TRAVERSE CITY, MICH. - Lear Corp. is spending more than $300 million this year to build plants, upgrade factory machinery and expand its engineering and testing facilities. The seating and interior components supplier is betting heavily on a strategy that foresees dominant parts makers building and assembling large modules or systems of parts. That requires a huge investment in computer-aided design and engineering tools.
At the same time, Lear also is extending its reach into emerging markets around the world where auto assemblers are setting up new assembly operations. That means new business for suppliers, even as markets in North America and Europe become mature.
``There are plenty of opportunities for all of us on a global basis,'' said Kenneth Way, chairman and chief executive officer, who spoke Aug. 7 at the University of Michigan Management Briefing Seminars in Traverse City.
He said the industry's traditional focus on drivetrains and styling recently has given way to an emphasis on interiors as a means of marketing vehicles.
For Lear, based in Southfield, Mich., this interiors focus has fueled its growth as automakers add new features such as complex restraint systems, child seats, and safety and luxury items. That trend also plays into Lear's strategy of offering an entire interior system to its customers.
But while the number of large suppliers that deal directly with automakers continues to decline, Way said there remains ``plenty of room'' for lower-tier suppliers providing parts and materials to the Lears of the world. He noted that Lear's purchasing staff had a ``$4 billion buy'' last year.
If any company has benefited from the industry's trend toward outsourcing, or the use of independent parts suppliers, it is Lear. From sales of just $160 million in 1983, Lear grew to $4.7 billion last year.
The company's acquisitions of Automotive Industries last year and Masland Corp. in July greatly expanded its product offerings in the hot markets of interior trim and carpeting and acoustical insulation. He noted that Automo-tive Industries improved Lear's ability to manage large programs, an example of an acquisition helping both parties.
``It's integration both ways when you go through these acquisitions,'' Way said.
The missing piece of the puzzle for Lear's systems strategy is instrument panels. In an interview after his speech, Way said the company was searching actively for an instrument panel line - perhaps through a joint venture or acquisition - but had nothing to announce.
Lear also has put itself in a position to grow its business even if the cyclical auto industry suffered a sales decline of 20 percent, Way said. That is a major concern of investors who remember the industry's historical boom and bust pattern.