Textron Automotive Co. added $500 million in sales in 1997, principally by acquisition. Most notably, it picked up fuel tank maker Kautex Werke AG of Germany. Textron has been an energetic consolidator as far back as 1993, when it acquired Chrysler Corp.'s Acustar plastics business. The supplier also makes instrument panels and interior and exterior trim. Textron Automotive, a unit of Textron Inc., reported total sales of $2.1 billion last year, and ranked 23rd on Automotive News' list of top suppliers to North America.
Textron Automotive CEO John Janitz spoke with Staff Reporter John Couretas at a meeting of Canada's Automotive Parts Manufacturers' Association in Hamilton, Ontario. Edited excerpts:
What did the Kautex acquisition accomplish for Textron Automotive?
It did a couple of things for us. First of all, they were in the plastics business - it was more or less a bolt-on. It gave us European presence and the relationships with European customers. It gave us balance relative to product. We are now into substantial functional components. The other thing is, they had an excellent management team in place. It wasn't a fix-it type of situation for us.
For several years now, Chrysler has been your largest customer. Has the Kautex acquisition dramatically reduced your dependence on Chrysler?
Worldwide Chrysler sales are in the 45 percent range. That's down significantly from where it was. I think at one time we were at 65 percent, before the acquisition of Kautex. It's in line with our strategy and vision.
You have some pretty big competitors out there, including Walbro, Solvay, Plastic Omnium. Will there be enough growth for all these suppliers?
If you look at the market shares right now, there are probably four main players, not counting 'in-house' production. With the tremendous growth in the North American market, and (the potential in) Asia, I think there's more than enough business. The other aspect is, who comes out with the best technology? I think that's going to determine who wins the game.
And the underhood areas. Big growth prospects for you as well?
Well, let me give you an example. Over in Europe, Kautex has had a significant presence under the hood, or in what we call engineered products. Some of it goes under the hood. Some of it is in the passenger compartment. They've been able to grow that business 10 to 15 percent a year. We really didn't have a presence in that business here in North America. So that's been a great marriage for us.
Are you looking for other large acquisitions? Does Textron need to continue to grow at this rate?
Eighty percent of our growth has been acquisition growth. More important than the size of the acquisition, we're really looking at the synergistic value of the acquisition. If we could do five ($50 million acquisitions) vs. one ($250 million acquisition), I would almost rather do the former five 50s, but I'm more interested in the synergistic value of the acquisition. That's really key to us.
So you don't feel any great pressure to bulk up?
Absolutely not. Based on orders that we've received, we will push the $3 billion mark (by 2001-02). So we're feeling pretty good about that. If the right opportunity comes, we're going to be there.
Given what's happened at other conglomerates lately, you don't see Textron Inc. losing interest in the automotive business? Do you see Textron Automotive as an acquisition candidate at some point?
No. Chairman Jim Hardymon has said more than once that we want to keep our automotive business in the 20 percent range of our total business. We don't want to become 50 percent or 60 percent automotive. We want to get that 10 percent growth and protect those margins. That's where we're at, and that's why innovation is so important to us.