DETROIT - Newly-merged supplier ArvinMeritor Inc. is hoping roof modules will help it double sales within five years. Europe is seen as central to that increase in business.
ArvinMeritor was formed in July by the combination of two US suppliers - Arvin Industries Inc. of Columbus, Indiana, and Meritor Automotive Inc. of Troy, Michigan.
Meritor was the only auto supplier with a roof module in production - the plastic top for DaimlerChrysler's Smart minicar, which contains a polyester and polyurethane headliner, a composite middle layer and a plastic exterior.
ArvinMeritor has four other development contracts with unspecified automakers, said Terry O'Rourke, president of the light vehicle systems division. 'This becomes a great opportunity for us to take on more.'
O'Rourke expects one of those programs to turn into a full production program within a year.
'We're very close to a contract,' he said.
O'Rourke would not give details on the proposal, but he expects European automakers to accept roof modules before their North American counterparts.
ArvinMeritor anticipates sales for roof modules to hit $500 million annually within five years.
Use of the modules will change the way automakers build cars, O'Rourke said. Now a roof is welded into place in one of the first steps on the assembly line. In the ArvinMeritor system, the roof is one of the last parts added to a nearly completed vehicle.
O'Rourke points to several benefits:
Production workers can get inside the car easily, meaning they can install seats, consoles and instrument panels faster
Roof module suppliers can oversee the installation of a variety of features, ranging from sunroofs to electronics and curtain airbags
Use of such lightweight materials as plastics or aluminum lowers a vehicle's center of gravity, making it less prone to roll over in a crash
A plastic roof will not interfere with radio and satellite signals that are a part of the information and entertainment packages offered in vehicles, O'Rourke said. That will allow the automaker to hide antennae and connections within the roof system.
Arvin will have little impact on Meritor's roof concept. But the merger will make more money available for research and development and access to more customers, O'Rourke said.
'This way, neither Arvin nor Meritor had to go out and borrow $1 billion or $1.5 billion and then have to worry about serving all the debt that would come from acquisitions,' said ArvinMeritor CEO Larry Yost.
The businesses make more metal than plastic components, with extensive contracts for axles, suspension and exhaust systems for both light vehicles and commercial trucks.
Stockholders for the two companies approved the merger on July 6, creating a $7.5 billion auto supplier in Troy, Michigan. ArvinMeritor wants to double that figure in five years.
'We feel we have to be one of the very big suppliers to be able to sit at the table as equals with the large transportation companies,' said Bill Hunt, vice chairman.
Hunt, the former chairman and CEO of Arvin, is scheduled to take over Yost's job once Yost, the former chairman and CEO of Meritor, retires.
At the same time, the two businesses expect to save $50 million in their first fiscal year just through joint purchases and other cost savings, Hunt said.
Said Hunt: 'We can increase our investments into research and development to create the products of the future.'