Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • Reuters Responsible Business Europe 2022
    • Reifenhäuser Technologies Livestreams
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
June 09, 2008 02:00 AM

Weathering the storm... by turning into it

Rhoda Miel
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    International Automotive Components will continue to expand its auto plastics business despite a downturn in the auto industry in North America that the company's top official believes will get worse before it gets better.

    Wilbur Ross, the chief executive officer and chairman of WL Ross & Co., said during a June 5 speech at Ward's Auto Interiors Show in Detroit that automakers are continuing to refer troubled suppliers to IAC, which Ross created two years ago through the acquisition of units of the former Collins & Aikman Corp., the interiors unit of Lear Corp. and other suppliers. The global company now has more than $5 billion in sales annually, with operations in Europe, Asia, South America and North America.

    IAC North America LLC, with headquarters in Dearborn, Mich., injection molds and blow molds interior parts, including instrument panels, door panels and center consoles.

    While Ross would not name specific potential acquisition targets, he said the company is considering ways to, ``continue to expand our plastics business and develop other business units.''

    ``We're in a growth pattern wherever we can be,'' he said.

    That could be in regions where auto production in expanding, such as Eastern Europe or Asia, or in North America if an opportunity makes sense, he said.

    But North American growth will be going up against an economy that Ross believes is in the midst of a recession. It also faces ``at least a year of stagflation or worse'' in the wake of the collapse of the housing bubble and oil prices that have hit more than $130 per barrel already, with at least one investment house predicting prices could hit $200 per barrel.

    Americans are driving less, and less likely to buy cars, he said, and when they do buy, it will be smaller cars, which are less profitable for automakers and suppliers. He expects auto sales will not bottom out in North America until sometime in 2009. So automakers and the auto supply industry will have to change.

    Suppliers cannot afford the traditional ``cost downs'' in the industry, which requires them to reduce the cost of their parts each year, Ross said. That is especially true with raw-material prices rising week after week.

    And the industry cannot afford to spend millions of dollars supporting unprofitable suppliers. To succeed, the auto supply industry needs to reduce the amount of capacity in the marketplace. That means allowing some firms to fall by the wayside.

    Companies cannot afford to survive running their equipment at 60 percent or 70 percent of capacity, he said. At higher capacity and volume levels, suppliers can amortize the cost of their equipment and research and development at more sustainable levels.

    Ross said Chrysler LLC's move earlier this year to attempt to move tools from bankrupt supplier Plastech Engineering Co. - and General Motors Corp. and Ford Motor Co.'s support in court for Chrysler's actions - signals a clear move that automakers are willing to let poorly performing suppliers fail.

    IAC's strategy to buy troubled suppliers may seem to be in conflict with Ross' belief that the industry must reduce capacity, but Ross noted IAC has cherry-picked its desired operations, allowing some plants and presses to go silent. The company only purchased specific operations from Collins & Aikman, he said, and realigned Lear's interiors units by closing some of those facilities.

    Reducing capacity and consolidating facilities also will help plastics component suppliers caught between a limited number of automaker customers and a small number of resin suppliers.

    ``We've got a highly concentrated [automaker] base, and a higher concentrated resin base, but the supplier base in between is fragmented,'' he said.

    Ross said he had expected the auto industry to go into decline when he first started creating IAC, though general economic conditions deteriorated even more than he'd expected.

    ``We did not anticipate $125 per barrel oil, and to that degree, we were wrong,'' he said.

    But he remains positive about the auto industry's prospects once it survives the current downturn.

    ``The long-term outlook is pretty good, and we're used to going through short-term hiccups,'' he said.

    RECOMMENDED FOR YOU
    Hillenbrand cites recycling as 'strategic growth' area with Herbold acquisition
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Hillenbrand cites recycling as 'strategic growth' area with Herbold acquisition
    2
    Eastman Chemical looking to build another major plastics recycling facility
    3
    California passes strictest plastics law in US, with EPR and recycling targets
    4
    Congress debates pause on plastics growth, ‘disposable communities'
    5
    Newell closing Coleman plastics plant in Texas
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • Reuters Responsible Business Europe 2022
        • Reifenhäuser Technologies Livestreams
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified