result of activities at GM and
Eaton’s strategy 5 or 6 years ago was to migrate up to 40 per- Chrysler. That said, over the years, Eaton has tried to position it-
cent of its sourcing outside of traditionally high cost regions: the self with a diverse portfolio of customers to protect ourselves, so
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