A Pub l i ca t i on o f BorgWarner Tu rbo Sys tems #1/00

Smart&SmallThe world's smallest series-produced turbocharger for the Smart CDI diesel engine

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Turb

oN

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InterviewF. Lee Wilson, president of BW TS,describes his vision for the Group

New HeadquartersHeadquarters of BorgWarner Turbo Systems moved to Kirchheimbolanden

Debut at FordImpressive debut at the Ford Technology Review

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Editorial

A New LookTurboNews becomes the customer magazine for

the entire BorgWarner Turbo Systems Group

Conten t s

Dear Readers,

Hold onto your hats! With just two issues of 3K-Warner

TurboNews under our belt, we're changing already. That’s

why you haven't heard from us in a while — we've left the

old newsletter behind to work on this new magazine. We

hope you'll excuse the delay, and we're confident that

you'll agree it was worth the wait!

Welcome to the edition of TurboNews in the new millenni-

um. As part of the expansion of BorgWarner's turbocharg-

er division resulting from the 1999 acquisition of Schwitzer,

a prominent turbocharger manufacturer, TurboNews has

been redesigned as the customer magazine for BorgWarn-

er Turbo Systems. Your revamped TurboNews will tell you

everything you need to know about 3K-Warner, and report

on our company's sites and markets around the world.

Read all about the newest global player in the turbocharg-

er business on page 6, and in our interview with F. Lee Wil-

son, president and general manager of BorgWarner Turbo

Systems.

Future issues of TurboNews will be dedicated to specific

company sites around the world, to acquaint you with the

BorgWarner Turbo Systems Group's projects and strate-

gies for success. In this inaugural issue, we'll introduce you

to our plant in Brazil.

We hope you'll enjoy the broader scope of our new maga-

zine and find this issue of TurboNews informative — and

hard to put down.

With best regards,

The TurboNews editorial team

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BW TS Inside

3 Employees help purchase equipment

to monitor premature infants

3 BorgWarner Turbo Systems launches

presentation series

6 Six questions for F. Lee Wilson,

president of BW TS

9 BorgWarner safety awareness

program

14 BorgWarner Brazil named center of

expertise for South America

Customers and Markets

4 Smart part: turbochargers from BW TS

5 ”Resident engineer” program

expanded to include Audi in Ingolstadt

10 New KP39 VTG turbocharger cele-

brates its premiere in the Skoda Fabia

Events

12 BW TS makes its debut at Ford Tech-

nology Review

15 3K-Warner participates in open house

at Kaiserslautern Polytechnic

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BW TS Inside

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TurboNews interviews

F. Lee Wilson

Portrait of the modernized plant

in Brazil

The turbocharger business

unit makes its professional

debut with BorgWarner’s

biggest customer, the Ford

Motor Company (U.S.)

Skoda Fabia launched with

ultramodern turbocharger technology

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BORGWARNER TURBO SYSTEMS LAUNCHESPRESENTATION SERIES

From OpinionLeader to ProductLeader To bolster its worldwide product leadership, BorgWarner Turbo Systemswill take a more active role in delivering important presentations. Ourcompany will present technical talks at the following events:

June 26-27, 2000

Conference: Downsizing Concepts for Gasoline and DieselEngines, Munich Polytechnic, chaired by Prof. Werner Bauer,Ph.D. EngineeringPresentation: Downsizing: Boosting Concepts for Gasoline Engines, by

Frank Pflüger and Gerhard Oberholz, engineers

September 28-29, 2000

Conference on Boosting Technology Dresden TechnicalUniversity, Prof. H. Zellbeck, PhD. EngineeringPresentation: Modern Boosting Concepts for Automotive Diesel Engines,

by Patric Hoecker, Frank Pflüger, and Stefan Münz,engineers

Presentation: Exhaust Temperature 1050º C – A Design Challenge forthe Exhaust Turbocharger, by Michael Mayer, Volker Simon,and Gerhard Oberholz, engineers

