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August 19, 2013 02:00 AM

Big buys small: Cooper Standard, Jyco reflect trend

Chris Sweeney
Rubber && Plastics News
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    Cooper Standard Automotive Inc. has acquired the automotive sealing business of Jyco Sealing Technologies Inc., giving it three additional factories and more global clout.

    The acquisition of Jyco, effective July 31, aligns with Cooper Standard's growth strategy and further solidifies the company's position as a global leader in automotive sealing systems, the company said.

    Jyco employs 800 and operates plants in Sherbrook, Quebec; Guaymas, Mexico; and Shanghai.

    Jyco's annual sales and the financial details of the deal were not disclosed.

    "We had an opportunity to expand our footprint in regions we feel need additional capacity," said Keith Stephenson, Cooper Standard's chief operating officer. "The footprint was attractive to us, the customers were attractive to us, and this is our core activity. That's what drove us to completing the acquisition."

    Cooper Standard already operates six facilities in China, six in Mexico and five in Canada.

    Jyco brings a network of about 20 Tier 1 and Tier 2 customers worldwide, as well as General Motors Co. and Chrysler Group LLC — both also customers of Cooper Standard. Jyco's relationship with Chrysler dates to 2003, and the company has been producing seals for GM since 2010.

    A Jyco spokesman said President and CEO Sam Jyawook and COO Shawn Jyawook plan to remain with the company, though neither firm would comment on transition plans.

    Buying trends

    The acquisition continues a trend of large auto suppliers acquiring smaller ones. Jay Baron, president and CEO of the Center for Automotive Research, said carmakers are looking to trim down their portfolio of suppliers and streamline the process through a select group of bigger companies.

    "Auto companies have been reducing the number of relationships they want to work with," Baron said.

    "There has been a radical decline on the number of Tier 1 companies. Every major auto company is trying to work with fewer, bigger companies," he said. "The pressure starts at the top and ripples through to the Tier 1s to the Tier 2s to the smaller companies."

    Cooper Standard ranks as a major global supplier of systems and components for the auto industry, with products including sealing and trim, fuel and brake delivery, fluid transfer, thermal and emissions, and anti-vibration systems. The Novi, Mich.-based company is North America's eighth-largest rubber product maker, employs more than 22,000 and operates in 19 countries.

    The company closed the first quarter with net income of $20.7 million and sales of $747.6 million. It reported net profit of $102.8 million and sales of $2.9 billion for 2012.

    TPV technology

    Cooper Standard also gains access to Jyco's thermoplastic vulcanizate sealing technology. The company began pioneering the development of TPV when it was founded in 2000.

    The acquisition makes Cooper Standard a major player in the TPV market.

    Baron said not to underestimate the value of acquiring another sealing technology.

    "With all the pressure in the industry right now to develop much better performance and at the same time lightweighting the vehicle, seals play an important role there," he said.

    "Seals are a big deal. The technology is much more sophisticated than you think it is."

    TPV is a cross-linked mixture of ethylene propylene diene monomer and polypropylene. It offers both thermoplastic and elastomeric properties. The company estimates finished-part costs are 20 percent lower than using EPDM alone.

    "The technology is complementary to what we do today," Steph¬en¬son said. "It's an area where that type of material in automotive sealing is growing. Jyco brings capacity in a growing segment of the sealing business.

    "There is a growing interest in thermoplastic technology from customers because of lighter weight and recyclability. Jyco's capacity is all dedicated toward that technology."

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