DETROIT - In a major consolidation of automotive interior components suppliers, Johnson Con-trols Inc. announced July 18 that it will acquire privately held Prince Automotive of Holland, Mich., for $1.35 billion in cash. Prince, with projected sales this year of $850 million, supplies a variety of interior components, including headliners and overhead consoles, floor consoles, door panels, visors and armrests. The company has grown rapidly, with sales of only $30 million as recently as 1982.
Prince has focused on the integration of electronics into interior components, such as its Home-Link transmitter that allows remote control of garage doors, gates, security and lighting systems from a vehicle. One of Prince's earliest innovations was a sun visor with a lighted vanity mirror the company developed for the 1972 Cadillac.
JCI's Automotive Systems Group reported sales last year of $3.8 billion, a threefold increase since 1991. While seating and headliners are its main products, the automotive group - with 113 facilities in 18 countries - also produces door panels, instrument panels and parcel shelves.
Prince Automotive, a unit of Prince Holding Corp., has 4,500 employees at eight manufacturing plants, with seven in its headquarters city of Holland, and one in Mexico City. The JCI acquisition of the automotive business does not include other Prince units, including Prince Machine, Lumir Corp. and Wingspan Leasing.
Founded in 1965 by the late Edgar D. Prince, a designer of custom tooling for the die casting industry, the company has fostered a paternalistic and private culture based on a Dutch Calvinist work ethic prevalent in western Michigan.
In 1991, Prince opened what it called the People Center, a recreational facility housing a full-size swimming pool, weight machines, racquetball courts and a sauna. Ed Prince, who died in March 1995 at the age of 63, also was a major benefactor to charitable causes and a key player in the redevelopment of downtown Holland.
But Prince's insular corporate culture, one of its key strengths, has not necessarily been an advantage for the company as automakers demand that suppliers expand their reach to emerging markets around the world, according to Jim Gillette, an analyst with IRN Inc. in Grand Rapids, Mich.
``It's really been a very reluctant thing for that company to go global,'' Gillette said. ``It's going to be a dramatic and wrenching culture change over the next five years.''
By aligning with JCI, a company that had sales last year of $8.3 billion, Prince gets access to global markets and manufacturing facilities in one move. JCI also has been active on the expansion front, opening 13 plants last year around the world and acquiring a majority interest in Roth Freres, a major supplier of headliners in Strasbourg, France.
In February, JCI also formed Intertec Systems, a joint venture with Inoac Corp. of Nagoya, Japan, to produce instrument panels.
JCI's acquisition of Prince also will give it the capability to supply a greater portion of the complete automotive interior, a trend known as modularization or systems integration. That will help JCI compete with major rivals such as Lear Corp., Magna International and Textron Auto-motive Co., as the Big Three and other automakers thin out their supplier ranks in favor of a few, large components makers.
Gillette said the JCI-Prince combination should allow the firm to achieve cost savings through better control of the design and development process and a broader product offering. The only question is how JCI, a large, publicly held corporation, and Prince will merge their very different cultures.
``It's going to be real interesting to watch,'' he said.
A New York-based analyst said the deal is good for both firms.
``This [the acquisition] is right in line with the Johnson Controls' strategy to get into interior door paneling,'' said the analyst, speaking on the condition that his name not be used.
``JCI's concentration in this area is in an effort to become a full-system supplier, which is a trend you're now seeing in this industry,'' he said. ``You may see other acquisitions by Johnson Controls to increase its presence as a full-system supplier.''
Prince also benefits because it now will increase sales in overseas markets, the analyst said. About 80 percent of Prince's current sales come from Big Three automakers, he said.