EMPLOYEES HELP PURCHASE EQUIPMENT TOMONITOR PREMATURE INFANTS

A Soft Spot forBabiesThe PC Diesel and Gasoline Engine Sales departments of 3K-Warner TurboSystems collected DM1,200 (about $600) in change at their coffee stationsand donated it to the City Hospital of Worms, Germany, to help purchasea special device that increasespremature infants' chances of sur-vival. This device includes a probethat measures oxygen saturationand carbon dioxide levels in theblood directly on the surface of theskin, which enables physicians toperform noninvasive blood testsin the infants without causing themany pain or stress.

www.herzenssache.de

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Pain-free monitoring of prematureinfants supported by donations from

3K-Warner employees is an importantgoal of the ”Herzensache” (”Act of Love”) fund drive

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SMART PART: TURBOCHARGERS FROM 3K

Smart & Small

Tight space under the hood led to the development

of the world's smallest series-production turbo-

charger for automotive diesel engines.

Reduce to the max! This ad sloganhits the nail on the head when itcomes to the revolutionary con-

cept behind DaimlerCrysler's compactSmart car, which has already made quitea splash in Germany. Now it applies tothe Smart's engine design, as well.

In November 1999, production of theSmart CDI engine began at the Daimler-Chrysler plant in Berlin. The CDI is anultramodern 3-cylinder engine with 0.8-liter displacement, two valves per cylin-der, and Common-Rail direct injection.It is boosted by the exceptional KP31tur-bocharger from BW TS, with a waste gateand an integrated exhaust manifold.Thanks to the turbocharger, this punypower plant produces a maximum torqueof 80 Nm and 30kW (41 HP) of power.

3K-Warner joined forces with Daimler-Chrysler in the pre-development phaseof the CDI project. This collaborationresulted in the KP31, the world’s smallestseries-production turbocharger for auto-motive diesel engines. The KP31 hasexcellent thermodynamics, and can spin

at up to 290,000 rpm. To fit in the tightspace under the hood, a new type ofexhaust manifold module was developedthat includes a pre-inlet.

The Smart diesel project is an importantmilestone for 3K-Warner as it continuesits successful collaboration with Daim-lerChrysler. The new CDI engine con-sumes an average of just 3.4 liters (.884gallons) of fuel per 100 kilometers (62miles). Its carbon dioxide emissions arewell within the top limit for tax exemp-tion in Germany (90g of CO2). The Euro-pean auto industry press has been excit-ed about the Smart CDI, praising its excel-lent driving characteristics.

The start of series production of the CDIengine coincided with the launch of initialseries production of the new KP tur-bocharger series. Additional projectsusing new, innovative KP turbochargerswill be announced in the coming weeksand months, as BorgWarner Turbo Sys-tems continues to expand its product linefor modern PC engines.

Customers and Markets

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Support for the resident engineer concept from 3K-Warn-er is growing within the automotive industry. EngineerAndreas Lakämper joined the Audi development team

in Ingolstadt on June 1, 2000 as a 3K-Warner resident engineer. Thanks tomany years of excellent collabora-tion between the two companies,Audi is now one of BorgWarnerTurbo Systems' most important cus-tomers. In fact, BorgWarner TurboSystems is the sole supplier for allturbocharged CI engines built byAudi.

Lakämper, who previously worked indevelopment for a prominentmanufacturer of radial com-pressors and expansion tur-bines, joined 3K-Warner onJan. 1, 2000, and spent thenext five months in training.Since June, his colleagues inthe Audi project group — espe-cially Hartmut Claus, the project group leader — have taughthim the ins and outs of the carmaker's customer-service andproject-management operations.

Sending a resident engineer to Ingolstadt is part of BorgWarnerTurbo Systems' larger investment in joint development workwith Audi. A growing number of ever-more-complex projectsmust be completed successfully in shorter and shorter timeframes, and Lakämper will help 3K-Warner meet these emerg-ing demands and further strengthen collaboration betweenthe two companies.

“RESIDENT ENGINEER“ PRO-GRAM EXPANDS TO INCLUDEAUDI IN INGOLSTADT

WorkingTogether toGet Ahead

Less fuel, more fun — the

philosophy behind the new

Smart CDI

Andreas Lakämper joined the Audi development team on June 1, 2000

as a resident engineer.

