Earlier this year, executives at Federal-Mogul Corp. ordered little cards printed up that trumpeted their 'Big Hairy Audacious Goal.' Federal-Mogul borrowed the phrase from the 1994 management book Built to Last. It reasoned that big company goals have a way of energizing employees and managers.
Federal-Mogul took the advice to heart. In late 1996, as the ailing bearings and seal maker limped toward doom, Federal-Mogul brought in a new CEO. Richard Snell was given a license to make changes. First, Snell reversed course and pulled the company out of the retail parts business. Then Snell declared the company would turn its $2 billion annual sales into $10 billion by 2002. It would reduce its product defect rates to zero.
Last year, the Southfield, Mich., supplier bought Britain's T&N PLC, doubling the company's size and giving it a new array of pistons, camshafts and gaskets. And this year it bought aftermarket gasket maker Fel-Pro Inc., with its $500-million-a-year catalog of engine gaskets.
The current complement of companies has given Federal-Mogul the ability to sell engine 'submodules' to automakers, and also to 'seal' entire engines and transmissions.
As a result, Federal-Mogul's powertrain product offerings are now so wide that it has risen from near death to become a contender among the major Tier 1 module suppliers of the next decade.
The $720 million Fel-Pro purchase reveals the magic of acquisition. Federal-Mogul was already in the gasket business to a lesser extent, but Fel-Pro offered access to the relatively new technology of producing multilayer steel products. That process is critical in sealing head gaskets. It is a small but vital step in Federal-Mogul's desire to be able to seal entire engines and axles.
Now Federal-Mogul faces another task: marshaling Fel-Pro's resources for the high-volume OE market. Fel-Pro's capacity in Skokie, Ill., is tight. Federal-Mogul must find a way for Fel-Pro to produce more of its high-tech products while meeting demand from its traditional aftermarket business.
At last sighting, Snell was mulling over a list of 12 or so other acquisitions.