DETROIT -- Ford Motor Co. said France's Faurecia, one of Europe's largest auto suppliers, agreed to buy Ford's interior parts business, based at a factory in Saline, Michigan, for an undisclosed amount.
The Saline site near Ann Arbor, Michigan, has $1.1 billion in annual sales from cockpit modules, instrument panels, door panels and center consoles for vehicles assembled at Ford plants, the Paris-based supplier said in a statement on Thursday.
Ford also announced the transaction on Thursday. Crain's Detroit Business, an affiliate of Automotive News Europe, first reported the deal on Wednesday.
The plant is owned by Ford's Automotive Components Holdings unit and makes automotive interiors for vehicles such as the Ford F-150. Ford will become Faurecia's third-largest customer after Volkswagen and PSA/Peugeot-Citroen, the company's majority shareholder.
Ford's ACH unit will continue to own the Saline plant, which will be leased by Faurecia.
Faurecia said it will create a Detroit-based joint venture with Rush Group Ltd. Faurecia would own 45 percent of the company, which will make injection molding and assemble interior trim components, according to the statement.
About 500 jobs at the new Detroit plant will be filled by members of the UAW union, which endorsed Thursday's transaction.
"I am pleased that the sale of the Saline ACH business ensures the retention of jobs for UAW members and communities surrounding the Saline plant while helping rebuild Detroit," Jimmy Settles, director of the UAW's Ford department, said in a statement. "The UAW is committed to diversity and looks forward to continuing our productive relationship with the Rush Group."
The Saline plant workforce will be cut to 1,100 hourly workers from the current 2,100, Reuters reported. The plant's UAW-represented employees agreed to a new contract last week.
The new contract there calls for starting pay to be $11 per hour, and top out at $15.50 per hour in three years. Saline ACH workers who were making more than that per hour will keep their current pay for one year, then be cut back to $15.50 in the second year, Reuters reported. Skilled trades workers will make $24 to $26 per hour. Faurecia said it is working with Ford to place "nearly all" of Saline's hourly workers.
ACH invested $32 million in new equipment at Saline during the past year, and Faurecia North America -- which was already in negotiations for the purchase -- consulted with ACH on which equipment to buy, said Mike Heneka, president Faurecia North America.
Moving things around
"We're going to move some things around because we have different processing systems than (ACH)," Heneka said.
The floor space cleared up as assembly operations move to Detroit will be occupied by new parts-making operations for Faurecia's other North American customers -- with Saline becoming a technical center for the company in the region.
"We needed capacity," Heneka said, noting that there are other automakers within the city of Detroit as well as multiple assembly plants within a few hours drive from its location just off Interstate 94.
North America and auto interiors have become an increasingly important market for Faurecia since it obtained its first foothold through the purchase of Sommer Allibert SA in 2000. In 2003, it boosted its presence with a deal to supply more than $1 billion in parts to Chrysler and it has steadily increased its capacity through new facilities since then, including a $20 million investment at its Fraser, Michigan, plant last year.
Faurecia saw its North American sales climb 32.6 percent in 2011, according to its annual report -- during a time when total auto production grew by 11 percent. The company also produces seats and exhaust systems.
Ford was a key player in the deal, not only because it owns the Saline plant through ACH but through an interest in continuing its support of minority-owned businesses. Ford does $17 billion in business each year with minority suppliers, said Tony Brown, group vice president, Ford global purchasing.
"With this announcement, Faurecia is not only serving a critical business need for Ford, they are helping to provide leadership in our effort to build a financially healthy, diverse supply base," Brown said in a statement.
Ford originally opened the Saline facility under its own name, then spun it off with its former parts unit Visteon Corp. in 2000. It took it back in 2005 when it created ACH to oversee 17 former Visteon plants.
Once the deal is completed for Saline, ACH will still operate two businesses -- a climate control plant in suburban Detroit and a lighting operation in Sandusky, Ohio. Ford is working out final negotiations to sell the Sandusky plant under an agreement signed with an unidentified company last year.
Faurecia ranks No.6 on the Automotive News Europe list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $18.2 billion in 2010.
Philip Nussel of Automotive News, Dustin Walsh of Crain's Detroit Business, Rhoda Miel of Plastics News, Reuters, and Bloomberg contributed to this report.