The North American interior auto supply world is about to get much more competitive, with French giant Faurecia gaining a big foothold through a contract with DaimlerChrysler AG's Chrysler group.
The deal announced July 8 should boost Faurecia's North American business to $1.8 billion by 2006, but signals more than its own growth. It also means there is a significant global player ready to take on the region's interior specialists in their own back yard.
``Chrysler has been somewhat dissatisfied with some of the more traditional suppliers here,'' said Scott Upham, senior forecasting director for J.D. Power & Associates' automotive group in Troy, Mich. ``They've been looking to expand their horizons and Faurecia has been very active in courting them.
``This is a warning sign to Lear [Corp.] and Johnson Controls [Inc.].''
Southfield, Mich.-based Lear and JCI's Plymouth, Mich.-based auto group, along with Intier Automotive Inc. of Newmarket, Ontario, are North America's biggest suppliers of complete interior systems, which include seats, instrument panels, center consoles and door panels. Faurecia of Nanterre, France, is the second-biggest auto supplier in Europe. It won its first major business in North America in 1999 when General Motors Corp. selected it to provide seats for its midsize Epsilon platform starting this year.
It picked up interior trim with its purchase of Sommer Allibert SA in 2000, which supplied European automakers' assembly plants in the United States and Mexico.
The Chrysler deal, for unspecified vehicles, brings all of its specialties together with seats, seat frames, instrument panels, center consoles, door panels and even exhaust systems.
``It's pretty hefty volume,'' said Don Montroy, component market analyst for CSM Worldwide, a Northville, Mich.-based consulting group. ``It's a new customer, too, which is something else to look at.''
It is too soon to say if the firm will build new plants to handle the business, said Patrick de Bellescize, Faurecia's marketing vice president, who also oversees product development.
``Chrysler is requesting assembly production lines and we are building this capacity, but not everything, because we will rely on existing capacity and buy some components,'' de Bellescize said. ``We are starting from such a small position that each time we take an order, we need to build a new plant.''
Faurecia has three interior trim plants in North America now, in Fountain Head, S.C.; Wilmington, Del.; and Puebla, Mexico, along with a design and development center in Farmington Hills, Mich. It has separate facilities for seating and exhaust systems in the United States and Canada.
Faurecia aggressively has sought business in North America for the past three years. It is the top supplier of seats, cockpits and door trim in Europe, but 85 percent of its business is there. North America makes up about 12 percent of its $10 billion in annual sales; the rest of the world brings the remaining 3 percent. Faurecia needed to establish a real presence beyond its home base to prove itself as a global competitor.
At the same time, Upham noted, automakers were anxious to see more large-scale competitors active in the United States, Canada and Mexico.
``The interior segment has really consolidated a lot in the last 10 years,'' he said. ``Some of the [carmakers] think it consolidated too much. They didn't have enough choice. They're actively looking for non-U.S. suppliers to step in and give them that choice. Faurecia is one of those companies.''
And with the GM seat contract and new Chrysler business in hand, the French firm stands an even greater chance of more business with U.S.-based automakers, with each smooth launch adding to its capabilities.
``GM clearly said that we gave you big business for a small company with the resources you have in North America,'' de Bellescize said. ``Obviously you will hire a lot of new people, but with a lot of people coming, it's dangerous, so let us make sure that you succeed and when you have, then we will open the door.''
Automotive News staff reporter Julie Armstrong contributed to this story.