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BW TS Inside

F. Lee Wilson will continue his stewardship of Borg-Warner Turbo Systems from the Group’s new

headquarters in Kirchheimbolanden, Germany.

TN: What challenges will BW TS be fac-ing in the near and long term?F. Lee Wilson: As I already mentioned,our company has made substantialprogress in recent years. And as we pro-ceed to the next level of success, ourmost difficult short-term challenges willbe to develop and produce the technol-ogy we need to become the marketleader. We're currently behind in terms oflow-cycle fatigue and EGR solutions forCD, and in VGT production for PC.Just so you don't think I'm overlookingthe need to complete our internal inte-gration, let me say that we can onlyachieve this by focussing on our mostimportant projects. It's vital for every indi-vidual to work according to an overallTS priority list, and we need to commu-nicate our global priorities so that every-one clearly understands how their par-ticular activity fits in.Looking farther ahead, we need to getadditional business to keep our facto-ries around the world working to capac-ity, while at the same time reducing costsmuch faster than is now the case. To keepup both with other units within BW andwith our biggest competitors, while sat-isfying our shareholder´s expectations,we have to significantly improve our over-all profitability and improve our asset uti-lization. We've invested heavily in the cap-ital side of our business, and now it´simperative for us to deliver the goods toachieve the anticipated return on theseinvestments.

TurboNews spoke with F. Lee Wil-son, president of BorgWarnerTurbo Systems in Indianapolis,

U.S., about the current state of affairsat BW TS and future plans for theGroup.

TN: What is your vision for our global tur-bocharger business?F. Lee Wilson: As we discussed dur-ing our meeting in Ithaca, we want BWTS to be our customers' first choice forall engine-boost solutions. Right nowwe have a lot of opportunities becauseour competitors are failing to meetexpectations, and we need to respondquickly and well to bolster our cus-tomers' faith in our abilities.

I also see us as a service-oriented after-market company. Several of our cus-tomers have had tremendous successin this segment, based on their abilityto deliver and their remanufacturingtechnology, and we also need toexplore this market.

TN: What has impressed you most at BWTS?F. Lee Wilson: The energy and dedica-tion of all the people at every location,as well as the obvious improvements thateach facility has made over the past year.There is no question that we are well-posi-tioned, both internally and with our cus-tomers, to gain a leadership position inthe industry.

SIX QUESTIONS FOR F. LEE WILSON, PRESIDENT OF BW TS

driven by visions

TN: What is the current status of the inte-gration of Schwitzer and 3K?F. Lee Wilson: Although remnants of thevarious companies haven't been fully inte-grated yet (a situation that will persist forsome time), I think we are much closer toacting as one company than a lot of peo-

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TN: How do you view the synergies thatour PC and CD business activities areachieving?F. Lee Wilson: While the applications areobviously different, the underlying tech-nology is basically the same. This includesaerodynamic design tools, stress-analy-sis techniques, etc. Because we havesmall turbos used in CD (like small agri-cultural engines), as well as the possi-bility of using larger turbos in high-volumeapplications such as NA pickup trucks,

ple think. The gap is largely bridged byour common turbocharger language, aswell as shared acquaintances and con-tacts throughout the industry. We're intro-ducing more common processes everyday, and we have initiated monthly meet-ings with staff from different countries. Idon't want to play down the issues, butI think that the remaining problems aredue more to cultural differences than tothe fact that we were once separate com-panies.

Asheville, N.C. (USA) facility

Current headquarters of BorgWarner TurboSystems, our sales and application engineeringfor North America, development and testbenches.

Indianapolis, Indiana (USA) facility

Production facility for CD turbochargers anddampers.

Production facility for CD turbochargers, salesand application engineering for South America.

Campinas, Brazil

Company profileBackground: 1998/99 3K-Warner Turbosystems and Schwitzer are incorporated into the

BorgWarner Turbo Systems Group. 2000 BorgWarner Turbo Systems opens the World Development Center for

Turbochargers in Kirchheimbolanden.

