WARREN, MICH. - On a sunny summer morning, TI Automotive Ltd. Chief Executive Officer William J. Laule talks about the demands of creating an independent automotive supplier in a tough economic environment.
As he speaks, Laule occasionally must raise his voice above the din of hammers and saws echoing through the building from just a few floors below him, where crews are giving that new company a very real - and very separate - setting in the heart of the North American auto industry.
TI was spun off on its own from its British corporate parents in early July. Now Laule is in the midst of creating a new global headquarters in Warren, providing physical evidence of the break that he said the producer of plastic fuel tanks and fuel systems needed in order to grow.
``In the context of growing up in a large corporate structure, it was exactly the right thing for us to do,'' Laule said in a July 19 interview. ``I think it's also the right thing to do now to give birth to a new company, so that we can be true to what we do, and that's automotive. Not to compete for resources and not to worry about having a balance in the company of: Are we becoming too much aerospace, too much industrial, too much automotive?
``That was the issue within the old TI from a corporate standpoint.''
Engineering conglomerate TI Group plc of Abingdon, England, created the automotive unit in 1999 when it purchased Walbro Corp., a blow molder of multilayer fuel tanks, and added it to its Bundy Group, a producer of handling systems for fuel and other automotive fluids.
Last year the auto division racked up $2.5 billion in sales, placing it among the 50 largest automotive suppliers in the world. The company controls 15 percent of the market for fuel storage and delivery systems globally, 40 percent of the brake and fuel lines and 20 percent of the market for air conditioning and all fluid-carrying markets.
TI's leaders already were convinced the auto unit was big enough to survive on its own and considering ways to cut it from the fold when TI was approached by fellow British engineering group Smiths Industries plc late last year. Smiths wanted to merge with TI but only if it shed the auto unit.
Because corporate leaders already were prepared to separate automotive, it agreed to the merger, Laule said.
TI first tried to sell the auto division, but a slowing economy and slacking auto sales did not provide the kind of interest the corporation wanted. Instead, the newly formed Smiths Group plc decided to spin it off independently, with Laule - TI's auto leader since 1998 - heading up the new company.
The now-independent TI Automotive currently has its global headquarters in Oxford, England, but will officially move to Warren later this year.
Warren already was home to the division's North American office, and North America is the company's biggest sales base, responsible for about 50 percent of its sales. Europe makes up 35 percent of TI's sales, with the rest divided between Latin America and Asia.
European automakers still use more plastic fuel tanks than their U.S. counterparts, Laule noted, but technology is more centered in North America, led particularly by California's standards for reduced emissions.
Tank molders rapidly are bringing in new technology to beat higher standards that will hit the market in 2004. While some tank producers are looking at different molding programs to meet those standards, including thermoforming and injection molding, TI is sticking with blow molding. Its major benefit is that TI produces not just the tank but fuel lines, pumps and other major components, said D. James Davis, president of TI's North American division.
``In many cases our competitors are making tanks,'' he said. ``They have mandated suppliers for the pump modules, the valves, the lines themselves, but with that comes a lot of complexities that are difficult to manage.
``We're able to become a one-stop shop that can do it all.''
To meet the changing emission standards, TI already has a system it calls a ``ship in a bottle,'' which moves components inside the tank and captures any leaks that occur wherever there are connections. The firm's researchers also are entering the final stages of validation for another system called Complete Vapor Recovery, or CVR, which places a plastic cap over much of the tank and its components, also capturing emissions.
That system can beat the standard of steel tanks already on the market, TI researchers maintain, and do it cost effectively.
``We're spending the money on moving technology forward,'' Laule said.
And controlling technology, he said, adds the value that is needed to succeed in a mature industry such as the auto business.
``When you control the pump design and the [fuel] module design, [you] can design those in conjunction with the tank and the lines of the whole system, that's when you add value,'' he said. ``Our view has always been that your customers will pay you for value added.
``We're in business to make money. We make money by doing what we do better than anybody else, and if we don't, then the free market system will force you out of business.''