French parts giant Faurecia plans to open at least one factory in North America to support new business at a Volkswagen Group of America Inc. assembly plant being built in Chattanooga, Tennessee.
Faurecia CEO Yann Delabriere told Automotive News Europe sister publication Automotive News last week that Faurecia will supply Chattanooga with parts from each of its four business segments: seats, interior trim, exteriors and exhaust systems.
More than one plant is possible. Michael Heneka, president of Faurecia North America, said the company does not mix production of seats and interiors with exhaust systems. Typically, seat plants are built close to a final-assembly plant.
VW will open the $1 billion Chattanooga plant in 2011. The carmaker will build a new mid-sized sedan there.
Delabriere said it is too early to say how much Faurecia will spend for Chattanooga because its total work for the VW plant is "still fluid."
VW is Faurecia's largest global customer, accounting for about 22 percent of 2008 revenues of $17.66 billion.
Delabriere said Faurecia has no plans for a technical center in Chattanooga. Most technical support for Tennessee will come from company technical operations in Mexico.
Faurecia has 28 plants in North America, including nine in Mexico.
2,000 employees cuts
Delabriere said Faurecia has cut about 2,000 employees in North America this year in response to customer production cuts that have hit the entire industry. It has announced plant closings in the U.S. state of Kentucky and Canada.
Delabriere said North American revenue, which totaled $2.65 billion in 2008, will fall about 30 percent this year. It would have been worse if not for Faurecia's business with the North American assembly plants of VW and BMW Group, Delabriere said. About one-third of sales in North America are to European carmakers, he said.
Although those makers have suffered in the recession, their vehicle sales have held up better than those of the Detroit 3, Delabriere said.
For example, Faurecia supplies full interiors for the X5 and X6 crossovers made at BMW's Spartanburg, South Carolina, plant, he said. Spartanburg stepped up its exports to offset lower 2008 sales in North America.
Delabriere said Faurecia should benefit from its designation as a preferred, long-term supplier to Ford Motor Co. under Ford's Aligned Business Framework program.
Globally, Ford was Faurecia's fifth-largest customer in 2008, with purchases, including those of Volvo, of about $1.68 billion. Delabriere said he expects Ford eventually to become his company's third-largest customer.