Consolidation is not a trend for the automotive industry. It is a way of life.
That is not about to change. The only real question for midsize suppliers serving North American carmakers is whether they are buyers or sellers.
``If you want to be a leader, start looking for partners who fit that strategy,'' said Jay Alix, founder of turnaround firm Alix Partners LLC and financial buyout group Questor Partners Funds. ``If you think you want to sell, don't wait. Do it now. Valuations are not going to get better with time.''
Decoma International Inc. is looking at ``prudent acquisitions,'' said President and Chief Executive Officer Alan Power during a Jan. 15 discussion at the Automotive News World Congress in Dearborn.
Lear Corp., a Southfield, Mich.-based interior specialist, still may add holdings to improve its potential in Asia, even though overall it is focusing on internal growth, said Vice Chairman James Vandenberghe.
Deciding what each company needs, and where, requires both intense and impersonal research.
Business owners tend to believe that 80 percent of their products provide real value to customers and offer something no one else can deliver, said Stephen D'Arcy, global automotive practice leader for consultants PricewaterhouseCoopers. Actually, it is more like 20 percent, he said. ``Therein lies the place where some basic, strategic errors are made,'' he said.
And making mistakes at that point can translate to long-standing problems that could hit during mergers or even in deciding which contracts to pursue and which to give up, Alix said.
``If there is a box in your business plan for year three that says: `Miracle happens here,' you'd better know what that miracle is,'' he said. ``You'd better have a talk with your CFO, because if he doesn't know, then those letters don't stand for chief financial officer, but chief fantasy officer.''