DETROIT — The man who will head General Motors Corp.'s soon-to-be-sold lighting business says he hopes to bring about a turnaround in two or three years.
Michael Hammes, president and chief executive officer of the newly formed Guide Corp., says he will seek new technology and launch a cost-cutting campaign.
``We have to have world-class technology, and we don't yet,'' said Hammes, a former Ford Motor Co. and Chrysler Corp. executive. ``We have to be cost-competitive, and we're not yet. We've got to get there before we can knock on some doors and get some [non-GM] customers.''
GM's Delphi Automotive Systems announced last week that it will sell the lighting business to Guide's corporate parent, a New York investment group called Palladium Equity Partners.
The lighting operation has two major injection molding facilities: a headlight plant in Monroe, La., and a taillight plant in Anderson, Ind. Both are unprofitable, and industry sources say the sprawling Anderson complex scared away several potential buyers.
Hammes did not disclose the purchase price. Palladium hopes to finalize the deal in two or three months.
Last fall, GM placed its lighting division up for sale as part of a larger effort to unload three money-losing parts operations. The Detroit automaker already has found buyers for Delphi's seating and coil-spring businesses.
With 4,000 employees and $665 million in 1997 sales, Guide claims it will be North America's largest independent supplier of headlights and turn signals.
GM will be the new company's sole customer; Guide must oust a number of established rivals to gain any non-GM business.
Several observers say North America's lighting operations are ripe for consolidation. But in an interview last week with Automotive News, a Plastics News sister publication, Hammes said Guide has no short-term plans to expand by acquisition.
Although Palladium still is negotiating with GM, it appears the deal will resemble GM's previous spinoffs. According to Hammes, GM will carry the pension costs of Guide's unionized work force — a significant cost item.
GM also will assure Guide of contracts for the next five years or so. After that, the new company will be on its own. To be competitive, Guide will have to spend a lot of money on its plants.
According to a 1996 story in the Indianapolis Star, Delphi once estimated that it would cost $146 million to make its Anderson plant competitive. Neither Delphi nor Hammes verified that estimate.
``The lighting business is capital-intensive, and we are prepared to invest here. But we are not Mr. Deep Pockets,'' Hammes said.
For its turnaround effort, Palladium is counting on an executive with more than 25 years' experience in the auto industry. Hammes spent 20 years at Ford, where, as president of European truck operations, he directed the launch of the Transit, Europe's top-selling truck. He left Ford in 1986.
Hammes was president of Chrysler International from 1986-90. He helped guide Chrysler's re-entry into overseas markets.
Most recently, Hammes was chairman of Coleman Co. Inc., a manufacturer of camping equipment. He retired from that job a year ago. Hammes then began working with Palladium, which was formed in February 1997.