By David Barkholz, Automotive News
As vehicle sales plummet in the US for General Motors and Ford Motor, its two largest customers, Lear is looking to increase revenue by boosting its global business and by manufacturing more of the components that go into its seats.
In the past, the company has produced few seat coverings, which represent about 15 percent of a seat's cost. Lear also has outsourced the vast majority of seat structures to suppliers.
But that's changing, says Lou Salvatore, senior vice president in charge of seats at Lear.
Last month Lear bought a 75 percent stake in the fabric business of New Trend Group of China. Lear launched a leather line for seats late last year. And Lear is bringing frame making back in-house in a big way, Salvatore, 52, said.
Seats account for about 76 percent of all sales at Lear, the world's ninth-largest parts supplier to automakers, according to the 2007 Automotive News Europe ranking of the top-100 global partmakers.
"We're chasing growth at the automakers all over the world," said Salvatore, a former Ford purchasing manager who took command of Lear's seat unit in February. "A second source of opportunity is components."
Lear is in a race to change both its product offerings and its traditional North American customer base. Ford and GM accounted for about 42 percent of Lear's $16 billion (about €10.2 billion) in world sales last year. North America accounted for 45 percent of global sales.
<b>Rising gasoline prices<b/>
Lear makes seats for GM's pickups and large SUVs, two segments particularly hard hit by rising gasoline prices. With Ford's US vehicle sales down 14.5 percent through the first half and GM's down 16.3 percent, Lear is seeking its growth in Europe and Asia.
For example, Lear has opened a foam plant in Wuhu, China, and a seat trim facility in Hai Phong, Vietnam. The company also has moved its central purchasing operation to China and has organised its seating and electrical units on a global basis.
Salvatore said Lear seeks acquisitions that would add components or open more markets to the company, but nothing is imminent.
The acquisition of New Trends' automotive fabric business is aimed at China, at least initially, he said. The Shanghai-area company posted sales of about $30 million last year.
Lear supplies virtually all of the major carmakers in China, Salvatore said. In addition, "We see an opportunity to launch our fabric portfolio with American and European customers," he said. Lear predicts its seat sales in China will reach $1000 million this year.
Owning a leather company and a fabric maker lets Lear design into its seats fancier stitching and designs, said Don Bernhardt, vice president of engineering for Lear's North American seating unit.
Lear launched its Aventino collection of premium automotive leather last autumn in Detroit.
Frames also can be a game-changer, Salvatore said. Lear makes an ultralight frame for the seats it supplies on the Mercedes-Benz SLK class roadster. The stylish, exposed steel back saves weight, a major selling point to carmakers.
Lan Lan contributed