UT Automotive has beaten bigger companies to win a contract to produce instrument panels for General Motors' Delta program. It will double their interiors business.
The Delta is the world car platform under development in Europe. It will provide the mechanicals for the Chevrolet Cavalier, Pontiac Sunfire, Opel Astra and some Saturn models.
According to Plastics News, a sister publication to Automotive News Europe, the $400 million deal will nearly double sales of UT Automotive's interiors division. The program, which is slated for a 2001 launch, assumes production of 1.2 million vehicles a year.
The contract is a coup for United Technologies Automotive. UT Automotive will make fully assembled plastic instrument panels for GM's new Delta car program, said sources close to the bidding.
'Winning Delta would be cause for celebration by anyone,' said consultant Greg Janicki, vice president of consulting group CSM Corp. in Okemos, Michigan.
Some suppliers classified the award as a small miracle for a company in some financial distress. UT Automotive's interiors business unit is undergoing major retooling after suffering lagging sales and excess capacity.
'(Interiors) was the Achilles' heel of their automotive operations,' said equity analyst Paul Nisbet of JSA Research Inc. in Rhode Island.
In January, the company brought in Richard Sloan, head of UT Automotive's European operation, to replace Edward Northern as president of its interior systems international unit. Sloan said his goal is to boost sales and eliminate weaknesses.
'We don't want to have facilities running at half or three-quarters (capacity) or laid out in a way that takes too much (space) for a given amount of business,' Sloan said in an interview. 'We're looking as hard as possible at every dollar spent.'
One of Sloan's recent moves was closing a trim plant in Michigan to rid UT Automotive of excess trim capacity
The new GM contract could revive the fortunes of the entire automotive group. In 1997, UT Automotive sales dropped to $3.0 billion, from $3.2 billion in 1996, mainly because the interiors group failed.
Sloan would not confirm or deny that UT Automotive had won the GM contract. GM does not discuss future supplier contracts. But Sloan said his unit had been handed significant business to assemble an entire instrument panel and ship the complete piece to a carmaker.
'It will include a lot of hang-ons that are normally associated with other manufacturers,' Sloan said.
It was unclear if UT Automotive would make instrument panels globally for the program, or just in North America. However, in Europe it has the experience as a producer of entire instrument panels, and it is probably that experience and Sloan's European background that won UT Automotive the contract.