TRAVERSE CITY, MICH. — With its recently announced spin-off of its automotive seating and interiors units, Johnson Controls Inc.'s massive Automotive Experience business is further distancing itself from injection molding.
Jeff Williams, vice president of enterprise operations and engineering at JCI, talked about the new strategy during an interview at the Center for Automotive Research's 2015 Management Briefing Seminars in Traverse City.
The Glendale, Wis.-headquartered company last month announced it planned to spin off its $20 billion seating and interiors business, with the transaction expected to close in September 2016. The automotive interiors product line includes injection molded components like instrument panels, door panel substrates and trim, along with plastic skins and skin composites. Those parts are now manufactured by Yanfeng Automotive Interiors, JCI's joint venture with Shanghai's Yanfeng Automotive Trim Systems Co.
JCI's other automotive supply business, Power Solutions, says it is the world's largest supplier of auto batteries, with more than 150 million units sold each year. A spokesman for JCI said Williams was speaking only about the interiors group, and that Power Solutions retains its manufacturing footprint, including plastics.
Before the joint venture, JCI's seating division was purchasing its plastic components from the interiors unit, Williams said. Yanfeng Automotive Interiors now supplies those parts.
“When it comes to making urethane foam, making seat frames, making trim covers and value-added assembly, Johnson Controls does the lion's share of that in-house. But injection molding and plastic, that's with Yanfeng,” Williams said.
JCI's seating unit and operations that fall under Yanfeng joint venture will form a new, independent company, headed by Bruce McDonald, currently vice chairman and executive vice president at Johnson Controls.
Citing the cyclicality of the automotive industry among factors for the decision, JCI CEO Alex Molinaroli at the time of the announcement noted JCI would be able to refocus on its Building Efficiency and Power Solutions units.
The Auto Experience business was nearly as large as Power Solutions and Building Efficiency combined in the 2013-14 fiscal year, but recorded the lowest profit levels, and the auto interiors business in general has thinner margins.
This will not mark the first time JCI has built a major business platform, only to sell it off. In 1992, it had $445 million in blow molding for packaging in North America alone — tying it with Constar International Inc. as the biggest blow molder in North America in Plastics News' first ranking of blow molders. Amcor now owns those JCI rigid packaging holdings.
In 1998, it sold its Uniloy Plastics Machinery Division — a maker of blow molding and structural foam molding machines — to Cincinnati Milacron Inc. Those operations remain as part of the restructured Milacron LLC machinery giant, which became a public company earlier this year.