By: Dustin Walsh
October 29, 2012
DETROIT (Oct. 29, 1:25 p.m. ET) — V. Johnson Enterprises LLC, an affiliate of Redford, Mich.-based Piston Group, announced Oct. 29 the formation of a new joint venture with Valeo SA called Detroit Thermal Systems LLC.
Ford Motor Co. orchestrated the deal to create the minority-owned supplier and to transfer its ACH climate control business in Plymouth Township, Mich., to the new joint venture.
To support the new business, DTS announced the leasing of a 365,000-square-foot plant in Romulus, Mich. The plant will support the ACH business, or HVAC (heating, ventilation and air-conditioning) units for Ford vehicles, with 30 injection molding presses. The plant has the capacity to produce 2 million units annually, the company said in a release.
Production will begin during the third quarter of 2013, the company said. Assets and operations will be moved over the next two years. Current ACH employees, many UAW members, will need to reapply for positions at the new DTS plant.
“Our investment in readying this site with the installation of advanced equipment and employee training, demonstrates our commitment to rebuilding a vibrant manufacturing base in the Detroit area,” Kurt Hall, COO of the new company, said in a release. “Once our investments are complete, this facility and our talented workforce will create the benchmark for efficient and high-quality manufacturing of climate control systems.”
V. Johnson Enterprises, led by former Detroit Piston and Chairman and CEO Vinnie Johnson, will maintain a majority stake in the venture. Paris-based Valeo operates in North America as Valeo Automotive Inc. in Troy, Mich.
The deal is reminiscent to the deal that created the Detroit-based minority-owned supplier Detroit Manufacturing Systems LLC.
Ford helped form DMS in May with a deal between Wayne, Mich.-based Rush Group and French supplier Faurecia SA. Under that deal, Ford created the minority-owned supplier — Andra Rush, Detroit Manufacturing Systems CEO, is an American Indian — and unloaded its $1.1 billion book of interiors business at its 1.6 million-square-foot ACH Saline plant.
Rush Group holds a 55 percent stake in that joint venture.
DMS occupies 480,000 square feet in the Gateway Industrial Center in Detroit and shipped its first product, instrument panels for the Ford Mustang, to the automaker’s Flat Rock, Mich., assembly plant July 30.
DMS also is bidding on supply contracts with other automakers, including General Motors Co., Chrysler Group LLC and Toyota Motor Corp.
Valeo has been after the ACH business for nearly five years. It signed a memorandum of understanding to acquire the plant in December 2006, but the deal fell through in 2007 after negotiations with the UAW stalled.
Then-Valeo CEO Thierry Morin told reporters at the 2007 Frankfurt Motor Show that the supplier wanted hourly pay for UAW workers reduced to $20 or less from $30, Wards Auto reported.
Valeo’s North American unit generated sales of $1.9 billion last year with 447 employees in metro Detroit. At the time of the deal signing in 2006, the plant employed 1,250, according to a Ford release.
Piston Group was formed by Johnson in 1995 and supplies suspension assemblies, chassis modules and interiors, with Ford being its largest customer. The supplier generated sales of $473.8 million in 2011 with 226 local employees.