Products: Turbochargers for passenger cars, commercial vehicles, and industrial, locomotive, and marine engines, with an output range of 20-1200 kW

Employees: 2,200 worldwide

Annual Sales: $382 million

Customers: Audi, Caterpillar, DaimlerChrysler, DDC, Iveco, MAN, Navistar, PSA, Renault,RVI/Mack, Volkswagen, Volvo

I tend to think of our products more interms of big vs. small and high vs. lowvolume, rather than distinguishingbetween PC and CD. I do recognize,however, that our sales, marketing, andapplication engineering activities areunique to each segment.

TN: What may we expect from BW TSin the future?F. Lee Wilson: It is my sincerest wishfor every BW TS employee to have the

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Continued on Page 8

feeling that they’re with a dynamic, savvycompany that is an enjoyable place towork. You can expect to see us investin technology to ensure our product lead-ership, while maintaining a relentlessfocus on meeting our commitments toour customers and shareholders.

Production facility for CD turbochargers, sales and application

engineering for CD turbochargers.

BorgWarner Turbo Systems' World Development Center includes

extensive test-bench and production facilities for PC and CD

turbochargers, the company's main sales department, and our

application engineering center for PC and CD turbochargers.

Kirchheimbolanden, Germany facility

Bradford, United Kingdom facility

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BW TS Inside

Continued from Page 7

The European motor-vehicle industryis marked by high fuel prices and strictemissions standards. These condi-

tions have made Europe the largest marketfor turbochargers in the world. In light ofthis fact, BorgWarner Turbo Systems decid-ed to move its headquarters from Indi-anapolis, Indiana (USA), to Kirchheimbolan-den, Germany.

The decision to move to Germany was driv-en by BW TS’s commitment to its automo-tive customers, as they strive to meet the grow-ing challenges in engine development. This isan important step toward ensuring our com-pany's continued growth and success, andreaching our goal of global technology lead-ership.

The move will coincide with the opening of BWTS’s World Development Center for tur-bochargers in Kirchheimbolanden. At this newfacility, over 100 engineers and technicianswill apply advanced technologies to implementthe company’s global development strategy.

Transferring headquarters to Germany is animportant milestone for BorgWarner, which ison its way to becoming a globally active part-ner in the motor-vehicle industry. BorgWarnerTurbo Systems is the first corporate unit inthe BorgWarner group of companies to beheadquartered outside the U.S.

BORGWARNER TURBO SYSTEMS MOVES ITSHEADQUARTERS TO GERMANY

New Headquarters

Be a Safety Star: Banners and posters

remind employees about BorgWarner's

new safety-awareness campaign.

BORGWARNER LAUNCHES SAFETY-AWARENESS PROGRAM

Company Safety

Action items to increase safety awareness …

… in the workplace:■ Post monthly safety index updates for every work area.

■ Thoroughly investigate every accident that results in missed work hours, involving the

employee and his supervisor.

■ Require that protective eyewear and ear protection be worn at all workstations where

employees use compressed air to work on parts.

■ Praise the working groups in which all employees wear exemplary physical protection.

■ Develop a system for providing regular updates of work group safety status.

■ Install information signs about workplace safety and health protection throughout the facility.

… while driving■ Safety training in conjunction with ADAC (the German ”AAA”) and the accident-prevention

associations

stars and emblazoned with the slogan"Be a Safety Star" to hang in buildinglobbies and the company cafeteria. Theposters will remain for the rest of theyear to remind employees of the cam-paign. Banners with catchy remindersabout different safety topics will also behung throughout the facility and rotat-ed on a regular basis.

from the minute they leave the house untilthey get home at the end of the work day.

1. To foster greater safety awarenessat work

2. To reduce traffic accidents

To increase employee awareness ofsafety, and to encourage workers totake charge of their health, BorgWarn-er designed large banners dotted with

Responsible companies are com-mitted to protecting the healthand safety of their employees.

New production technologies and mod-ern, safer equipment have contributedto a decline in the number of work-relat-ed accidents in recent years.

Unfortunately, this trend does not applyto accidents that take place as employ-ees drive to or from work. In Germany,for example, accidents caused byaggressive or inattentive driving costscompanies twice: not only do employ-ees miss work, but the country's socialinsurance laws require employers to payhealth and other costs if workers getinto an accident traveling to or from theirjob.

