The shift to outsourced wheel-tire combinations is driving growth in Europe's wheel-tire assembly business, according to market leader Hayes Lemmerz International Inc.
Hayes Lemmerz has been producing wheel-tire assemblies for five years. In Europe, the group supplies Volkswagen, Skoda, DaimlerChrysler and BMW through the specialist subsidiary Hayes Lemmerz System Service.
Hayes Lemmerz has a 20 percent share of the outsourced wheel-tire assembly market. It assembles 5 million wheel-tire combinations a year.
Horst Koll, vice president of sales and business development at Hayes Lemmerz Holding GmbH, said he expects the company's outsourced wheel-tire assembly business to grow rapidly in the next few years. Vehicle manufacturers are focusing on higher value-added assembly operations, said Koll.
About two-thirds of wheel-tire assembly is still done in-house, Koll said, leaving room for growth in the market.
With its expertise in wheel-tire assembly and logistics, Hayes Lemmerz is well placed to gain from any increase in carmakers' outsourcing, Koll said.
'We are working on taking over one, maybe two operations every year,' said Koll.
Klaus Junger, president of Hayes Lemmerz's European Fabricated Wheels division, said success in the assembly business would create opportunities for the group's new suspension module business.
'If you are successful, the carmaker will come to you and say, if you can assemble wheels and tires can you also assemble other parts - such as a strut, for example. This is something that fits into Hayes Lemmerz's total corporate strategy,' said Junger. 'We not only want to do the parts for the suspension module, we also want to carry out the assembly.'
In February 1999 Hayes Lemmerz paid about $600 million for the automotive division of CMI International Inc. CMI supplies aluminum and polymer wheel-end, suspension, structural and powertrain components.
The CMI acquisition gave Hayes Lemmerz the capability to manufacture over 60 percent of the components in a suspension module. It also meant it could design and deliver an entire unit.
Hayes Lemmerz had sales of $2.5 billion in 1999. Based in Northville, Michigan, USA, it employs over 15,000 people worldwide at 40 plants and 11 joint-venture facilities.