DETROIT - A U.S. and a European maker of automotive sealants have bonded their worldwide businesses.
H.B. Fuller Co. of St. Paul, Minn., and EMS-Chemie Holding AG of Zurich, Switzerland, said last week that they had formed a new automotive venture called EFTEC.
The two companies currently make adhesives, sealants and coatings as H.B. Fuller Automotive Co. and EMS-Togo AG.
The new joint venture will consist of four business units - EFTEC North America, EFTEC Latin America, EFTEC Europe and EFTEC Asia - with direct and affiliated operations and licensees in 19 countries. EFTEC will have initial annual sales of $250 million.
Neither company had been involved in a joint venture before, but the changing nature of the auto industry forced the issue, said James Conaty, president and CEO of EFTEC North America LLC.
Conaty said the number of European primary players in adhesives, sealants and coatings has dropped to three from 16. In the United States, Ford Motor Co. dealt with as many as 27 adhesive suppliers a few years ago, but now says it needs no more than three.
'Consolidation is more than a buzzword now. It's a reality,' Conaty said.
He said Fuller's strength has been in adhesives, while EMS-Togo is noted for its manufacturing ability and its windshield-bonding technology.
Since 1987, Fuller has been moving ahead aggressively with its automotive business, based in Madison Heights, Mich. Two major acquisitions have made Fuller Automotive a top Tier 1 supplier of adhesives, sealants and coatings to North American automakers.
But as automakers emphasized their need for global suppliers, Fuller knew it had to become better positioned with the original equipment manufacturers in Europe. The company also needed better positions in Asia and Latin America, Conaty said.
Increasing its presence in those markets would have required too much money and too much time, Conaty said. Two years ago, Fuller took its dilemma to EMS-Chemie. Its automotive subsidiary, EMS-Togo, was a mirror image of Fuller Automotive, with a strong presence in Europe and Asia, according to Chet Ricker, president of EMS-Togo Corp. in Taylor, Mich.
Neither business would have survived the long term as a separate company, Conaty said.
As EFTEC, the two companies have positioned themselves as the No. 2 player in a $1.7 billion global market.
Under the agreement, Fuller owns about 70 percent of the North and Latin American operations, and is fully responsible for managing them. EMS-Chemie has similar control over Europe and Asia.