JCI's decision on interiors the result of shifting auto industry

By Rhoda Miel
News Editor

Published: October 30, 2013 4:52 pm ET
Updated: October 30, 2013 4:55 pm ET

Related to this story

Topics Automotive, Mergers & Acquisitions, Injection Molding
Companies & Associations Johnson Controls Inc.

Johnson Controls Inc. spent more than a decade creating an auto group that could supply complete interiors — from the seats to the headliners and electronics to trim.

But a shifting auto industry that once signaled its intention to buy complete systems from large Tier 1 companies has now moved the other way, and is more interested in controlling more from within its own walls. That leaves JCI, based in the Milwaukee suburb of Glendale, Wis., with looking at “strategic options” for its auto interiors group, including potentially selling it.

The Oct. 29 announcement from JCI comes less than a year after the company also began seeking buyers for its auto electronics unit, and after months of speculation that interiors would soon be offered as well.

JCI already has announced one sale from its electronics group, with Gentex Corp. of Zeeland, Mich., buying its Homelink business.

“[Interiors] has done a nice job turning the business around, but they’re sitting in the same position as we were at last year with electronics,” said Bruce McDonald, chief financial officer and executive vice president for JCI during a conference call with analysts. “They’d say, here’s some restructuring we’d like to do and here’s some capital expenditures we’d like to make, but we’re not in a position right now to put a lot of [money] into it.”

The interiors group saw $4.2 billion in sales last year, but lost $13 million. Net sales for all of JCI’s automotive businesses were up 9 percent for the year, with interiors seeing an 8 percent increase. However sales in Europe have been a drag on the business as the European economy tries to recover.

The auto industry’s shift from complete systems to individual components is not unexpected, noted Bill Rinna, senior manager of forecasting with LMC Automotive, a Troy, Mich.-based industry analyst. Buying a range of parts from multiple companies makes it easier to drill down on costs and reduce expenses.

“It’s hard to control suppliers who are supplying complete individual systems,” he said.

McDonald and CEO Alex Molinaroli — who took that post on Oct. 1 — both said they were not ready to discuss details of the potential future of the interiors group. Instead, the company will provide more background and data during a daylong meeting with analysts in mid-December. However, both also said that JCI has no intention of simply shutting down production.

“We’re not planning on winding down the interiors business,” Molinaroli said. “We aren’t saying that we’re exploring our options, but we don’t know what we’re going to do. We have some irons in the fire.”

The interiors group, based in Plymouth, Mich., includes instrument panels, door panels, interior trim, headliners, consoles and other parts. Its holdings include parts of the one-time Plastech Engineered Products Inc. JCI bought some of the assets of Plastech in 2009 out of bankruptcy. It has extensive injection molding operations along with compression molding, interior skin production and other plastics processing. The interiors group up for sale does not include seating, which operates as a different business unit.

At this point, Molinaroli said, there is no reason why selling interiors will hurt seating.

“They’re only interconnected by commercial convenience,” he said. “I don’t think it would be harmful to our seating business at all.”

JCI does not expect to make one single transaction involving interiors, Molinaroli said. Instead, he described the options to be an “ongoing process.”

“A lot of rumors are out there,” McDonald said. “We felt it was important to be up front with what we’re planning on doing. We’d rather handle the communication like this than be reactive to a leak in the future.”


Comments

JCI's decision on interiors the result of shifting auto industry

By Rhoda Miel
News Editor

Published: October 30, 2013 4:52 pm ET
Updated: October 30, 2013 4:55 pm ET

Post Your Comments


Back to story


More stories

Image

French investment firm buys Alabama-based CSP Technologies

January 30, 2015 1:10 pm ET

A French investment firm has finalized a deal to buy CSP Technologies Inc., an Auburn, Ala., company that makes specialty plastics packaging.    More

Image

Lubrizol buys Brazil-based coatings technology manufacturer

January 30, 2015 11:50 am ET

Specialty chemicals company Lubrizol Corp. of Wickliffe, Ohio, said it has acquired a Brazilian company that makes coatings technology for products...    More

Image

Lund adds to aftermarket auto products portfolio with buy of Bushwacker

January 29, 2015 2:49 pm ET

Lund International Inc. has expanded its portfolio of plastic aftermarket vehicle accessories by acquiring Bushwacker Inc.    More

Image

Chemtrusion, Mytex Indiana compounding plant set for expansion

January 29, 2015 1:35 pm ET

Japanese and American partners in a compounding plant in Indiana plan to expand the facility.    More

Image

Falcon Plastics expands in South Dakota

January 29, 2015 11:45 am ET

Falcon Plastics Inc. is putting the final touches on a 60,000 square foot addition that will nearly double the size of its Brookings, S.D., manufactur...    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events