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The North American Automotive Supplier Report
SupplierBusiness
2013 EditionSponsored by
FINANCIAL ADVISORS WITH DEEP AUTOMOTIVE INSIGHTS
The North American Supplier Report
CONTENTS Introduction ................................................................................................................ 9 Economics of the automotive industry in North America............................................ 10
North America macroeconomic overview ............................................................... 10 Economic review ................................................................................................. 10 Economic outlook ............................................................................................... 11
North America light vehicle sales review and outlook ................................................. 15 A quick recovery ................................................................................................. 15 Driving factors and outlook ................................................................................. 16 Canada and Mexico ............................................................................................ 17 Changing business models ................................................................................... 18 Price pressure ...................................................................................................... 19 Segmentation shifts .............................................................................................. 19
North American Light vehicle production review and outlook .................................... 21 The world’s third largest hub .................................................................................. 21
The Detroit Three, capacity and profitability ........................................................ 22 Imports less in vogue ........................................................................................... 24 Global platforms coming to North America ......................................................... 25 North America exports potential .......................................................................... 26 Shifts within the region ........................................................................................ 26
OEMs’ activity and supplier management - ................................................................ 28 Overview of OEMs’ activity and supply base management ...................................... 28
Major issue emerging from the crisis .................................................................... 28 OEMs want to deal with fewer suppliers .............................................................. 28 OEMs’ changing sourcing patterns ....................................................................... 29 Different management of relations with suppliers ................................................. 30
OEM Overview ...................................................................................................... 31 FORD ................................................................................................................. 31 GENERAL MOTORS ........................................................................................ 34 CHRYSLER-FIAT.............................................................................................. 37 TOYOTA ........................................................................................................... 40 HONDA ............................................................................................................. 42 NISSAN ............................................................................................................. 44 HYUNDAI-KIA ................................................................................................. 46 VOLKSWAGEN ................................................................................................ 48 MERCEDES....................................................................................................... 50 BMW .................................................................................................................. 51 OTHER OEMs (MAZDA, SUBARU, MITSUBISHI) ......................................... 52
Recent Developments and outlook for the North American supply base ...................... 53 About 200 suppliers were liquidated ........................................................................ 53
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The North American Supplier Report
Best-selling suppliers in North America ................................................................ 54 Domestic rising stars? .......................................................................................... 55
Profitability, revenue and costs outlook for North American suppliers ........................ 57 Improved financial health, not translating into massive investments ......................... 57
Profitability rather than market share are at the top of suppliers’ agenda ................ 57 Drivers of improved profitability .......................................................................... 57 Structural changes in customer portfolio ............................................................... 58 Cost containment measures have lowered the break-even point ............................. 59 Lower labour cost ................................................................................................ 60 Plenty of dry powder, but investment momentum is slowly picking up .................. 61
Capital spending and investment momentum of suppliers in North America ............... 62 Why investment momentum is slower than it should be .......................................... 62
Who’s investing? ................................................................................................. 62 Houlihan Lokey – M&A Insights ............................................................................... 69
Notable Financial Buyer M&A Transactions ........................................................ 70 Notable Strategic Buyer M&A Transactions ......................................................... 71 Conclusion .......................................................................................................... 73
Supplier merger and acquisition activity in North America ......................................... 74 Mild recovery from the sudden stop in 2009 ............................................................ 74 Role of private equity ............................................................................................. 76
Supplier Profiles ........................................................................................................ 79 3M Automotive ...................................................................................................... 79 ABC Group............................................................................................................ 82 Aisin Seiki .............................................................................................................. 84 Akebono Brake....................................................................................................... 87 Alcoa ..................................................................................................................... 89 Alfa........................................................................................................................ 94 Alpine Electronics .................................................................................................. 97 American Axle and Manufacturing ........................................................................ 100 Asahi Glass ........................................................................................................... 103 Autoliv .................................................................................................................. 106 Autoneum ............................................................................................................. 110 BASF .................................................................................................................... 113 Bayer MaterialScience LLC ................................................................................... 119 Behr ...................................................................................................................... 125 Benteler ................................................................................................................. 128 BorgWarner .......................................................................................................... 131 Bosch .................................................................................................................... 137 Bridgestone ........................................................................................................... 143 Brose ..................................................................................................................... 147 Camaco ................................................................................................................ 151
