Traverse City, Mich. — Adient plc's more than $36 million investment to move its headquarters to Detroit was a mistake.
Chief Technology Officer Detlef Juerss said the company's investment priorities since spinning off from Glendale, Wis.-based Johnson Controls Inc. in October 2016 have been misguided and that under new interim CEO Fritz Henderson the company is refocusing on operations and performance.
"We've been a little distracted," Juerss said Monday here at the CAR Management Briefing Seminars. "We're now transitioning to a focus on the day-to-day business ... not just the finer things in life."
The focus on new automotive business on the West Coast, including the $360 million acquisition of Futuris Group in 2017, pulled the supplier too far from its traditional automakers as it tried to win contracts from automakers such as Tesla and Faraday Future.
And the relocation was ill-advised as Adient gained its footing as a new supplier, he said.
Adient scrapped its plan to spend nearly $100 million on relocating its main office from Plymouth to the Marquette Building in downtown Detroit in June, days after the retirement of Bruce McDonald, its then-chairman and CEO. Adient acquired the building in 2016 for $16.9 million and paid about $19.23 million combined for a parking deck and surface parking lot near the building. The company acquired the building from Mexican businessman Carlos Slim Helu, who bought the Marquette Building for $5.8 million in 2014.
"Detroit was not the right timing," Juerss said. "We should have spent that money somewhere else."
That investment should have gone to plant operations, upgrading its aging infrastructure and equipment, he said, noting the company had invested in domestic manufacturing in some time.
Juerss also confirmed the company will invest in a new plant in the U.S. in the coming years, though declined to reveal the level of investment and location. Adient will invest in upgrading plants through increased automation and equipment, he said.
"Fritz is taking a 180-degree change in many aspects of our business," Juerss said. "Our strategy now is on our traditional customers and delivering flawless launches while investing in automation."
Since spinning off from JCI, Adient has struggled to maintain consistent profitability, reporting a $1.5 billion loss in 2016 before recovering to a net profit of $877 million last year.
In 2018, its balance sheet has been dragged down by its money-losing seat structures and mechanisms division with its $3.3 billion in debt. In the second fiscal quarter of 2018, Adient reported a net loss of $168 million on sales of $4.6 billion but recovered in the third quarter with a $54 million profit.
