Plan will hurt Lear, other seat makersBy Greg Bowens and David SedgwickAutomotive News / July 04, 2005Detroit, Michigan-General Motors Corp. is backing away from its policy of allowing seat makers to handle the design of complete vehicle interiors. Over the past four years, the automaker had assigned that job to Lear Corp., Intier and Johnson Controls Inc. Those suppliers would produce major interior components, then ask their own vendors to produce other parts. But GM believes it can cut costs more effectively if it works directly with smaller suppliers. "We will bring more design work back in-house rather than letting suppliers do it," said GM spokesman Tom Wickham. "We feel we have better control over cost and quality if we do it that way."GM decided to regain control over interior design about six months ago, Wickham said. The automaker will do so gradually, case by case. Major impact on seat makersThe new policy will have a major impact on GM's seat makers. Lear is the interior integrator for the Cadillac DTS and Buick Lucerne, which will be introduced this year. Lear produces 80 percent of those vehicles' interiors - twice the content that it produced on earlier GM vehicles. Other seat makers will be affected, too. For example, Johnson Controls integrated the Pontiac Grand Prix, while Intier is integrating several Cadillac interiors. GM's reversal is causing major soul-searching at Lear, which had an ambitious strategy to become a one-stop shop for automakers. The Southfield, Michigan, seat maker is struggling to restore profits at a time when its two biggest customers, GM and Ford Motor Co., are struggling. GM has informed suppliers of the new policy, said Doug DelGrosso, Lear's COO. "GM has recently come out and indicated that they are re-examining their total interiors strategy," he said. "They have said they want to increase their involvement in the Tier 2 and Tier 3 sourcing decisions and relationships," he added.Last week Lear announced a global cost-cutting plan that would affect 20 factories and eliminate 5000 to 7700 jobs over two years. Lear has 28 000 employees and 85 facilities in North America. The company said it will give details of its plan on July 29. Lear's plan: Sell more to importsBut DelGrosso offered a glimpse of Lear's strategy in an interview last week: The company hopes to sell more parts to import car makers-foreign car makers operating in the US. Lear already has had some success. Sales to the imports accounted for 46 percent of Lear's revenues last year, up from 19 percent in 1994. Lear plans to shake up its interior trim operation, which has been hurt by rising prices for raw materials. DelGrosso did not spell out his plans for plastic trim, which generates 15 to 20 percent of sales. But it seems likely that Lear will de-emphasise commodity components such as B-pillars and glove boxes. Lear's network of 2000 suppliers will shrink as the industry consolidates. Lear is evaluating its suppliers according to three factors: cost, delivery and performance. "We are trying to look at every single supplier and ask, 'Do they fit?' " DelGrosso said. "Are they willing to support some of our own internal initiatives? If they can, then we will find a solution for them." Automotive News is a sister magazine to Urethanes Technology"