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The North American Supplier Report
Clarion .................................................................................................................. 152 Continental AG ..................................................................................................... 156 Cooper Standard ................................................................................................... 165 Cooper Tire & Rubber Company ........................................................................... 168 Cummins .............................................................................................................. 171 Delphi ................................................................................................................... 175 Denso ................................................................................................................... 184 Dow Automotive .................................................................................................. 190 DuPont ................................................................................................................. 194 Dura Automotive .................................................................................................. 198 Eaton .................................................................................................................... 200 Eberspächer .......................................................................................................... 204 Edscha .................................................................................................................. 209 Exide Technologies ............................................................................................... 211 Faurecia ................................................................................................................ 215 Federal-Mogul....................................................................................................... 222 Flex-N-Gate .......................................................................................................... 227 Freescale ............................................................................................................... 229 Freudenberg-NOK ................................................................................................ 236 GECOM ............................................................................................................... 241 Gentex .................................................................................................................. 242 Gibbs Die Casting ................................................................................................. 245 GKN..................................................................................................................... 246 Goodyear .............................................................................................................. 249 Grupo Antolin....................................................................................................... 254 Guardian............................................................................................................... 257 Harman ................................................................................................................ 259 Hayes Lemmerz .................................................................................................... 263 Hella ..................................................................................................................... 266 Henniges Automotive ............................................................................................ 271 Hitachi .................................................................................................................. 273 Honeywell ............................................................................................................. 276 Hutchinson ........................................................................................................... 280 Inalfa Roof Systems ............................................................................................... 282 Inergy ................................................................................................................... 284 Johnson Controls .................................................................................................. 286 Johnson Electric .................................................................................................... 293 JTEKT .................................................................................................................. 296 Keihin ................................................................................................................... 300 Key Safety Systems ............................................................................................... 302 Koito .................................................................................................................... 304
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The North American Supplier Report
Kongsberg ............................................................................................................. 307 Lacks .................................................................................................................... 310 Lear ...................................................................................................................... 311 Linamar ................................................................................................................ 315 Magna .................................................................................................................. 318 Magneti Marelli .................................................................................................... 326 MAHLE ............................................................................................................... 331 Mando America Corp............................................................................................ 334 Martinrea .............................................................................................................. 336 Meridian Automotive ............................................................................................ 338 Meritor ................................................................................................................. 339 Metaldyne ............................................................................................................. 344 Michelin ............................................................................................................... 347 Mitsuba ................................................................................................................. 351 Mitsubishi Electric ................................................................................................. 353 Multimatic ............................................................................................................ 356 Navistar ................................................................................................................ 358 NHK Spring .......................................................................................................... 361 Nihon Plast ........................................................................................................... 365 Nippon Sheet Glass (NSG) .................................................................................... 367 Nissin Kogyo ........................................................................................................ 370 Novelis.................................................................................................................. 372 NSK ..................................................................................................................... 375 NTN ..................................................................................................................... 378 Ogihara ................................................................................................................. 383 Omron .................................................................................................................. 385 Osram ................................................................................................................... 