Siebe Automotive is preparing for a different role in the auto industry.
In it, the British supplier may or may not deal directly with its traditional automaking customers.
With 1997 sales of $625 million, Siebe qualifies today as a sizable player. But will automakers invite a supplier of fluid-handling systems to sit among the 15 to 20 key module makers that design and engineer the vehicles of the future?
Siebe has no hang-ups about where it sits, says James McElya, president of worldwide automotive operations.
'We're not fighting the Tier 2 role,' McElya says.
He cites Ford Motor Co.'s upcoming Amazon assembly plant in Brazil is a good example. He wants to be part of the project. But since Ford plans to use only 15 or so direct suppliers, Siebe will have to play through another supplier.
'We're going to have to look at programs like this that are coming up and ask, 'Where can we fit?'*' says McElya. 'We'll be doing a lot more in a Tier 2 role in the future.'
Meanwhile, Siebe has been positioning itself to do more business. The company has digested 10 acquisitions since 1995, spending $200 million on new companies. In 1996, it consolidated all automotive operations under a single roof. Over the next two years, Siebe expects sales to reach $1 billion a year.
'If you want to be a full-service supplier to the car companies, you've got to be of a size big enough to provide the engineering operations that go with it,' McElya says.
Engineering and research and development costs are rising. Siebe spent about $12 million on technical activity last year. This year, it will be closer to $25 million.
'Some suppliers are thinking this consolidation of the industry is going to stabilize,' he says. 'It's not going to stabilize. It's going to accelerate. It's going to force new alliances.'