Interiors, like this one on the new 2012 Ford Escape, have become critical in differentiating brands.
Ford has been trying to get out of the components business since the days of former CEO Jacques Nasser – and now it has taken another big step towards finishing the long-planned restructuring of its part business with the sale of its interior component operations to French supplier Faurecia.
With the deal, Faurecia reinforces its position as part of Ford’s Aligned Business Framework. ABF companies enter into long-term relationships with Ford to strengthen collaboration and drive mutual profitability and technology development.
“Our ABF network of suppliers is built on long-term relationships and collaboration for the mutual benefit of Ford and our suppliers,” said Tony Brown, Group Vice President, Ford Global Purchasing. “With this announcement, Faurecia is not only serving a critical business need for Ford – they are helping to provide leadership in our effort to build a financially healthy, diverse supply base.”
As part of the deal, Faurecia announced it was purchasing a key plant in Saline, Michigan from Ford.
“The acquisition reinforces our leadership position in interior systems and our global partnership with Ford Motor Company,” said Yann Delabrière, Chairman and CEO of Faurecia, which is the world’s sixth-largest automotive supplier and is based in Nanterre, France. “The Saline business strategically fits with Faurecia’s key priorities, directly tying to our core focus, continuous improvement in operating performance, global customer expansion, technology leadership and strategic growth plans,” he said.
Terms of the sales were not disclosed but Faurecia and Ford hope to close the deal by June1.
Like its competitors, Ford has put an increasing emphasis on interior design, now considered a key differentiator between brands. But it is betting that the answer is to outsource development to company’s specializing in interior designs rather than keeping that as one of its own core competencies.
That approach can also help improve economies of scale, Ford believes.
The plant in Saline generates $1.1 billion in annual sales supplying cockpit modules, instrument panels, door panels and center consoles for 12 vehicle programs assembled at eight Ford plants throughout North America.
With this acquisition, Faurecia’s objective is to create a new operation that is optimized for efficient production, Heneka said.
As part of the deal, Faurecia will also enter into a new joint venture with Rush Group Ltd., one of the Rush Group of companies that together comprise one of the largest Native American and woman-owned businesses in North America.
The joint venture, called Detroit Manufacturing Systems (DMS), will do injection molding, assembly and sequencing of interior trim components from a new factory in Detroit. Rush Group will hold the majority of the capital and the management of DMS, while Faurecia – with a 45% stake, – will bring its technology and manufacturing expertise to the joint-venture.
With the acquisition, Faurecia, already the world’s leading supplier of interior systems components, will become North America’s No. 1 interior systems supplier and the top supplier of interior components
to the Ford Motor Co.