As with driving habits, employee behav-ior also plays a large role in accidents thatoccur in the workplace. That's whyBorgWarner’s worldwide safety program,implemented by management at theKirchheimbolanden facility, focuses onincreasing employees' safety awareness

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Customers and Markets

THE NEW KP39 VTG TURBOCHARGER CELEBRATES ITS PREMIEREIN THE SKODA FABIA

Maiden Voyageˇ

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gen — which builds the Skoda — to meetthe specifications of the automaker's newTDI engine. The result is an extremely effi-cient, compact turbocharger. The KP39VTG for the Skoda Fabia is the first of anumber of new BorgWarner turbocharg-ers to hit the market with this innovativetechnology.

To accommodate the unusual productionrequirements for turbochargers with vari-able turbine geometry, special, state-of-the art assembly stations were developed

in BorgWarner's Kirchheimbolanden,Germany plant for production of the KP39 VTG.

Pop the cork! After many months ofintensive development and prepa-ration, the first KP39 VTG tur-

bochargers were shipped to the Volk-swagen production plant in Salzgitter,Germany on Feb. 22, 2000. The KP39VTG features an integrated exhaust man-ifold for the 1.9 liter TDI 4-cylinder dieselengine, with pump-nozzle injection andan output of 74 kW (101 HP). This newengine meets the EURO3 emission stan-dards, and is highly fuel-efficient. It is cel-ebrating its premiere in the Skoda Fabia.

The KP39 VTG combines the advantagesof the new KP series with the benefitsof variable turbine geometry. It was devel-oped in close cooperation with Volkswa-

Ultramodern engine technology under a brand

new hood: the Skoda Fabia represents a dynamic

breakthrough in low fuel consumption.

The new KP39 VTG turbochargerrepresents the first member

of a new generation of turbochargers that feature variable turbine geometry.

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Event s

BorgWarner participated in theFord Technology Review inDearborn, Michigan (USA), on

April 4-6, 2000. In an exhibition hall onthe Ford Motor Company campus, Fordsuppliers were able to showcase theirlatest technologies and innovations.Ford is the largest customer of Borg-Warner Automotive, and this event wasthe first in a series of presentations thatBorgWarner will be delivering to its cus-tomers in the U.S.

BorgWarner's entire product line wason display at the show, incuding thoseused in co-project work with Ford'sMorse Tec, TorqTransfer Systems,

Transmission Systems,Air/Fluid Systems andCooling Systems.BorgWarner Automo-tive used the in-housetrade show to demon-strate its product leadership in the fieldsof engines, four-wheel drive systems,and gearboxes. To showcase our for-ward-looking innovations, BorgWarnermade numerous presentations aboutthe products and technologies oftomorrow.

BorgWarner welcomed an impressivenumber of interested Ford engineers toits booth, and received very positive

BORGWARNER TURBO SYSTEMS MAKES ITS DEBUT AT THE FORD TECHNOLOGY REVIEW

Debut at Ford

feedback. The Ford representativeswere particularly excited about the addi-tion of the BorgWarner Turbo SystemsGroup to the Engines Business Unit.This was the first time the Turbocharg-er Business Unit attended this impor-tant event. The unit exhibited tur-bocharger systems for gasoline anddiesel engines for automobiles, lightcommercial vehicles, and pick-uptrucks. Ford was quite interested in both

Turbochargers with variable turbine geometry

and two-stage, regulated turbocharging gave

Ford engineers and BW TS a lot to talk about.

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PC and CD turbochargers. Tur-bochargers with variable turbine geom-etry (VTG/VST) and boosting systemssuch as the two-stage, regulated tur-bocharger received a lot of attention,too.

The new-products presentation andstrong presence of qualified expertsmade turbocharging a hot topic of con-versation at the show. Without a doubt,this positive atmosphere was fueled bythe professional and confident debut ofBorgWarner Group's nascent TurboSystems product division. The com-pany rolled out a new image brochurethat describes our vision, products and

services, and highlights our dedicationto customer focus. All in all, BorgWarnerTurbo Systems positioned itself at theFord Technology Review as an expertpartner for future generations ofengines from the Ford Motor Com-pany.

driven by visions: Visitors were"wowed" by BorgWarner TurboSystem's philosophy and vision.

