ZF chief: TRW to keep its own identity -- for now

DETROIT -- TRW Automotive Holdings will remain a stand-alone company -- with its own board of directors, factories and r&d -- for at least three to five years after the completion of its merger this spring with ZF Friedrichshafen, says ZF CEO Stefan Sommer.

In a Jan. 14 interview, Sommer, 52, said the two companies will share technologies on a project basis, and that some functions, such as purchasing and aftermarket distribution, could benefit from joint operations.

After three to five years, the companies will evaluate their progress and see if there is any need for closer integration, Sommer said.

"We don't have to rush. We have no overlap" of product lines, r&d or production, Sommer said. "TRW is a well-managed company with an excellent product portfolio and efficient plants."

The $13.5 billion merger, announced in September, will create a megasupplier with global revenue of $40 billion -- right behind Robert Bosch GmbH, the world's largest automotive supplier.

Sommer said ZF will create cutting-edge collision avoidance and other products by combining TRW's radar, cameras, electronic control units and software with its own chassis systems and driveline components.

That was the main reason for the merger. But Sommer noted that the two companies also would benefit from integrating the following operations:

• Aftermarket: TRW has a strong distribution network in North America, while ZF has a presence in Europe. The two companies likely could share warehouses and brands.
• Purchasing: The companies could cut raw material costs by coordinating their purchasing operations. They also could achieve economies of scale by sharing suppliers.
• Technology: Products such as ZF's transmissions could use TRW's electronic control units. Likewise, new products such as ZF's rear-wheel steer would enhance any emergency lane-changing maneuvers, a key feature of TRW's collision avoidance technology.

It's unclear how long TRW CEO John Plant, 61, will remain with the company to assist with the transition. Sommer says Plant will stay on for a while.

In part, that will depend on regulators in the United States and Europe who are reviewing the merger. Final approval is expected sometime in the second quarter, ZF said.

"With all his experience and support, he will give TRW management confidence during the transition," Sommer said.

Sommer said he's confident the merger will go well because both companies are in good financial shape, with no pressure to lay off workers or close factories.

ZF is headquartered in Friedrichshafen, Germany. TRW is based in suburban Detroit.

And it should be relatively easy to harmonize the two companies' corporate cultures, Sommer added.

TRW has a major presence in Europe -- with a European management team to run it.

"If you look at TRW's management teams, they also have people from France, Belgium and Germany," Sommer said. "Your markets really form your culture."