Fueling speculation of westward expansion, Dynamit Nobel AG, one of Europe's largest automotive suppliers, has purchased a German competitor to boost production of plastic exterior parts.
The company, based in Weissenburg, Germany, signed an agreement in mid-June to purchase the plastics vehicle components unit of Phoenix AG, a smaller rival in Hamburg, Germany. The sale price was not disclosed.
The acquisition includes plastic exterior trim plants in Reinsdorf and Sterbfritz, Germany. The facilities are operated by Phoenix Kunststoff GmbH, the plastics vehicle components unit of Phoenix. The acquisition was expected to become final July 1.
Dynamit Nobel bought the entire unit as part of the deal. The large supplier's operations currently involve its Dynamit Nobel Kunststoff GmbH division, a thermoplastic interior and exterior parts maker, and Menzolit-Fibron GmbH, a producer of sheet and bulk molding compounds for body panels and other components.
The Phoenix plants injection mold a variety of painted components, such as bumper fascias, exterior trim and spoilers from polyurethane and thermoplastic materials. Phoenix Kunststoff, which has a total of 730 employees, recorded 1996 annual sales of 160 million deutsche marks ($92.6 million).
The Phoenix plants include injection presses with clamping forces as high as 3,500 tons and several paint lines, said Phoenix Chief Executive Officer Konrad Ellegist. Plant square footage and press totals were unavailable.
The sale puts to rest an announcement by Phoenix earlier this month that it would sell shares of its plastics car parts division. The firm, which had seen sales for its Kunststoff division slip in recent years, wants to concentrate resources on its other core businesses, Ellegist said.
Those businesses include its higher-volume Stankiewicz GmbH automotive acoustic insulation business unit. The unit makes interior sound-deadening parts made of ethylene propylene diene monomer/ethylene vinyl acetate elastomers, polyurethane foam, polypropylene, PVC and other materials.
In contrast, the company's exterior plastics operations only account for about 10 percent of company sales, Ellegist said.
``We either had to invest a lot of money in our plastics business to push it or we had to sell it,'' he said. ``The latter course made more sense to us as we move to expand.''
The firm's expansion plans have begun in earnest. The company is building a plant, expected to cost $6.7 million, near Antwerp, Belgium, to supply acoustical parts for General Motors Corp.'s Opel model. The company also is expanding through joint ventures into India and the Czech Republic, Ellegist said. In addition, the firm is making acoustical automotive parts at a manufacturing center near BMW AG's plant in Spartanburg, S.C.
Meanwhile, acquiring the Phoenix plants adds more bulk to the exterior and interior systems giant. Dynamit Nobel is owned by Frankfurt, Germany-based Metallgesellschaft AG, a holding company involved in areas such as explosives and specialty chemicals through its various units.
The company's Kunststoff and Menzolit-Fibron divisions racked up a combined DM 918 million ($531 million) in fiscal year 1996 sales, about a quarter of the company's total business, said Dynamit Nobel sales and marketing manager Lothar Schneider.
The purchase spurred talk that Dynamit Nobel's plastics division would expand outside Europe. The company is considering building its first facility in North America, where German carmakers Mercedes-Benz AG and BMW have opened shop in the past year, Schneider said.
The company also plans to increase production capacity at the Phoenix plants and add employees, he said. Current production levels at those plants were not disclosed.
``I think we're going to expand eventually to the North American market,'' Schneider said.
An overseas shift would not surprise equity analyst Brian Wilkinson of HSBC James Capel Ltd., an investment firm in London. Wilkinson, who follows Phoenix, said the company's plants give Dynamit Nobel more of a wedge in the luxury car market, an area where Phoenix has more presence with German carmakers than does Dynamit.
``Phoenix might have thought about going to North America, but they didn't want to invest that much in plastics,'' Wilkinson said. ``Now, they don't have to. Nobel could easily bolt over to the states, where U.S. companies are always looking for integrated systems suppliers.''
Dynamit Nobel's outward push could have started in March when the company's Menzolit-Fibron division formed a 50-50 joint venture with Cambridge Industries Inc. of Madison Heights, Mich. Cambridge and MenzolitFibron, in Bretten, Germany, have agreed to manufacture and sell each other's products.
Dynamit Nobel produces instrument panel systems for Volkswagen AG and Mercedes-Benz.
In addition, the company will manufacture exterior panels for Micro-Concept Car's small Swatch car, which is expected to begin production in Europe during 1998.