Visteon Corp. said Aug. 13 it will sell its new Chicago assembly and sequencing plant, with its contracts, to privately held Plastech Engineered Products Inc.
It's the second major acquisition for Plastech in the past seven months. In February, the Dearborn, Mich.-based supplier bought competitor LDM Technologies Inc. for an estimated $290 million.
Plastech would not comment on the Visteon deal, expected to close Sept. 30. Terms were not disclosed.
For Visteon, the deal is an unusual move, analysts say. The Chicago plant is part of a supplier park near Ford Motor Co.'s plant. Visteon just started sequencing and shipping parts for key Ford models - the Freestyle crossover vehicle, the Five Hundred and the Mercury Montego. The Five Hundred and the Mercury variant are Ford's replacement for the Taurus, its flagship sedan.
``Why would they walk away from the systems-integrator role?'' asked one analyst familiar with Visteon who asked not to be named. ``It doesn't make sense. This is not the kind of thing Visteon wants to sell.''
Visteon sold the plant just a week after its grand opening. To sell a plant so quickly after investing in property, equipment and people is unusual, analysts said.
The 270-employee, 215,000-square-foot plant assembles and sequences front-end modules, cockpit systems, fuel storage systems and climate-control systems.
Sequencing is where a supplier holds a component, does some assembly, and ships it to an automaker's plant on a just-in-time basis.
``We were confident they would be able to operate this facility competitively and the customer, Ford, is ensured of getting a high-quality product,'' said Visteon spokesman Jim Fisher.
He said Visteon and Plastech have a business relationship going back 15 years and the deal happened ``very quickly.''
Fisher said Visteon had not reached a contract agreement with the United Auto Workers employees there. Plastech's employees in Chicago are unionized.
Visteon said the employees will be offered positions with Plastech.
One possible motivation for Visteon would be that it bid a low price and could not make the operation profitable as it ramped up, said Craig Fitzgerald, partner and auto analyst at Plante & Moran PLLC.
Plastech's overhead is lower, though the UAW probably will not agree to lower wages, he said.
Fisher said pricing was not a key factor in the sale.
The move puts Plastech further up the food chain in terms of selling more systems directly to automakers, said Michael Benson, managing director and head of the automotive investment banking practice at Stout Risius Ross Inc. in Detroit.
Plastech was a good fit if Visteon needed or wanted to sell the operation, he said.
``It's a benefit to Plastech because it gives them knowledge of some systems they're not in,'' Benson said. ``For Visteon, Plastech is less of a competitor than Lear [Corp.] or [Johnson Controls Inc.].''