This week: Register for FREE subscriber access to autonews.com

Arvin's Martens sees chance to export from America to Europe

Phil Martens
Auto-parts supplier ArvinMeritor Inc. plans to spin off its light-vehicle business unit into a stand alone company, Arvin Innovation Inc. Phil Martens, currently head of the company’s light-vehicle systems unit, will be the new company’s CEO.

Martens joined ArvinMeritor in his current role in September 2006. Since then, the 18-year auto industry veteran and former Ford Motor Co. vice president of product creation has been at the center of major changes at ArvinMeritor.

Martens’ light vehicle group has consolidated eight business units down to two, including a divestiture of its Roll Coatings and Emissions Technology units last year, leaving him at the helm of the company’s body systems and chassis systems groups.

The company has also seen North American sales shrink from 50 percent of total sales in 2005 to about 35 percent in 2007. Martens says that trend of overseas sales growth will continue.

After the split was announced, Martens spoke with Ryan Beene, a reporter for Automotive News’ sister publication, Crain’s Detroit Business, about the spin-off, supplier industry challenges and what lies ahead for Arvin Innovation. Here are some edited highlights of the conversation:

Why was it the right time to split ArvinMeritor’s two main business units?

The bottom line is, in terms of shareholder return, it was felt that spinning them off, allowing them to focus independently on the light vehicle market and the commercial, with very little overlap, we would actually unlock shareholder value and allow them to grow at a rate they would not be able to if they were still wedded together.

How will your job be different after the spin-off is complete?

The role of the CEO of a publicly held company is different than the role of a president of one of the two large businesses within a publicly held company. We’ll have a public board; we’ll have our constituent partners, our shareholders, our banking group and a variety of other things. So if I look at where I’m going to spend my time, it’s going to be different. Likewise, the people underneath me will assume more responsibility. Instead of reporting to me, they will run two big business units and we will have the full responsibilities of managing and running a publicly held company.

ArvinMeritor has been working to cut costs for some time, but it hasn’t been easy.

Cutting costs is never easy.

What have been the biggest challenges up to this point that have held the company back from cutting costs as much as you’ve wanted?

The biggest challenges you face, and some of it you have no control over, are the external market conditions and material economics, primarily steel. You have to react very quickly, you have to manage them very aggressively, and you cannot take the position that “just because the external markets did this, it affected you and why.” You have to find a way through that to continue to deliver your results.

How do you plan on reducing costs, especially with the value of the dollar being so low -- although the low dollar seems to have helped your fiscal second-quarter revenue?

It did (help). It’s becoming an interesting situation because we have the ability with some of our sites to ship from North America to Europe. And given the strength of the euro, we are beginning to explore what we used to think was not the most pragmatic thing to do, shipping from our sites here back to Europe, because now it becomes a low-cost product.

That’s on the revenue side of it, and that takes a little longer to develop.

On the cost side, it’s really an acceleration of what you have, and you just have to take the continual attitude that every penny, every dollar, every nickel has to be scrutinized.

You also have mentioned “the opportunity to create next-generation systems technologies,” that the stand-alone Arvin Innovation will bring. What do you mean by that?

We have a very strong engineering DNA within Arvin Innovation. On both sides of the fence, with the chassis and body systems businesses, we defined that electronic control systems and motor development were critical for long-term success.

We now have some extremely strong engineering teams that are developing complete chassis control system for applications that are intended for automotive, but are actually being used for other off-highway vehicle applications and the like. That type of technology is going to help us move forward with a broader range of what I would call “higher tech,” and what I mean by that is a more software-based, electronic-based with a mechatronic view, blending the mechanical and electric.

Now, everybody’s doing that, it’s just can you do it better, can you do it quicker, and can you provide more “value-add.”

Both of the new businesses will have new product coming to market next year that will start to signal a change-over from a more mechanical to a more electronically-based company.

You can reach Ryan Beene at autonews@crain.com

25

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Newsletters