Collins & Aikman Corp. is stepping up its exposure to the automotive plastics supply business and also helping to lead a brewing revolution in the auto industry's supply chain.
With its pending purchase of Textron Automotive Co.'s trim unit - in a deal announced Aug. 7 - Troy, Mich.-based Collins & Aikman extensively boosts its capability to mold everything from instrument panels to exterior trim. The firm also is marketing itself as a ``mega Tier 2'' supplier, specializing in production, rather than integration.
It is a strategy aimed at turning C&A into the prime contractor for automotive interiors, said Chairman and Chief Executive Officer Thomas Evans.
While interior giants such as Lear Corp. and Johnson Controls Inc. battle to bring electronics and telematics into cars, C&A will be there to make parts for both companies, as well as their competitors and the automakers still producing modules internally.
``I wanted to have a strategy from the beginning that had a shot at making everybody our customer,'' Evans said.
And at the same time, the company will be a processor with a focus - to not only make massive components but to use the materials inside the vehicle to control acoustics. Sound performance will grow in importance with automotive electronics, Evans said. Systems that rely on voice activation also must rely on operating in a relatively quiet atmosphere.
``From the beginning, I've been trying to push the strategy that at the end of the day, the anchor in our strategy is acoustics,'' Evans said. ``It is not being the biggest and best player. It's about sound management.
``What our acoustics angle is really, is an enabler for the telematics revolution.''
To do that, though, the company needed to control the materials inside a car. When Evans joined C&A in 1999, he did so with plans that the firm would look to acquire companies that made the parts that make up vehicle interiors.
Textron's trim division, he said, was a key target.
It was a quality producer, Evans said, with respected performance in a variety of materials. It also had extensive reach as the largest injection molder operating in the North American automotive industry as well as a global footprint that now includes operations in Europe and South America.
Before C&A could follow that strategy, though, it needed a new investment partner. David Stockman, who had an extensive background in finance, including a stint as President Ronald Reagan's budget director, was a key member of Blackstone Capital Partners LP, previously a key backer of C&A. He led Evans to Collins & Aikman and they shared the mega Tier 2 philosophy, Evans said.
Last year, Stockman split from Blackstone to create Heartland Industrial Partners, an investment company keyed at industrial operations. Heartland bought a controlling stake in C&A early this year, providing the capital needed to launch the acquisition strategy that Evans and Stockman had fostered.
They began with the purchase of Becker Group LLC, an injection molding operation based in Sterling Heights, Mich., and a pending buyout of fabric producer Joan Automotive Fabrics.
At the same time, Textron Inc. announced its plans to reduce its automotive exposure, opting instead to refocus its holdings on other operations, such as aerospace.
Suddenly, the TAC trim division - a key in C&A's long-term goals - was in play.
Evans' team began immediate talks.
``This has been, in total, my vision from the beginning,'' he said. ``The only kicker in it is that the TAC trim acquisition popped up probably a year or two before I planned on it.''
Textron's corporate leaders in Providence, R.I., were happy to find a buyer for the trim unit that was anxious to use it and its personnel in a way that would benefit both companies.
``This is a pretty sophisticated outfit, and as part of this transaction we got to know each other very well,'' said Textron Chief Executive Officer Lewis Campbell. ``It surprised me how complete and well thought-out they were walking into this.
``This is not a simple roll-up. This is a strategic move that I think is a very good one. They're going to be poised to really be a major player in a broad section of the automotive supply business in a very big way.''
A key element in the deal turned out to be Textron's Intellimold, a patented closed-loop injection molding control system that the division picked up last year with its purchase of developer M&C Advanced Processes Inc.
C&A entered negotiations with Textron prepared to purchase a license to use Intellimold, Evans said.
Instead, once it saw its record for improving cycle times and reducing scrap, C&A added it to the purchase portfolio, instead licensing the technology back to Textron for nonautomotive molding uses.
All of the trim unit's patents played a part, he said.
``They bring to us a rich portfolio of process technologies,'' Evans said. ``They're a world leader, and in one fell swoop, they're going to make us a world leader.''
Marrying the division's processing and interior skin expertise with acoustics performance gives engineers from both companies a chance to exercise their imaginations, Evans said.
``What you've got is two well-organized, very sophisticated companies coming together with a `best of the best' mind-set,'' Evans said.
And the company is not done yet. It still is seeking two more acquisitions, one that will provide it with exposure to roof systems, and a second focused on acoustics performance in Europe, according to Evans.
C&A, with financial backing from Heartland, is among the first major players pushing for a new Tier 2 definition, but it is not the last.
David Cole, director of the Center for Automotive Research based in Ann Arbor, Mich., noted that he knows of at least two other businesses considering the same move.
It's a consolidation of firms that focus on production rather than integration in answer to the demand for strong manufacturing capabilities, he said.
``What the Tier 1 companies are saying is that they need a cadre of Tier 2s out there who have the logistics and are capable,'' Cole said. ``I think this is the start of something to come.
``Heartland is just the first.''