DETROIT - French supplier Hutchinson SA is turning a U.S. acquisition into an automotive hose maker.
Hutchinson bought the former Fayette Tubular Products Inc. in January 1996 for $155 million. The company, now called Hutchinson FTS, is preparing to make its first rubber product.
The firm will produce automotive heater hoses at its new facility in Byrdstown, Tenn., said CEO George Mach, the former president of Fayette.
The 50,000-square-foot plant will begin supplying radiator and heater hoses in August to Ford Motor Co.'s EN114 platform for the 1998 Crown Victoria/Grand Marquis. By 1999, the company's sales to Ford will double when it begins supplying other Ford platforms, including the DEW98, a new Jaguar/Lincoln entry-level luxury car; and the CW170, the world car replacement for the Escort, Mach said.
Chrysler Corp., currently representing 60 to 65 percent of Hutchinson FTS's overall sales, will remain the firm's largest customer, according to Mach.
Annual sales at the new facility should reach $30 million to $40 million. That will help boost Hutchinson FTS's yearly sales to $225 million by 2001, from $175 million, he said.
The parent company is investing $10 million to $12 million in the hose plant and an adjoining 70,000-square-foot facility for the assembly of metal retriever-driers for air conditioning systems. The hose factory initially will employ 45 workers, and eventually about 100.
Hutchinson FTS currently employs about 1,250 workers at four other plants and at its Troy, Mich., headquarters.
Hutchinson FTS decided to get into the hose business when former parent company Danaher Corp. decided to sell Fayette. Danaher was moving away from automotive and initially decided to spin off Fayette - which is nearly 100 percent automotive -as a new public company. But the market declined before the public offering went through, and Danaher and Fayette started looking for a buyer.
In Europe, Hutchinson was seeking acquisitions. The French rubber company realized it started its globalization effort late and needed to catch up with the competition, Mach said.
'Once they decided to go, they went aggressively and did all the right things,' he said.
During the past two years, Hutchinson picked up a number of companies, including several hose-related firms.
In North America, the French company found Fayette and an opportunity to supply 'a ready-made market with a large steady market share,' Mach said.
'It's a good marriage because we basically don't compete in any area,' he said.
Hutchinson will compete with the already entrenched hose makers in the United States - giants such as Goodyear and Gates Rubber Co. - and it won't be easy. 'If you come to North America with a 'me-too' product, you might as well stay home,' Mach said.
For Hutchinson FTS to go beyond its initial hose contracts with Ford, it has to beat the other hose companies with better quality and better prices. 'What we're focusing on is innovation and technology,' Mach said.
A major step would be the success of Hutchinson's current work to develop rubber material for air conditioning hoses. The company could supply some air conditioning hoses to its U.S. subsidiary by late 1998 or 1999, Mach said.