|2001 Management Briefing Seminars index|
Companies that might have fought the stigma of a lower tier position are working out strategic plans that will present them as a production expert.
Collins & Aikman Corp., of Troy, Mich., is helping lead the way with its purchase of Textron Automotive Co.'s trim division, a $1.8 billion business.
"Collins & Aikman continues to position itself to meet the evolving needs of the automotive industry," Chairman Thomas Evans said Tuesday in announcing the purchase of the Textron unit for $1 billion in cash and debt plus stock.
"Our position enables us to serve as a prime contractor to the Tier 1 integrators as they shift their capital and emphasis toward electronics and the delivery of fully integrated interior modules."
The proposed buyout is among the first of the Tier 2 megamoves, but it will not be the last, said David Cole, director of the Center for Automotive Research in Ann Arbor, Mich.
Similar to Collins & Aikman, which is supported by investment group Heartland Industrial Partners LP, of Bloomfield Hills, Mich., other corporations are considering the same process, focusing on production rather than integration in response to the demand for strong manufacturing capabilities, Cole said.
"What the Tier 1 companies are saying is that they need a cadre of Tier 2s out there who have the logistics and are capable," he said. "I think this is the start of something to come. Heartland is just the first."
Textron Inc. CEO Lewis Campbell agreed that Collins & Aikman is taking a strong growth position.
While Textron, based in Providence, R.I., wants to reduce its automotive business, others will benefit.
"This is a pretty sophisticated outfit, and as part of this transaction, we got to know each other very well," Campbell said. "It surprised me how complete and well thought out they were walking into this.
"This is not a simple rollup. This is a strategic move that I think is a very good one. They're going to be poised to really be a major player in a broad section of the automotive supply business in a very big way."
Textron is retaining fuel tank maker Kautex and camshaft maker CWC Textron.