France's Valeo SA and Textron Automotive Co. of the USA are the newest team with plans to supply complete cockpit modules to automakers.
The proposed 50-50 global joint venture was announced August 3. It would give Troy, Michigan-based Textron access to Paris-based Valeo's electronics and air conditioning expertise while allowing Valeo to utilize Textron's extensive instrument panel and trim injection-molding capabilities.
Together, the two companies aim to become a top supplier of complete cockpit modules - an auto supplying system expected to go into 10 million cars by 2004, up from an estimated 3 million vehicles this year.
'Textron is a good company doing a good job, but they don't do all the guts and gauges and electronics,' said Scott Upham, president of Ann Arbor, Michigan-based Providata Automotive, which is completing a one-year study on interior systems. 'They have to fill these holes if they want to be a systems competitor.
'Textron has been on the prowl for a new partner, and you can't get better than Valeo.'
Company executives - including Jack Sights, named July 31 to take over as Textron Automotive president, chairman and CEO - have not worked out all of the details of the new venture, said Textron spokesman Tim Weir. They still must determine financing and how the venture will impact employment and existing facilities.
'The goal is for all future cockpit business to be rolled into the joint venture,' Weir said. The companies expect to have the operation up and running within a few months.
The venture also still lacks a name.
For Valeo, the arrangement allows the business greater access to the North American market and to a top producer of major components.
'The partnership [between Valeo and (Textron] is a real breakthrough based on a perfect fit in terms of product and service range and geographical spread,' said Andre Navarri, Valeo's chairman and CEO.
'The joint company will provide real innovations in cockpit systems and modules for our customers. We already have existing business in this area. We intend to build on this fast and win new contracts in the near future.'
A complete cockpit module takes in the instrument panel, instrument cluster, switches, electronics, wiring harness, electric distribution system, heating, venting and cooling, the cross-car beam and steering column.
Most carmakers now order individual components and assemble them in-house, but are looking to expand modular systems that allow them to install one unit covering all of the parts.
Textron competes against larger interior systems integrators including Delphi Automotive Systems with nearly $30 billion in sales; Visteon Corp. with nearly $20 billion in sales; Lear Corp. with $12.4 billion in sales; and Johnson Controls Inc. with more than $11 billion in sales.
Textron's $2.9 billion in annual sales is small by comparison, and limited geographically with $2.1 billion of those sales in North America.
While Valeo is only slightly larger than Textron in North America - it generated $2.3 billion last year in the USA, Canada and Mexico - its European and Asian holdings push its overall sales to $7.7 billion.
Those are important numbers to any company anxious to stay on the top tier of the automotive supplier base, Upham said.
Textron had to decide whether to grow through acquisitions and joint ventures or miss the opportunity. Its corporate parent, Textron Inc. of Providence, Rhode Island, may have been tempted to drop the automotive unit if it could not compete, he said.
The question was finding who could best give Textron the needed push in an already intense North American marketplace, he said.
'I compare it to a ballroom dance,' Upham said. 'All the good partners were already taken. You had to go to Europe or Japan to find a good partner, and that's what they did. Valeo is a great partner.'
And, Weir noted, through a joint venture both Textron and Valeo can combine their forces at less expense than an outright purchase.
'We're working together without significant increases in costs,' he said. 'That was a significant element.'
Valeo has announced a series of recent joint ventures to expand its reach, linking up with Ichikoh Industries of Tokyo on lighting systems and with Zexel Corp. of Tokyo for a climate control program.
Textron Automotive fits right into that growth scheme, Upham said.
'It makes sense,' he said. 'Each of them have a core group they can position themselves better through this.'