DETROIT (Jan. 23, 2 p.m. ET) — Faurecia SA, a major French supplier of seats, interiors, exhaust systems and exterior parts, is angling for a much bigger share of North American sales.
CEO Yann Delabriere, 61, is counting on strong sales to German automakers, along with fast-growing demand for luxury components, diesel exhaust systems for commercial trucks, and parts for global vehicles such as the Ford Focus and Fiesta to fuel his company's market share growth.
In fact, Delabriere predicts that Faurecia, which ranks No. 9 on the Automotive News list of the top 100 suppliers to North America, will move up to No. 5.
Delabriere spelled out his expansion plans during a Jan. 10 interview in Detroit with special correspondent David Sedgwick and news editor Charles Child.
Q: How well have Faurecia's sales recovered since the recession?
Delabriere: We have enjoyed an exceptional rebound in our sales since the crisis in 2009. Our sales grew by 48 percent in 2010, and 2011 will be a pretty good year. It means we're at a record level of sales.
Q: Last November, you projected global sales of 15.9 billion euros [$20 billion] for 2011. Will you achieve your target?
Delabriere: We will release our results on Feb. 7, but we can easily confirm the objectives that we announced last year.
Q: How are your sales in North America?
Delabriere: Our sales in North America were up almost 30 percent for the first nine months, and the fourth quarter could be even better.
Q: How will you do in 2012?
Delabriere: North America represents close to 25 percent of our sales now, with the very rapid expansion that we enjoyed in the last three years.
We expect our North American sales will grow 5 to 7 percentage points faster than the market.
Q: With that in mind, what is Faurecia's growth potential in North America?
Delabriere: In 2010, we were the ninth-largest supplier in North America. We expect to become the fifth-largest supplier.
Q: In 2009, Faurecia acquired Emcon Technologies, a U.S. producer of emissions control equipment. The next year, you bought Plastal GmbH, a German maker of exterior parts. Give us a progress report on your acquisitions.
Delabriere: We were pretty active in sizing up the best possibilities during the crisis in 2009 and 2010. Emcon has been a key acquisition for us. Today we command 25 percent of the exhaust market worldwide. It has really been a game-changer.
Plastal was the largest supplier in Europe of exterior plastic parts like fascias, fenders and tailgates. We have emerged as the largest provider [of those components] in Europe. We aim to expand this business worldwide.
Q: Which of your four business units — interiors, seats, emissions equipment or exterior parts — has grown fastest in North America?
Delabriere: In the recent past, our largest growth was definitely in emissions equipment and exhausts. [New U.S. emission regulations] provide a large growth opportunity for commercial diesels. We have built a strong partnership with Cummins in that segment.
Q: So commercial trucks are driving your North American growth?
Delabriere: Yes, Class 8 trucks and off-road vehicles provide a solid base. Going forward, I would expect that interiors and seats also will enjoy pretty solid growth in North America.
Q: Do you expect more consolidation of interior suppliers?
Delabriere: We are not interested [in acquisitions]. But yes, it's a segment that is still very fragmented, with a number of mid-sized players whose future is [uncertain]. In seats, there are four leaders: Johnson Controls, Faurecia, Lear and Magna. That is not the situation in interiors. I don't know what form it will take, but consolidation will happen. It's a global trend.
Q: German automakers account for half of Faurecia's European sales. Are you also winning contracts from them in North America?
Delabriere: [Faurecia has benefited from] the expansion of the German automakers in North America: BMW, Volkswagen and Mercedes. [For the new Mercedes M class], we provide the seats and a good part of the interior — all the leather-wrapped parts. For BMW, we supply the interior of the X5, plus the seats.
Q: And you supply instrument panels, seats and exhaust systems for the Volkswagen Passat in Chattanooga. Are you also selling to U.S. luxury brands such as Cadillac and Lincoln?
Delabriere: Customers know that we are able to propose premium solutions. We do the door panels [for the Cadillac ATS]. We expect further progress with Cadillac.
Q: Before the recession, Faurecia was losing money in North America. Are you profitable now?
Delabriere: In the second half of 2009, we announced that we were profitable in North America, and we have been profitable since then. We are aiming at profit margins of 5 to 6 percent worldwide in 2014. It is my five-year plan, and we will have the same profitability in North America and Europe.
Q: Given Faurecia's aggressive expansion in North America, how many of your plants are in Mexico?
Delabriere: 60 percent of our North American work force is in Mexico; that drives our expansion. In Puebla, we make interior components like seat covers. We are in Queretaro and Silao to make exhaust systems. We are in Ramos Arizpe to make interior products for GM. And we are in Hermosillo, where we supply exhaust systems to Ford.
Q: Now that North American vehicle production is expanding, are you hiring more employees?
Delabriere: We had 12,400 employees at the end of 2010, and 15,700 employees at the end of 2011. We expect to continue to grow faster than the market in North America.
Q: Will you build any plants this year?
Delabriere: We have said that we need to build 60 new plants or major expansions of existing plants worldwide through 2015.
We already have 42 projects under way. We will spend 2.3 billion euros through 2015.