German automotive suppliers Hella KG Hueck and Co. and Behr GmbH already are major players in front-end modules through their joint venture Hella-Behr Fahrzeugsysteme GmbH.
Now France's Plastic Omnium SA is about to join the business arrangement. Last week the companies announced a plan for a three-way joint venture that would launch with 350 million euros ($440.4 million) in annual sales, strengthen Hella and Behr's existing capabilities and lay the groundwork for further expansion in the modules.
``It basically gets all the three players together you need for an incremental push to build more of a system,'' said Mitra O'Malley, a principal with ITB Group, a Novi, Mich.-based consulting firm that has done extensive studies of the modules.
Hella, based in Lippstadt, Germany, Behr of Stuttgart, Germany and Plastic Omnium of Levallois, France, announced the plan to create a joint venture company called HBPO on Jan. 13.
The new company would be based in Lippstadt with a dedicated research and development center at Plastic Omnium's office in Lyon, France.
It would launch with 550 employees in eight production sites in Germany, the Czech Republic, Slovakia, Spain, Mexico and South Korea, making an estimated 1.25 million modules in 2004 and a predicted output climbing to 2 million in the next two years.
The final deal is subject to agreement by government officials, but is scheduled to officially open early this year.
The definition of a front-end module varies widely, depending on who is using the term, O'Malley said. There are some module definitions based on cooling systems, others based around lighting. Some North American suppliers use it to refer to bumper systems completed with painted fascia, energy absorption and lighting.
A full module produced in Europe is different, reflecting a change in manufacturing at the auto assembly plant. A typical module Hella-Behr now produces for Volkswagen AG and other automakers includes the entire front vehicle structure and multiple parts from the radiator forward, including cooling, lighting, hoses and connectors, hood latch assemblies and wiring.
North American automakers do not use the complete systems as widely as their European counterparts because they would have to change their assembly architecture. Vehicles made with the modules are open on the front end through manufacturing, with the module carrying the tie bars that unite the frame. The typical U.S.-based auto plant is designed to build the car around a complete frame from the start of the line.
Future proposals to expand the systems in Europe would add the bumper beam and painted fascia to those parts, increasing the value of the overall system, O'Malley noted.
Plastic Omnium brings that talent into the venture, while also strengthening Hella-Behr's capabilities in existing modules through its expertise in the structural plastics used in the carrier that holds all of the individual components.
``Each [company] is a leader in its respective businesses,'' the companies stated in their joint announcement. ``This unique set of competencies will allow the new company to meet future challenges.''
More development is taking place in those carriers as companies find that finessing the design can improve strength, lower weight and reduce production costs by integrating in units used to hold the various components in place.
Hella-Behr competitors Valeo SA, Faurecia and Decoma International Inc. can build their own carriers in-house.
With Plastic Omnium on hand, the German companies also will have access to proprietary technology, since the French firm already has expertise with long-fiber composites in both thermoplastics and thermoset materials.
Plastic Omnium, meanwhile, has a chance for a full partnership with an already strong player in front-end modules.
``Hella-Behr has a lot of experience,'' O'Malley said. ``They know how to design and develop the carrier. The first ones you would want to be in bed with in a partnership would be Hella-Behr.''