387 Owens Corning ..................................................................................................... 389 Panasonic.............................................................................................................. 392 Parker Hannifin ..................................................................................................... 395 Philips Automotive Lighting NA ........................................................................... 398 Pioneer ................................................................................................................. 400 Plastic Omnium .................................................................................................... 403 PPG Industries ...................................................................................................... 406 Remy International NA ......................................................................................... 410 Revstone ............................................................................................................... 413 Saint-Gobain NA .................................................................................................. 415 Samvardhan Motherson Group ............................................................................. 419 Sanden .................................................................................................................. 421 Sanluis Rassini NA ................................................................................................ 423 Saturn Electronics & Engineering .......................................................................... 425
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The North American Supplier Report
Schaeffler .............................................................................................................. 426 Shiloh Industries ................................................................................................... 431 Showa ................................................................................................................... 433 SKF ...................................................................................................................... 436 Stanley Electric ..................................................................................................... 440 Stoneridge ............................................................................................................. 442 Strattec Security .................................................................................................... 444 Sumitomo Electric ................................................................................................. 446 Superior Industries ................................................................................................ 449 Takata ................................................................................................................... 451 Teksid ................................................................................................................... 455 Tenneco ................................................................................................................ 457 ThyssenKrupp ....................................................................................................... 462 TI Automotive ...................................................................................................... 468 Timken ................................................................................................................. 471 Tokai Rika ............................................................................................................ 474 Tower Automotive ................................................................................................ 476 Toyoda Gosei ........................................................................................................ 480 Toyota Boshoku .................................................................................................... 482 Trelleborg.............................................................................................................. 485 TRW .................................................................................................................... 489 TS Tech ................................................................................................................ 498 UGN .................................................................................................................... 500 Valeo .................................................................................................................... 502 Visteon .................................................................................................................. 507 Webasto ................................................................................................................ 514 Woodbridge .......................................................................................................... 516 Yazaki .................................................................................................................. 518 ZF......................................................................................................................... 521
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The North American Supplier Report
TABLES AND FIGURES Figure 1: Change in US real GDP (Source: IHS) ........................................................ 12 Figure 2: US Labor market employment forecast (Source: IHS) .................................. 12 Figure 3: Trade Balance, Exports and Imports of Goods and Services 1995-2012 (Source: US Census Bureau).................................................................................................... 14 Figure 4: US Gas Prices 2003-2013 (monthly average) [Source: IHS] .......................... 17 Figure 5: Light Vehicle sales North America [Source: IHS Automotive] ..................... 19 Figure 6: Light vehicle production and capacity utilization in North America [Source: IHS Automotive] ....................................................................................................... 23 Figure 7: Major currency exchange versus US dollar (March 2003 average exchange rate as 1) (Source: Federal Reserve) .................................................................................. 24 Figure 8: Top 10 US Import partners for motor vehicle parts (HS 8701-8705) (in billions USD) [Source: Foreign Trade Division, U.S. Census Bureau] ..................................... 29 Figure 9: Average hourly earnings of production and nonsupervisory employees at OEMs and suppliers (2012 data refers to average of January to November period) [Source: Bureau of Labor Statistics] ........................................................................... 60 Figure 10: Employees at OEM and suppliers (in thousands) (2012 data refers to average of January to November period) [Source: Bureau of Labor statistics]........................... 61 Figure 11: Number of supplier investment announcements by parent country of origin 64 Figure 12: Disclosed investment value of supplier investments for announcements between January 2012 and January 2013 (in USD million) ......................................... 64 Figure 13: Supplier investment announcements between January 2012 and January 2013 by target component area ........................................................................................... 64 Figure 14: Announced investment value by beneficiary location (in USD million) ....... 65 Figure 15: Number of deals announced between January 2012 and January 2013 involving North American suppliers (by buyer country of origin) ................................ 75 Figure 16: U.S. Light Vehicle SAAR [Source: IHS Automotive] ................................. 69 Figure 17: North American Light Vehicle Production [Source: IHS Automotive] ........ 69 Table 1: US Imports CAGRs for top 10 countries [Source: Foreign Trade Division, U.S. Census Bureau] ......................................................................................................... 30 Table 2: Top 15 Automotive suppliers by 2011 automotive sales [Sources: company reports, IHS estimates)[Note: non- USD amounts converted to USD with early 2013 exchange rates] .......................................................................................................... 56 Table 3: OESA members Breakeven volumes (in millions units) [Source: OESA Barometer survey] ..................................................................................................... 59 Table 4: Key M&A Activity involving North American suppliers in 2012 and 2013 (* indicates private-equity company) .............................................................................. 76
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