DETROIT (Sept. 26, 11:30 p.m. ET) — The U.S. subsidiary of French supplier Faurecia S.A. is on pace to hire 800 employees in engineering, human resources and purchasing, among others, this year in Michigan.
Faurecia North America has nearly doubled its employee base in the state, which is now at about 2,000.
The growth has caused the supplier of interiors, exteriors, seating and emissions to plan a 20,000-square-foot expansion of its headquarters in the Detroit suburb of Auburn Hills.
In July, Faurecia North America moved 100 employees from its exteriors unit into a new nearby technical center, also in Auburn Hills.
“When we moved into this facility, we thought it'd be bigger than we needed,” said Mike Heneka, president of Faurecia North America, speaking from its headquarters. “But we've seen such strong growth and opportunities, we've outgrown this building.”
Faurecia North America also is investing $19.2 million to house and manufacture interiors from a new facility in nearby Fraser, and in future expansions, which were supported by tax credits from the Michigan Economic Growth Authority.
Faurecia's U.S. expansion is led by new contracts with the Detroit 3 as the automakers continue to push for global platforms.
“The globalization of (Detroit 3) platforms benefits international suppliers,” said Bernard Swiecki, senior project manager of sustainability and economic development strategies group at the Center for Automotive Research in Ann Arbor, Mich. “It's only logical that the suppliers of platforms in Europe will follow the automakers here.”
The industry's transition to smaller, more fuel-efficient cars offers an advantage to suppliers in Europe, where small cars have dominated for decades, Swiecki said.
Faurecia snagged U.S. platforms in recent years, including the Chevrolet Equinox and Malibu, the Ford Fiesta and the Fiat 500.
“Fewer and fewer truck parts are needed in the U.S.,” he said. “That means that a supplier like Faurecia that is already making parts for small cars in Europe suddenly has demand in the U.S.”
Faurecia has piggybacked on the trend by expanding its emissions controls technology to the U.S., facilitated by its $436 million acquisition of Emcon Technologies LLC from New York private investment firm One Equity Partners. Emcon, a former ArvinMeritor business unit, was projected to provide revenue of $7.7 billion worldwide to Faurecia.
The acquisition delivered North American contracts with Toyota Motor Corp., Honda Motor Co. and commercial-vehicle makers Cummins Inc. and John Deere.
Its emissions controls business unit in the U.S. already has seen 30 percent growth in 2011, Heneka said.
Last year, Faurecia acquired the bankrupt German exteriors supplier Plastal GmbH and its Spanish sister company Plastal Spain SA in a move that is expected boost U.S. business. Inexpensive technology for painting small-batch exterior body parts developed by Plastal, called NewTech, has received a warm reception in Europe, and Faurecia is shopping it to U.S. customers, Heneka said.
Due to the acquisitions, Faurecia North America was able to bring more production in-house, reducing its supplied parts from 78 percent outside of the company down to 50 percent since 2006.
“Right now, we are where we want to be in the U.S.,” Heneka said. “We've successfully changed that model.”
Faurecia North America revenue in 2010 totaled $3.4 billion.
Heneka projects an average growth of 12 percent across all four business units in the U.S. next year.
European automakers' expansion into North America also has benefitted Faurecia. Key customer BMW launched its second plant in Spartanburg, S.C., last fall. Faurecia built a new seat plant in Cottondale, Ala., to supply Mercedes-Benz — previously not a Faurecia customer in North America. It also acquired an interior components plant in Tuscaloosa, Ala., to supply another new customer, Nissan North America Inc.
‘Not looking bad'
“Despite all the skepticism over the past few weeks, it's not looking bad for us,” Heneka said. “We're cautiously optimistic. The vehicles we're on, inventories are at historic lows, and we're not seeing a slowdown in sales.”
Van Conway, CEO of Birmingham-based advisory firm Conway Mackenzie Inc., said investments from European automakers and suppliers in the U.S. and Michigan will continue, given the current volatility in Europe.
“Europe could be staring down a rough economy for a couple years,” he said. “They are not anywhere close to through the storm, and automakers are cutting production forecasts there.
“If you're a European supplier, it makes sense to come to the U.S. and Michigan,” he said. “The next few years in the U.S. market are going to be better than in Europe. If you're looking to mitigate your compression in Europe, here is a good choice.”