Lear Corp. is negotiating with Goodyear Tire & Rubber Co. to acquire its plastic instrument panel business and become a one-stop shop for interior systems in North America, according to Goodyear and union sources.
Goodyear has signed a conditional letter of intent to sell its 334,000-square-foot injection molding plant in Logan, Ohio, to Lear, said Goodyear spokesman David Wilkins at the company's Akron, Ohio, headquarters. The sale is pending the completion of certain sales conditions, Wilkins said. The purchase price was not announced.
The acquisition would hand Lear its first North American instrument panel production facility, sending the message that the large Tier 1 supplier could now provide a complete interior package. That fact could strengthen the growing company's competitive standing with Detroit's Big Three automakers, analysts said.
Lear spokeswoman Leslie Touma would only say that the Southfield, Mich.-based company does not comment on rumors of possible acquisitions.
Still, officials with Local 744 of the United Steelworkers Union in Logan confirmed word of an impending sale to Lear. The local's executive board met with Lear in January to discuss details of the union contract, which runs until 1998, said Local 744 Vice President Troy Stewart. Since then, news of an imminent acquisition have continued to be passed to union members, Stewart said.
Local 744 President Dawn Wells said that union officials also were told that Lear plans to visit the Goodyear plant on April 23, possibly to close the sale.
``Everything we've told our employees is tentative,'' Wells said. ``But we understand that all papers have been signed by Goodyear, and we're waiting for final action from Lear. We hope the sale is completed on April 23 or soon after.''
The 34-year-old Logan plant makes instrument panels for Ford Motor Co.'s popular Taurus and Mercury Sable and General Motors Corp.'s well-received Oldsmobile Cutlass and Chevrolet Malibu, according to Wells.
The plant has hired close to 150 workers within the past year to keep pace with around-the-clock production, Wells said. Currently, the plant has 560 hourly and salaried employees.
The Logan facility is entirely dedicated to instrument panels. The soft vinyl panels are injection molded by bonding the skin to a substrate made with Dylark SMA and foam.
The facility uses three Cincinnati Milacron injection presses, said Stewart, who doubles as a plant maintenance engineer. Two presses, with clamping forces of 2,450 tons, mold the panels, while the third, 850-ton press molds the glove box, Stewart said. Goodyear would not confirm the number of presses or their tonnages.
The decision to sell the plant fits with Goodyear's strategy to focus on core rubber and tire businesses, Wilkins said. The plastics molding plant also was on the selling block in 1993 before the company chose to keep it in the fold.
In addition to the Logan plant, Goodyear also has signed a conditional letter of intent in January to sell its Jackson, Ohio, engineered composites plant to Cambridge Industries Inc. of Madison Heights, Mich.
The Jackson plant does injection and compression molding of fiberglass-reinforced sheet molding compound for automotive exterior components.
The Jackson and Logan plants are Goodyear's only two remaining plastics processing plants, Wilkins said. The Cambridge sale is also yet to be completed.
``We wanted to move ahead and really focus on our core businesses,'' Wilkins said. ``Selling those two plants will allow us to do that. We expect the [Logan plant] sale to be completed very soon, after we finish due diligence.''
For Lear, the sale would give the company a completed matched set of interior systems components produced by Lear in North America. The supplier currently is capable of providing four of the five main areas of an interior system: seating, door panels, headliners, and carpet and flooring systems.
``[The buyout] would really lock up the fact that they do it all,'' said Ross Seymore, equity automotive analyst with First of Michigan Corp. in Detroit. ``Systems integration is demanded by many automakers, who want to make as few parts as possible themselves. Lear would also be able to match color and texture on all its interior parts to greatly reduce the chance of error.''
The purchase would be the second by Lear of an instrument panel producer within a year. In October, the company bought Borealis Industrier AB of Gothenburg, Sweden, a major instrument panel supplier to AB Volvo and Saab Automobile AB in Europe.
However, Borealis does not serve the North American market. Also, European panels are not made of the soft vinyl preferred by the Big Three, Seymore said.
Several of Lear's main rivals, including Johnson Controls Inc. of Milwaukee and Magna International Inc. of Markham, Ontario, have lassoed other suppliers in acquisitions that allow them to make entire interior systems.
Lear ranked second in 1996 injection molding sales in North America with $615 million, according to Plastics News' list of top injection molders. Goodyear ranked 27th among top original equipment manufacturer automotive suppliers in North America with an estimated $1.49 billion in 1996 sales, according to rankings by Automotive News, a sister publication to Plastics News.
A sale would be greeted warmly by the union representing the Logan plant. With its corporate eye on other businesses, Goodyear is not likely to invest money in the plant anytime soon, Wells said.
``I'm pleased with the developments,'' she said. ``Goodyear wouldn't be that interested in getting new contracts for us or buying new equipment. With Lear, we're an important part of their interior business operation.''