Magna International Inc. is phasing out the Decoma name while keeping Decoma's specialization in automotive composites work and building on that through its acquisition of certain parts of Meridian Automotive Systems Inc.
Magna has created the Magna composites unit within its exteriors and interiors group to take the range of thermoplastic and thermoset composite processes now under its control and develop that business for a variety of auto parts and end users.
We think we're at the bottom of the market, said Tom Pilette, vice president of product and process development for Magna's exteriors and interiors group in a July 24 telephone interview.
We had a significant presence in reinforced products already, and we bought the Meridian assets and certain facilities and key core employees to help develop and bolster our business going forward, Pilette added.
Aurora, Ontario-based Magna completed its acquisition of seven Meridian plants in June including a facility that produces sheet from sheet molding compound in Grabill, Ind. and it is leasing an SMC sheet production line in Saltillo, Mexico.
Allen Park, Mich.-based Meridian sold its remaining assets to Flex-N-Gate LLC, based in Urbana, Ill., on July 7.
Magna expects to expand production in Mexico even further by bringing a wider range of customers and products to the Saltillo plant, creating new demand for its SMC sheet, Pilette said.
Magna already had compression processing and some SMC compounding, but not a full production line for sheet. The Meridian acquisition not only adds that capability, but brings long-fiber thermoplastics to Magna's product lines, adding to its experience in reinforced injection molding, compression molding and direct injection compression molding.
You really need all of these to say that you're a true, non-one-dimensional composite manufacturer, he said.
Magna hired most of Meridian's research, advanced engineering and product development teams as part of the acquisition.
Putting all of Magna's and Meridian's specialties under one roof, Pilette said, will allow the company to offer a complete portfolio to automakers regardless of what they want or introduce new processes customers may not be familiar with.
It also puts the new Magna composites unit on track as the auto industry might finally have hit bottom and could be moving toward a slow turnaround.
Auto industry analysis firm J.D. Power and Associates is predicting a 19 percent decrease in North American auto sales for July compared with July of last year, but the double-digit decline actually represents an improvement in previous month-to-month comparisons in 2009.
A cash for clunkers federal incentive for U.S. buyers to invest in new vehicles could provide another boost for sales in the coming weeks, J.D. Power analysts noted, although it is hard to say what the total impact of that program will be.
The federal program will put more focus on cars that have better fuel efficiency at the same time that new fuel standards are headed for the industry. Both occurences will play into lighter-weight vehicles, which will feed directly back to Magna composites, Pilette said.
We're just starting our business planning cycle for 2011, 2012, and the theme is mass reduction and lightweighting, he said.
Composites offer lighter weight than traditional metal parts, as well as more flexibility in small cars, with the option to mold in additional storage, he said. Honda Motor Co. Ltd.'s Ridgeline, for instance, uses composites not only for the structural elements of its pickup-truck bed, but it also includes a lockable, weatherproof storage box under the bed. Meridian helped develop and mold the Ridgeline bed and Magna now has that business.
But Magna is looking beyond the auto industry with its lightweight composite message.
Planes, trains, trucks every one of those companies is looking for mass-reduction solutions, Pilette said.
Meridian brought Magna new customers in the commercial-truck industry and recreational vehicles. Its Saltillo plant, which opened in 2008, was built to produce SMC sheet and parts for commercial trucks. So while Magna's composites business will have a large automotive focus, it also will help Magna diversify beyond vehicles for future sales.
We know that to be successful, we have to diversify our customer base, diversify our regions and diversify the products themselves, Pilette said.
This allows us to grow beyond our traditional [auto industry] parts supply business.
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