Brembo accelerates N.A. growth
Brembo S.p.A.'s brake systems have crossed the Atlantic many times over the past 50 years on some of the world's most exclusive imported sports cars. But the Italian supplier's first foray into the United States came in 1992 when it secured a contract to supply high-performance brakes on what was then a new V-10 sports car, the Dodge Viper.
Now, 20 years later, Brembo has opened its first U.S. manufacturing plant in Homer, Mich., about 100 miles west of Detroit, and is poised to expand North American operations. Brembo is riding the market's fast-recovering volumes and automakers' desire to capitalize on its high-performance brand recognition.
Since opening its headquarters in 2010 outside Detroit, Brembo North America has invested $150 million in the market with plans to invest $100 million over the next few years to expand its presence.
Brembo generated revenue of $300 million in 2011 and expects that figure to climb with new contracts with the Detroit 3 for its Michigan-made brakes. In January, General Motors said it would use Brembo brakes from the Homer plant on the Cadillac ATS and XTS. Brembo also supplies brakes to the Chevrolet Corvette ZR1 and Z06, Buick Regal GS, Cadillac CTS-V and Chevy Camaro SS.
Brembo has grown its North American operations to 500 employees in Michigan and Mexico. North America accounts for 20 percent of Brembo's worldwide sales, second only to Germany.
Before this month's Detroit Chevrolet Belle Isle Grand Prix, Brembo gathered its global executives, customers and racing sponsors for a party. It was a chance to strengthen working relationships with the Detroit 3 and to try to build new ones, said Dan Sandberg, CEO of Brembo North America.
Brembo is the sole supplier of brake systems to the Izod IndyCar Series and the motorcycle teams in the MotoGP Racing Series. It also supplies most teams with braking systems in the Formula One World Championship Series. "We innovate in the arena of the top-performing vehicles in the world, and when you can take that technology and bring it to an event that is sponsored by one of the largest automotive companies in the world, it's a tremendous opportunity," Sandberg said.
Brembo also has strong relationships with high-end luxury brands such as Bentley, Ferrari and Porsche.
The reputation of providing high-performance, lightweight brakes systems is helping Brembo secure more contracts with the Detroit 3, said Andrea Abbati Marescotti, Brembo's top executive.
Brembo acquired Hayes Lemmerz's North American brake components division, which included the Homer plant and another in Mexico, in 2007 for $58 million. The Hayes Lemmerz unit's revenue in 2006 was $120 million.
"We've more than doubled the sales since the acquisition, and for what we see in our business plan, we are likely to triple that in the next few years," he said.
Abbati Marescotti said automakers are looking to incorporate higher-end products across segments, and the supplier does not plan to create low-cost options to gain access to smaller, cheaper vehicles like the Ford Focus.
James Gillette, director of automotive analysis for IHS Automotive Inc., said high-end niche products are surging in the market. "When you take a look at the products that are doing well, it's the performance and luxury parts that are growing," he said. "The market is more and more for the buyer of the differentiated product. Brembo not only has the features that are in demand by the automakers and recognizable by the car nuts, it's one of the few ways the Detroit 3 can attract buyers away from the Mercedes and BMWs of the world."
Gillette said this differentiation is causing the Detroit 3 to look for strong brand identity, which is what helped Brembo establish itself in the United States.
"There are precious few suppliers that can establish an identity like Brembo," Gillette said. Brembo benefits from having a strong motorsports background that gives it "street credibility" with car enthusiasts, like Koni shock absorbers and Holley carburetors, he said.
"Our brand is perceived by all of our customers with real value," Abbati Marescotti said. GM wants "to see the Cadillac and Brembo on the brakes, which is co-marketing. We don't need to invest much in marketing."
He said: In many non-English speaking "countries, people think the English word for brake is Brembo, and we don't tell them that they are wrong, of course."