Parts maker ArvinMeritor wants to triple its business with Asian vehicle makers during the next five years and is launching a restructuring programme that will look at cost cuts, revenue growth and product development.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The Associated Press (AP) said the moves come as ArvinMeritor faces a rough ride in the near term. Chairman and chief executive Charles ‘Chip’ McClure and chief financial officer James Donlon reportedly told an investors’ conference that a slow-down in the coming year in North American heavy truck production and production cuts by big automotive customers General Motors, Ford and DaimlerChrysler will hit results in the company’s current fiscal year.
ArvinMeritor will consider acquisitions or joint ventures to achieve its sales goal with Asian auto makers, McClure said, according to AP.
The news agency noted that ArvinMeritor, based in Troy, Michigan, currently generates about 9% of its $US9bn in annual revenue from sales in Asia and sales to Asian-based vehicle makers, while 47% is generated in North America and 38% in Europe but McClure said he wants to bring Asia, Europe and North American revenue to roughly one-third each, while expanding total revenue to about $11-12bn over the next five years.
McClure also said that in addition to expanding business with Asian vehicle makers, ArvinMeritor wants to triple its commercial vehicle replacement parts business worldwide from a base of less than $1bn annual revenue today, the report added.
The company is introducing a ‘Performance Plus’ programme which eventually should deliver between $150m to $350m in improvement to operating earnings on an annual run-rate basis, AP said.
McClure reportedly said a team of 120 to 125 employees will work on the programme for two to three years, eyeing cost savings in manufacturing, materials and overhead as well as “revenue enhancement,” such as improvements in product development, research, and increasing the company’s replacement parts business.
Donlon told investors the company’s recent restructuring programme, which he said will deliver $60m to $65m in annual run-rate savings, looked at improvements in individual business lines and initial moves will include consolidating some corporate functions, re-engineering a key axle component, moving engineering to lower-cost countries and increasing re-manufacturing. The light vehicle and heavy truck divisions also will work more closely and try to build new products based on each other’s base, the report added.
Donlon reportedly said the company expects to announce 10 to 12 “fairly significant items” in the next six to nine months.
AP noted that ArvinMeritor is also restructuring its emissions technologies group, which is expected to cost $50m over four years, and will affect at least 800 positions as work shifts to countries with lower labour costs, such as in eastern Europe.
