FRANKFURT - German lighting and electronics specialist Hella KG plans to develop a network of alliances with other medium-sized suppliers.
The strategy will extend Hella's research and development capability and allow it to survive as a competitive family-owned company, said CEO Jurgen Behrend.
Behrend said the network concept would give customers an alternative to mega-suppliers.
'We have come up with solutions to make sure that we can cope with challenges and competition from much bigger rivals,' he said.
As an example, Behrend cited Hella's joint venture with German supplier Behr for climate control systems. The alliance, formed last year, brings Hella's electronics expertise together with Behr's climate systems hardware.
Now Hella is negotiating a similar agreement with Japan's Stanley Electric, another lighting group.
The two companies have agreed on the first stage of cooperation that includes an exchange of technology and benchmarking.
The partnership could lead to joint production. Stanley needs a manufacturing presence in Europe and Hella wants a production base in Japan.
'We could offer minority participation in one of our European plants, and Stanley would do the same in Japan,' said Behrend.
He said other partnerships would be formed within the next year, though he would not name potential collaborators. Deals could include cooperation on specific projects, or equity links, he said.
Behrend said Hella's expertise in electronics makes its attractive to potential partners.
'We are much sought-after by other suppliers of our size that need an electronic partner,' he said.
Behrend said the growing number of model variants offered by vehicle manufacturers is straining Hella's development resources. Each variant demands a different set of lights to give it a distinct visual identity, he said.
To help cope, Hella has come up with a modular component approach.
'In lighting, we have identified more than 20 different parts in the headlamp that can be modularized,' Behrend said. 'This enables much simpler technical solutions, offers higher reliability, and at the same time brings down costs.
'What is important is that this does not prevent us from offering customers a large variety of styling designs for the headlamp,' he said.
The modularization applies only to parts that are not seen by the customer.
'We now produce 3 to 4 million of these headlamp modules a year,' Behrend said. 'They can be adapted to be part of different headlamp designs.'
Hella increased sales by 12 percent to DM4.8 billion (E2.43 billion) in the year to May 31. Forty-two percent of sales were outside Germany. Behrend expects Hella to grow to sales of DM7 billion within three years, with growth in electronics playing a major role.
The family-owned group did not publish its profits, but said that results in the year through May 31 were 'acceptable.'
In North America, Hella sales grew 42.1 percent to DM766 million. The company has a new lighting plant in South Carolina, and has expanded production for Volkswagen in Mexico.
Hella also makes front-end modules for Volkswagen in Mexico. Behrend reported interest in the concept from North American manufacturers, but Hella has not yet received any orders.
Hella, which is based in Lippstadt, Germany, is investing heavily in its home country. For example, DM30 million has been spent on a development and production facility for signal lamps in Paderborn.
One of the first products to come out of the new facility is a high-tech rear combination lamp for the new BMW 5 series, with LED (light-emitting diode) and light-guide technology.
Hella is also developing a brake light that consists of several pieces. The number of parts of the light illuminated increases with brake pressure. If a car brakes fully, the whole light comes on. Hella hopes the technology will enable drivers to detect when a vehicle in front is breaking heavily and avoid rear-end collisions.