Seeking expansion, Visteon looks to central, eastern Europe

Kerpen, Germany. U.S. supplier Visteon wants to expand in central and eastern Europe. As it investigates possible locations for facilities there, "we are turning our gaze in an intensive way toward Turkey, Russia and the countries that will be the next wave of EU members," said Karl-Friedrich Krause, Visteon Europe's vice president of manufacturing.

For example, Visteon will produce climate control and interior components for PSA/Peugeot-Citroen and Kia at Nitra in Slovakia. The supplier, spun off from Ford Motor Co. five years ago, is concentrating on interior components, climate control and electronics. It is currently expanding research and development capacity in low-wage countries in eastern Europe.

By last summer, it had already opened a new technology center for climate-control components in the Czech Republic. But Visteon's center for climate-control expertise continues to be its Kerpen facility, near Cologne, where a new wind tunnel is operating.

High wage costs

Visteon Europe still employs 47 percent of its employees in high-wage countries such as Germany and 21 percent in countries with mid-range wages, such as Portugal. Low-wage countries such as the Czech Republic, Hungary and Poland account for 32 percent.

Krause, who is responsible for manufacturing in Europe and South America, won't discuss how that distribution might change in the future. "That depends to a great extent on our customers' choice of countries for their new factories," he said.

In the meantime, Visteon will strengthen the networks linking existing plants to gain cost advantages. Plants in Dueren, Germany, and Praszka, Poland, already cooperate closely on chassis production. Dueren is responsible for capital-intensive processes, while Praszka performs labor-intensive work in final assembly. "In the interim, the factories have grown closer and form a unit," Krause said. "It's conceivable they could be a model for other Visteon factories."

German success story

In the last three years, the supplier has undertaken a cost-cutting program in the eight component factories it took over from Ford of Europe. That program saved Visteon $100 million. In Germany, the initiative included Wuelfrath (steering) and Berlin (interiors), along with the chassis operations at Dueren. Krause said he is happy with the results.

"All in all, it was a success story," he said. "We have already been able to win new orders for the three German factories."

Visteon Europe President Heinz Pfannschmidt, who runs both the European and the South American business, wants to decide by year-end if further cost cutting is needed. Visteon Europe is currently doing well, in contrast to its American parent company, which has returned 24 of its factories to Ford, Visteon has 137 plants worldwide.

"The business in Europe is profitable," Pfannschmidt said. In Europe and South America, Visteon had revenues of $4.4 billion, with about half that figure coming from business with Ford. Pfannschmidt wants to boost revenues by $300 million to $400 million annually and further reduce the company's dependence on Ford.

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