Ford creates minority-owned JV with Valeo in Detroit area
The Sheldon Road plant is the last plant left from Ford's takeover of 17 Visteon plants in 2005.
DETROIT -- In another minority supplier initiative created by Ford Motor Co., V. Johnson Enterprises, an affiliate of former NBA star Vinnie Johnson's Piston Group, today said it was forming a joint venture with French supplier Valeo SA.
The new entity will be called Detroit Thermal Systems LLC.
As reported last week by Crain's Detroit Business, an affiliate of Automotive News, Ford orchestrated the deal to create the minority-owned supplier and transfer its ACH Sheldon Road plant climate control business in suburban Detroit to the new joint venture.
To support the new business, DTS also announced the leasing of a 365,000-square-foot plant just west of Detroit in Romulus, Mich. The plant will support the ACH business, or HVAC (heating, ventilation and air-conditioning) units for Ford vehicles, with 30 injection-molding presses. The plant has the capacity to produce 2 million units annually, the company said in a release.
Production will begin during the third quarter of 2013, the company said.
The equipment, assets and operations from the Sheldon Road plant will be transferred to Detroit Thermal Systems' Romulus plant -- which is scheduled to be completed by the end of 2014.
Ford will then seek to sell the plant, said Della DiPietro, consultant and spokesperson for ACH.
DTS expects to hire 500 employees at its Romulus plant by 2015. The current 750 ACH Sheldon Road employees, many UAW members, will need to reapply for positions at the new DTS plant.
However, most will receive jobs offers either from DTS or from Ford, DiPietro said.
"Our investment in readying this site with the installation of advanced equipment and employee training, demonstrates our commitment to rebuilding a vibrant manufacturing base in the Detroit area," Kurt Hall, COO of the new company, said in a statement. "Once our investments are complete, this facility and our talented workforce will create the benchmark for efficient and high-quality manufacturing of climate control systems."
V. Johnson Enterprises, led by CEO Johnson, the one-time Detroit Pistons star who helped lead the team to two NBA titles, will maintain a majority stake in the venture. Paris-based Valeo operates in North America as Valeo Automotive Inc.
The deal is reminiscent to the deal that created the Detroit-based minority-owned supplier Detroit Manufacturing Systems LLC.
Ford helped form DMS in May with a deal between 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 near Ann Arbor, Mich.
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 a plant 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.
Valeo has been after the Sheldon Road business for nearly five years. It signed a memorandum of understanding to acquire the ACH Sheldon Road plant in December 2006, but the deal fell through in 2007 after negotiations with the UAW stalled.
Then-Valeo CEO Thierry Morin told reporters at the 2007 Frankfurt Motor Show that the supplier wanted hourly pay for UAW workers reduced to $20 or less from $30, Wards Auto reported.
Valeo's North American unit generated revenue of $1.9 billion last year with 447 employees in metro Detroit. At the time of the original deal in 2006, the plant employed 1,250, according to a Ford statement.
Piston Group 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 Detroit area employees.