ECHLIN BUYS FRENCH TUBE EXTRUDER, MOLDER

Comments Email Print

DETROIT — Automotive supplier Echlin Inc. of Branford, Conn., has purchased Nobel Plastiques SA of Nanterre, France, to gain ground in a fast-growing market for multilayered, thermoplastic fluid-system tubing.

Echlin, which supplies more than 550,000 types of parts worldwide, bought the outstanding shares of the specialized European injection molder and extruder for $16 million. The sale closed in mid-January and was announced in the company's first-quarter financial report, said Echlin investor relations director Paul Ryder.

Nobel specializes in hydraulic and pneumatic fluid-handling products made of multilayered hose material, Ryder said. The hoses typically can be made from a variety of engineered thermoplastic compounds, including nylon 12 or polyurethane, and are used as a lighter-weight alternative for hoses made of rubber with steel fasteners.

The demand for multilayered fluid systems is gaining in North America because of their relatively low emissions and reduced gas permeability, said Joel Kopinsky of ITB Group Ltd., an automotive research group in Novi, Mich.

Nobel's thermoplastic tubing products are used for fuel lines, power-assisted brakes and steering and clutch applications. The French company, which primarily supplies European carmakers, recorded 1996 sales of $70 million.

The purchase broadens the product portfolio of Auburn Hills, Mich.-based Echlin Automotive, the company's division that specializes in supplying original equipment manufacturers with system components. Echlin also is a large worldwide supplier of parts for the automotive aftermarket.

Before the purchase, only a small percentage of the company's tubing products used thermoplastics, Ryder said.

``Prior to the acquisition, most of our hose and hose-coupled products were made with rubber,'' Ryder said. ``The purchase expands our presence in fluid-handling products by giving us new offerings with thermoplastic hose and added manufacturing capability in a new field.''

The purchase also gives Echlin an expanded presence in Europe, which currently accounts for close to 20 percent of annual sales, Ryder said.

Nobel's plants are located in Barcelona, Spain, and Vitray and Guiscard, France.

At each plant, the resin compounds are first injection molded to form the tubing before undergoing a single-line, multilayer coextrusion process that forms each fluid-handling module.

A spokesman for Echlin Automotive said the products will be sold worldwide with others manufactured by its fluid systems group.

The group provides fuel and vapor lines, fuel rails, fuel senders and throttle bodies to both carmakers and Tier 1 suppliers.

Echlin has been active in acquisitions as a growth strategy since 1959, said Ryder, who added that about one-third of the company's sales has come through buyouts of related businesses.

Echlin recorded 1996 sales of $3.3 billion and profit of $142 million for its fiscal year, which ended Aug. 31.

The company has been extremely aggressive in its acquisitions, according to several industry experts.

Late last year, its fluid systems group purchased Long Manufacturing Ltd., a heat-exchange and air-conditioning fabricator in Oakville, Ontario, and the automotive segment of Handy & Harman, an Auburn Hills, Mich., producer of fuel-delivery components. Echlin renamed the company Epic Technical Group Inc.

Due to the flurry of activity, the company's stock price and earning ratios have been volatile, said an equity analyst who did not want to be identified.

``They've turned up the heat in acquisitions, and now they have to prove that they can integrate those businesses into their operations,'' the analyst said.

Echlin also suffered a recent top-management defection. President and Chief Operating Officer C. Scott Greer left the Connecticut supplier Jan. 31 to take over as president of United Technologies Corp.'s automotive division in Dearborn, Mich. A successor has not been named.