Textron Automotive Co. will enter the fast-growing plastic automotive fuel tank market when its parent, Textron Inc., acquires Kautex Werke Reinold Hagen AG of Bonn, Germany. The Troy, Mich., auto parts major expects to get 15 manufacturing plants, including fuel tank facilities in Avilla, Ind., and Windsor, Ontario, and a plant in Mexico due to begin operating early next year. Textron agreed to pay 468 million deutsche marks (US$308 million) in cash, and expects to complete the deal in early 1997, it announced Nov. 7.
John A. Janitz, Textron Auto-motive chairman, president and chief executive officer, said in a telephone news conference that the purchase reflects his firm's strategy to expand its proprietary plastics technology base. He said Kautex's ability to make its own blow molding machinery is attractive. Janitz claimed Kautex is the world's largest producer of plastic fuel tanks. They account for about 63 percent of Kautex's sales, estimated to total $500 million this year. Janitz said other blow molded auto parts represent 18 percent of sales, and the rest of sales are from containers for commercial and consumer use. Kautex has 2,000 employees.
Janitz said Kautex mainly makes monolayer fuel tanks for the European market. In North America it blow molds multilayer high density polyethylene tanks with a barrier layer. It developed an alternative to fluorination for barrier properties and will begin commercial production of tanks using the ``proprietary barrier layer'' next month.
Plastic fuel tanks now have about 37 percent of the North American market and will have about 50 percent by 2000, Janitz predicted. About 70 percent of European tanks now are plastic, and that figure should rise to 75-80 percent by 2000. Japanese automakers hardly use any plastic tanks, but predict they will convert in five to seven years. Kautex just received a Japanese order and expects more.
Kluckner-Werke AG of Duis-burg, Germany, said the sale of its Kautex subsidiary will help it reach previously announced financial objectives of reducing debt by 30 percent and of doubling its net equity ratio. Kautex CEO Wolfgang Theis said in a news release that Textron will help Kautex expand globally and develop advanced fuel systems. Janitz said Theis will remain CEO of the business.
The purchase will boost Textron Automotive's sales to more than $2 billion annually. It already is a major supplier of interior systems, exterior trim and functional components. Its only involvement to date in fuel systems has been fuel filter pipes and pump parts.
In North America, Textron Automotive's main plastic tank competitors include Solvay Automotive and Walbro Corp. About 18 percent of Kautex's sales are in North America, where it holds about a 26 percent share of the plastic tank market, making it the second-largest player. It holds a similar percent of the European market, where Janitz said it is the largest supplier.
Kautex's main customer is Volkswagen Group, which buys 40 percent of its production. Ford Motor Co., Chrysler Corp., Gen-eral Motors Corp. and BMW are other key accounts. It recently got a new contract with Mer-cedes-Benz. Janitz said Kautex significantly expands Textron's global presence with offshore plants in Germany, Belgium, China, Czech Republic, Spain, Portugal, Brazil and the United Kingdom.