Hella North America Inc. is banking on the growth of its lighting and electronics. The Plymouth, Mich., unit of Germany's Hella KG Hoeck & Co., is optimistic about light-emitting diode systems, bend lighting and lane- departure warning sensors.
Though the technologies are expensive, Joe Borruso, Chief Executive Officer of Hella North America, says that prices will decrease as volumes increase. With $387 million in sales to North America last year, Hella North America is No. 102 on the Automotive News list of the top 150 parts suppliers to North America.
Hella North America has in-house injection molding for its lighting business at three sites in North America: two in Mexico - at Guadalajara and Mexico City - and one in York, S.C. The South Carolina facility opened in 2001 with room for 20 presses, 100 employees and capacity to make 1.5 million headlights annually.
Borruso, who had been executive vice president of sales for Robert Bosch Corp. before joining Hella in 1999, spoke with Automotive News, a sister publication of Plastics News.
Q. What is your outlook for advanced lighting systems in the United States? How receptive are consumers going to be to paying for the systems?
A. Advanced lighting is moving along very nicely in Europe, especially in Germany. The Germans tend to be more informed about the technical lighting in Europe for light vehicles. Total market, we see that going in the next 10 years to 50 percent. In this country, the consumer tends to be more price-driven and, obviously, high-intensity discharge lights are [expensive]. So unless they're buying a luxury car, their inclination toward spending the premium as an option is lower than it is in Europe.
Q. Which automakers are embracing advanced lighting in the United States?
A. We're presenting it to all of them, and they're showing interest. I'm not aware of any specific model-year commitment yet.
Q. Has Hella overcome the challenges in high-intensity discharge lighting as far as cost, weight and space?
A. The cost will be very much influenced by volume. As volume increases, price will come down. As far as weight and size, the electronics package has come a long way with significant reductions.
Q. What is your light-vehicle sales outlook for the United States next year?
A. Sales have been quite good. Granted, the car companies have [used] incentives. So once inventory levels reach a satisfactory level of 55 days, we'll see production increasing as well. As far as '04 is concerned, all of the lead indicators are suggesting that we're coming out of this. What does that mean in sales - 17.6 million [vehicles]? ... A majority of our business is with GM, Ford and Chrysler. We're doing everything we can to help them maintain or gain market share.
Q. What are you doing to get in with other carmakers?
A. We have some success, especially in our electronics business. With the European transplants, we have a lot of content, mostly lighting.
Q. What about lighting with the Asian automakers?
A. That's coming slow.
Q. What about China?
A. We're doing a great deal with China today; however, that is to serve the Chinese market. There is nothing for export today. We have a new JV partner in China that will soon be manufacturing relays [electrical switches] for us, and a very high percentage of that production will be coming into the United States.
Q. What percentage of your global sales will come from China five years from now?
A. Most Chinese can't afford to buy a car. But the way I see it, if 1 percent or a fraction of 1 percent could buy a car, that represents one hell of a critical mass. China certainly has some deficiencies - the quality and consistency of raw materials, robustness - but that's today's picture, and China is moving very quickly to address those shortcomings. Five years, 10 years from now, I see China being a very significant factor. It's hard to compete with $80-a-month labor.