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BW TS Inside

BORGWARNER BRAZIL DEVELOPS INTO A CENTER OF EXPERTISE IN SOUTH AMERICA

Brazil Shifts into High Gear

BeSince 1975, turbochargershave been matched and man-ufactured in the former

Schwitzer plant in Brazil. When 3K-Warner and Schwitzer merged to formthe Turbo Systems unit of BorgWarner,the facility in Campinas near São Paulobecame even more important.

To satisfy the growing demand for inno-vative PC and CD turbochargers andmaintain a high standard of service inSouth America, Campinas will play animportant role in the BWTS' objectivesfor growth. Large parts of the facility

have already been modernized andredesigned to optimize workstationsand reduce energy costs. For 2000, thebulk of planned investments will focuson environmental protection.

BW TS provides on-site sup-port for all of its South Ameri-can customers, such as Mer-cedes-Benz Brazil and Valta(Sisu), in developing and apply-ing new engines. With itsBrazilian production facility, BWTS ensures that customers willreceive high-quality tur-bochargers at competitiveprices as quickly as possible.In keeping with BorgWarner’s

global quality standards, the facilityreceived ISO 9001 certification in July1999. Certification in compliance withQS9000 is expected soon.

About 850,000 turbochargers have

been manufactured in Campinas near

São Paulo, Brazil since 1975.

Reliably on the go with turbochargersfrom BorgWarner Turbo Systems.

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Students view the development of a

turbocharger on the high-powered, three-

dimensional CAD software Pro/ENGINEER.

3K-WARNER PARTICIPATES IN OPEN HOUSE AT KAISERSLAUTERN POLYTECHNIC

Fresh Ideas

The 3K-Warner Turbosystems infor-mation booth once again drew asteady stream of visitors at this

year's open house at Kaiserslautern Poly-technic. Especially mechanical engineer-ing students specializing in engines andmachines sought audiences with our devel-opers, who were available to answer tech-nical questions about turbocharger designand our company. Rounding out the eventwas a presentation on "TurbochargerDesign Using 3-D CAD and CollaborationBetween Industry and Academia."

Such collaboration has been a traditionsince 1998, when the successful partner-ship between 3K-Warner and Kaiser-slautern Polytechnic began with the ideaof developing a CAD pool. This alliance

made it possible to conduct inexpensivetests of new software components forPro/ENGINEER and integrate them intothe design process — from simulationadd-on tools all the way to new function-ality for the Pro/ENGINEER software.

The partners regularly share their expert-ise with one another. As a result, 3K-Warn-er enriches student education by holdingregular, valuable presentations at the uni-versity, and in return has benefited by hir-ing five newly graduated engineers alreadyfamiliar with the Pro/ENGINEER designsystem.

Only CD turbochargers are manufac-tured in Campinas at this time. Pro-duction for the service market is a keyfunction here. Joining the establishedS-Series turbos, the first series in the Kfamily of turbochargers is planned toroll off the Brazilian production line laterthis year. Production volume is expect-ed to increase further from the num-ber of roughly 54,000 turbochargersbuilt in 1999 as demand rises. TheCampinas plant is set to play a key —and growing — role in BWTS' world-wide production strategy.

The Campinas plantby the numbers:

Campus size: 38 acres

Buildings: 60,600square feet

Employees: 113

Published byBorgWarner Turbo Systems GmbHMarnheimer Strasse 85/87, D-67292 KirchheimbolandenGermany

Concept, Design, Editing, and CoordinationGünter Krämer, European Market , 3K-Warner Turbo Systems GmbH

PhotographsBorgWarner Turbo Systems, MCC, Scania, Skoda

Translation Anglo American Ad, Heidelberg

LayoutHaas Werbeagentur GmbH, Mannheim

PrepressGutfleisch & Frey GmbH, Mannheim

PrintingDruckerei Peter Dewitz GmbH, Ketsch

Copyright (c) 20003K-Warner Turbo Systems GmbH, Kirchheimbolanden, GermanyAll rights reserved, including that to make technical modifications without notice.Printed in Germany

TurboNews 1/2000

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