Ford assembling another minority supplier JV, sources say
DETROIT -- Ford Motor Co., for the second time this year, is orchestrating a deal to create a significant minority-owned supplier joint venture.
Under the deal, which was close to being signed as of Thursday afternoon, Piston Automotive LLC and French supplier Valeo SA would create a minority-owned joint venture, two sources confirmed to Crain's Detroit Business under the condition of anonymity. Crain's Detroit Business is an affiliate of Automotive News.
Piston Automotive, led by chairman and former Detroit Piston Vinnie Johnson, will likely maintain a majority stake in the venture. Valeo operates in North America as Valeo Automotive Inc. in Troy.
Also under the deal, Valeo would likely take over all or a portion of the business at Ford's Automotive Components Holdings plant on Sheldon Road in Plymouth Township, Mich., and transition a portion of the programs to the joint venture.
It's unclear whether Valeo will take over the Sheldon Road plant through a purchase or lease, if at all. The plant covers 991,265 square feet, according to CoStar Group.
The Sheldon Road plant is the last plant left from Ford's takeover of 17 Visteon Corp. plants in 2005. Ford spun out its parts division to form Visteon in 2000.
Della DiPietro, a consultant for Ford and spokesperson for its ACH plants, declined to comment, calling the deal speculation.
"As you know, it's standard practice in the industry for companies to hold talks and establish regular contacts whenever they perceive a possible strategic benefit," said Brad Warner, regional communications manager for Valeo Automotive in Troy. "Nevertheless, I cannot confirm that Valeo is currently engaged in any discussions with any particular counterparties."
Attempts to reach officials at Piston Automotive for comment were unsuccessful.
The plant supplies climate control components to Ford. It's unclear how much business takes place at the plant.
The deal is likely to be reminiscent of a contract that created the Detroit-based minority-owned supplier Detroit Manufacturing Systems LLC.
Ford helped form DMS in May with a deal between Wayne-based Rush Group and French supplier Faurecia SA. Under that deal, Ford created the minority-owned supplier -- Andra Rush, Detroit Manufacturing Systems CEO, is an American Indian -- and unloaded its $1.1 billion book of interiors business at its 1.6 million-square-foot ACH Saline plant.
As a result of the deal, Rush Group controls 55 percent stake of the joint venture, which will take over about 70 percent of the book of business.
DMS occupies 480,000 square feet in the Gateway Industrial Center in Detroit and shipped its first product, instrument panels for the Ford Mustang, to the automaker's Flat Rock assembly plant July 30. DMS is also bidding on supply contracts with other automakers, including General Motors Co., Chrysler Group LLC and Toyota Motor Corp.
It's unknown whether the joint venture between Piston Automotive and Valeo has secured a plant or what it will be called.
Valeo has been after the Sheldon Road business for nearly five years. It signed a memorandum of understanding to acquire the operation in December 2006, but the deal fell through in 2007 after negotiations with the UAW stalled.
Valeo's North American unit generated revenue of $1.9 billion last year with 447 employees in metro Detroit. At the time of the deal signing in 2006, the plant employed 1,250, according to a Ford release.
Piston Automotive was formed by Johnson in 1995 and supplies suspension assemblies, chassis modules and interiors, with Ford being its largest customer. The supplier generated revenue of $473.8 million in 2011 with 226 local employees.