Johnson Controls (JCI), one of Europe’s largest suppliers of complete car seating, has signed an agreement to acquire the C. Rob. Hammerstein Group (CRH).
Headquartered in Solingen, Germany, CRH supplies metal front seat structures, seat tracks and height adjusters, multi-way adjusters, power gear boxes, as well as special applications such as steering column adjusters.
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Johnson Controls says the deal, which is expected to be completed in January 2011, should enable it to provide new technology and product solutions for its customers. The CRH business will be integrated into the Johnson Controls metal and mechanisms unit that is part of its recently carved out seating components group within the Automotive Experience business.
Johnson Controls believes that the acquisition will “create new opportunities for global growth and vertical integration in the premium vehicle segments where CRH has a proven track record.”
All in all, CRH employs 3,600 workers in nine countries. JCI says the combined manufacturing footprint will facilitate growth particularly in China, Mexico, Turkey, Hungary and Romania.
Since the 1980s, Johnson Controls has grown its seating business thanks to a string of acquisitions including Roth Frères, Prince Holding Corp, Becker Group and Ikeda Bussan.
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By GlobalDataThis latest move by Johnson Controls will strengthen its vertical integration strategy and enable it to further differentiate itself from the competition. It follows last month’s regulatory approval by the European Union to allow Johnson Controls to acquire Michel Thierry, a French vehicle interior fabric supplier.
These two deals by Johnson Controls reflect the trends occurring in the car seat industry nowadays both in terms of development of seats and outsourcing.
Developments in vehicle seating have been taking place much faster than may be apparent on the surface. OEMs are demanding greater differentiation in their seat designs while motorists look for greater functionality and luxury. Back in the 1970s, a car seat was a functional component with few or no added value features. Nowadays, with drivers spending more time in their car on longer commutes, they expect a comfortable ride. Consequently, the seat has become an integral part of the car’s overall design and appeal in the showroom. More power content in the front and, more recently, rear seats is becoming common.
During the 1980s, the manufacture and assembly of car seats was generally carried out by carmakers in-house, with only a very small input from outside suppliers. This changed through the 1990s, when the concept of just-in-time manufacturing began to take hold, and the manufacturing, assembly and inventory holding of car seats was generally undertaken by a tier-one supplier.
Since the early 1990s, there has been a gradual increase in the average value of outsourced modules as more complex modules and systems are outsourced. The extent of outsourcing of interior modules and systems varies by product line. Seating components and assemblies led the current outsourcing trend. This trend gradually evolved into complete seating systems as suppliers improved their technical competency and engineering expertise in the product line.
In part, this trend towards outsourcing of everything to do with seats was down to the ability of outsourcing to offer significant cost savings to the carmakers over this period, and is a phenomenon broadly shared over the car parts industry. It is also a reflection of the fact that car seats had evolved in both form and function, and carmakers were looking for ways to move the costs of the constant innovation required onto parts manufacturers.
Matthew Beecham
