DETROIT — Goodyear Tire & Rubber Co. is close to striking a deal to sell its engineered composites business to Cambridge Industries Inc., a move that would continue the consolidation trend among automotive parts suppliers that use sheet molding compound.
Akron, Ohio-based Goodyear confirmed last week that Cambridge signed a conditional letter of intent in January to buy Goodyear's 220,000-square-foot Jackson, Ohio, plant. The acquisition is scheduled to be completed by March 31, said sources at the plant and elsewhere in the industry.
The plant, which has 409 employees, performs injection and compression molding of fiberglass-reinforced SMC for a number of exterior and structural components. Among other products, the plant makes grille opening panels and reinforcements for the Windstar minivan, glove-box doors for the Taurus/Sable car line and exterior body panels and truck hoods for a number of models.
For Madison Heights, Mich.-based Cambridge, the buy not only would expand its SMC production capacity but also would open the door to more business with Ford Motor Co., a primary customer of the Jackson plant along with other Big Three carmakers.
The companies are completing negotiations on several issues and sale conditions, said Goodyear spokesman David Wilkins.
Goodyear did not disclose plant sales figures or equipment numbers and tonnage ranges. However, both Goodyear and officials with the local union representing the Jackson plant said it was operating at close to full capacity. The 31-year-old plant is represented by United Steelworkers Local 820L in Jackson.
``We have an agreement there until the year 2000, but the plant has contracts well beyond that,'' said Carroll Floyd, staff representative for the union's district office in Chesapeake, Ohio. ``It's been operating seven days a week around the clock.''
Cambridge — one of only two large suppliers that now dominate the SMC automotive market — declined to discuss the possible buyout. The company said in a prepared statement on March 19 that it is engaged in talks with Goodyear but had not reached an agreement.
The two firms hope to come to a resolution shortly, said William Sick, executive vice president of marketing and sales for Cambridge, who gave no timetable for the sale's completion.
``It's nothing secretive,'' he said. ``We're a forward-thinking company that's always looking to expand our business to serve our customers.''
Goodyear, which recorded $13 billion in sales last year, is leaving the SMC business to concentrate on its core rubber-products businesses, Wilkins said. Its automotive products also include power-transmission components, air springs, transportation hose and molded-rubber aftermarket parts.
In June, Goodyear had announced a $13.3 million, three-year expansion at the Jackson plant to boost production of compression molded truck hood systems. For the expansion's first phase, Goodyear is adding 14,300 square feet of manufacturing space and new equipment to double the plant's heavy-truck parts capacity, said spokesman Skip Scherer.
The first phase is to be completed by the end of March, Scherer said. It was unclear how the sale would affect future expansion plans, he added.
The potential acquisition continues to alter an industry shaping up as a two-horse race between Cambridge and the similarly sized Budd Co. Plastics Division of Troy, Mich., for a lion's share of the SMC automotive market worldwide.
Cambridge recorded $400 million in 1996 sales, with an estimated two-thirds of that from the manufacture of interior, exterior and structural SMC components. The firm employs 4,000 and operates 15 plants in North America.
Earlier this month, Cambridge announced a 50-50 joint venture with leading SMC European auto supplier Menzolit-Fibron GmbH of Bretten, Germany, to manufacture and sell each other's products on their respective continents. In addition, the company expanded a year ago when it bought Fairlawn, Ohio-based GenCorp Inc.'s automotive SMC business for an undisclosed amount.
At the same time, like Goodyear, Cincinnati-based Eagle-Picher Industries Inc. is shedding its SMC parts business. The company announced two weeks ago that it would sell its plastics division to concentrate on other, more lucrative operations.
No buyer has been found yet for Eagle-Picher's three SMC parts plants in Huntington, Ashley and Grabill, Ind., said company spokesman Michael Driehorst. But Eagle-Picher officials confirmed that an internal management team is considering purchasing the plants, while industry experts speculate that Cambridge also might be interested. Eagle-Picher's plastics division recorded about $80 million in 1996 sales.
Separately, Cambridge has completed its acquisition of the Production Molding Co. division of APX International Inc., based in Madison Heights. Terms were not disclosed.
The division uses resin-transfer molding technology to build interior and exterior body panels and other structural applications for the automotive industry. The sale of APX's PMC division to Cambridge was first announced in August as APX was preparing to merge with MascoTech Inc. to create one of the nation's largest automotive engineering and technical service companies. The new firm, in Auburn Hills, Mich., is known as MSX International Inc.
Erin Millerschin, program director of the SMC Automotive Alliance in Troy, Mich., said the recent consolidation trend is indi- cative of the entire automotive industry.
``All auto suppliers are going through the same thought process,'' Millerschin said. ``They're deciding where they want to be in the market and whether they have the resources to get there. Either they invest in continued growth or find another niche where they can find the most success.''