The sighs of relief from Land Rover executives at the news that MVS’s operating assets were to be acquired by Stadco Limited were probably audible right across the UK’s West Midlands region.
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Poised to begin supplies of key body parts to the new Discovery and a supplier of existing parts to the Range Rover and Freelander models, MVS is a vital supplier to Land Rover as well as other parts of Ford’s PAG empire.
Its crash into receivership in April, along with other Mayflower businesses, probably rekindled some unhappy memories at Land Rover’s Solihull and Gaydon, UK facilities. Back in 2002 the similar downfall of Land Rover supplier, UPF-Thompson, led to Ford partially bailing out the sole supplier of Discovery chassis in order to prevent an embarrassing and costly hiatus in production.
Acquisition by Stadco is probably a dream result for Land Rover and PAG bosses. Both sides know each other well. Although the Shrewsbury, UK-based supplier of body-in-white stampings and pressings has diversified its customer base in recent years, Land Rover business still accounted for 24% of group sales in 2002, the last year for which figures are available. Add in Jaguar and Ford business, with 14% and 5% of Stadco’s business respectively and the relationship looks even closer.
Although all parties to the deal have refused to disclose the purchase price, the odds are that Stadco may have landed a good deal in the face of strong competition from other trade buyers and an MVS management buy-out team.
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By GlobalDataOriginal estimates from analysts suggested the business could be worth upwards of £55 million but industry rumours suggest that the deal was struck for considerably less. Anything under £30-35 million would appear a snip, especially as MVS’s new state-of-the-art £23.5 million pressings facility at Fort Parkway, Birmingham, now renamed Stadco Castle Bromwich, is currently being commissioned.
This operation alone can generate annual revenue in excess of £30 million when fully operational and Mayflower has noted in the past that the site has the capability to be doubled in size in the future.
The facility was established to produce parts for the new generation of Land Rover models, all based on the T5 platform, starting with the Discovery. With Land Rover output targeted to grow to 250,000 units a year by 2008/09, compared to 165,000 at present, the prospects for the Castle Bromwich site look bright.
Interestingly, the new plant also has the flexibility to operate dies from all of Ford’s PAG in-house stamping facilities, including those at Solihull and Halewood, leading some to regard the Fort Parkway facility as an extension to, and possibly in the future as a substitute for, PAG’s own stamping assets. Stadco already has an existing assembly operation adjacent to Ford’s Halewood complex that manufactures subassemblies for the Jaguar X-Type.
As a subsidiary of the privately owned and low profile Acertec Holdings group of companies (with ultimate ownership by Candover, a private equity firm), Stadco often falls below the radar screen of supplier industry analysts. Acertec was formed from the acquisition of Hall Engineering in 1999.
This is despite the fact it operates eight sites across the UK and Germany and is a key tier 1 supplier to the Ford group, BMW, Volkswagen, PSA and MG Rover.
Stamping, welding and painting are Stadco’s core activities but it also offers full service capabilities from product design through development, tooling and procurement to volume production for a product life cycle.
Acquisition of MVS has added the Castle Bromwich facility and another one in Coventry, UK, now renamed Stadco Coventry. It will also add to Stadco’s recent fast growth. According to John Sword, CEO of Acertec, “Over the last few years the Stadco management team has grown the business from a single site at Shrewsbury turning over less than £40 million to the near £100 million it is today. The MVS acquisition will complement this success and lift sales above £150 million per annum.”
Equally importantly, Stadco’s capabilities will be extended in the areas of complete body assembly and aluminium body panels. MVS already supplies complete body shells, albeit for the low volume MGTF sports car, and Stadco has played a key part with Voestalpine‘s Polynorm in establishing Jaguar’s press shop at Castle Bromwich. This produces the XJ’s advanced aluminium body structure.
PolynormStadco’s Castle Bromwich Pressings company (CDP) was responsible for bringing the press shop to full production capability although management was transferred to Jaguar in November 2003.
According to Andrew Morriss, Stadco’s MD, “Stadco has learnt an enormous amount about aluminium pressings from this project”. With the help of MVS, the company appears poised to learn a lot more.
Stadco also partnered with Polynorm in the late 1990s to establish a joint venture operation in Brazil, Body Systems Brazil. This was formed to plan, set up and operate a new press shop and body facility at Ford’s new assembly facility at Camacari in northeast Brazil.
Stadco took responsibility for the body shop planning, which manufactures major body sub-assemblies together with the closure assemblies. Ford has now taken control of this facility.
The purchase of MVS excludes its German pressing operations, which were located at Gaggenau. These supplied Audi (A8 and TT) as well as parts for Mercedes-Benz, Volkswagen, Porsche and BMW (X3) and were sold to KWH Automotive GmbH shortly after Mayflower hit the rocks. These would have complemented Stadco’s existing operation linked to Ford’s Saarlouis plant in southwest Germany.
Stadco Saarlouis manufactures 28 major body-in-white sub-assemblies, or around a third of the total body structure, for the current Ford Focus, but is also seen as a base for supplying possible future contracts at other European OEMs.
Recent investment has been geared towards supplies for the next-generation Focus and the C-Max, the latter having entered production in the second half of 2003.
Also excluded from the Stadco deal is Mayflower Vehicle Systems Inc., which has four facilities in North America, including a major stampings plant in South Charleston. Investment bankers Robert W.Baird & Co are currently overseeing an auction for this business and a deal is thought to be imminent.
Stadco’s acquisition of MVS will crank up competition in the automotive BIW pressings and assemblies arena in Europe, a growing but fragmented sector. Stadco’s West Midlands neighbour, Wagon, even at three times Stadco’s size, will undoubtedly be watching developments with interest.
The continuation of MVS’s former UK stamping operations, which should be strengthened by new ownership, is good news for the workforce and for OEM customers. Sadly for shareholders, their investments have disappeared as fast as the Mayflower name.
SupplierBusiness.com
