It's a two-way street.
Facing the need to globalize, European automotive suppliers are coming to North America.
American parts makers have gone on a shopping spree, buying European companies to get an overseas toehold. Suppliers who failed to do so risked losing out on world cars launched by General Motors and Ford Motor Co.
Now Europe's suppliers are trying to muscle in on the action. In 1997, 10 North American suppliers were acquired by European companies, according to Bowles Hollowell Conner & Co., an investment banking firm based in Charlotte, N.C. So far in 1998, five additional deals were consummated.
Of course, some European suppliers have been entrenched in North America for decades. Now, other suppliers that had been content to be regional players believe they must have a global presence.
Besides, the United States is a competitive place to do business, says John Casesa, an analyst for brokerage firm Schroder & Co.
'North America doubles the market potential of a European supplier,' Casesa says. 'It's a very attractive place for a newcomer to do business. If you start fresh, productivity is high and labor flexibility is high. There is a lot of land and a lot of capital to do what you want to do.'
Consider these recent megadeals, near-deals and wishful deals:
In February, the French seat maker Bertrand Faure tried and failed to purchase Delphi Automotive Systems' seating operation.
In May, Valeo's chairman announced his intent to make a major North American purchase. Almost casually, he named the type of companies he would consider, such as ITT Automotive, Meritor Automotive Inc., AlliedSignal Inc. and Cooper Industries Inc., as possible targets.
Last October, Mannesman VDO bought Philips Car Systems, a supplier of radios and navigation units with North American sales of $700 million. The German supplier is transferring its North American headquarters to the Detroit area. To coordinate its efforts, Mannesman hired Herbert Everss - formerly of Siemens Automotive, an established player in the U.S. market - to be president of its North American operations.
Sommer Allibert SA, a French trim supplier, announced plans to double North American sales by 2000. In an April interview, its CEO said he regretted missing previous opportunities to buy Masland Corp. and Automotive Industries Inc., and he hinted at future acquisitions.
In the 1980s, Japanese suppliers followed Toyota Motor Corp., Nissan Motor Co. Ltd. and Honda Motor Co. Ltd. to North America. At first, they sold parts primarily to Japanese automakers, then gradually won Big 3 contracts.
Some European suppliers adopted a similar strategy when Daimler-Benz AG and BMW AG set up assembly plants in the United States. But there is one major difference: Japanese suppliers generally prefer to build their North American organizations from scratch. European companies are willing to try a variety of tactics, including acquisitions.
Here are some examples of the European tactics:
The blockbuster acquisition. In 1996, Autoliv AB of Stockholm, Sweden, acquired the automotive operations of Chicago's Morton International Inc. in a stock swap. The deal created the world's biggest maker of airbags. Autoliv -formerly an also-ran in this region - now ranks 28th on Automotive News' list of top North American suppliers.
The joint venture. Last September, Siemens Automotive formed a joint venture with Breed Technologies Corp. to design smart airbags. Siemens, of Munich, Germany, obtained a 10 percent equity share of Breed, which is based in Lakeland, Fla.
Following the customer. In 1995, Plastic Omnium SA built a plant in South Carolina to produce plastic gas tanks for BMW and General Motors. The French manufacturer previously had supplied both companies in Europe. After establishing a foothold, the company formed a joint venture with Becker Group of Sterling Heights, Mich., to produce exterior trim. Last month, Plastic Omnium bought out its partner.
Internal growth. After its failed bid for Delphi seating, Bertrand Faure SA is building its business by selling components to first-tier suppliers like Johnson Controls.
'We are paying our dues,' says Paul Campbell, the company's director of North American sales.
Since 1992, Bertrand Faure's sales have risen from $40 million to $170 million. Campbell hopes to maintain that pace.
Still, those revenues are only a small fraction of Bertrand Faure's European sales. So why bother? In the old days, Campbell says, companies like Adam Opel AG would handle their own purchasing independently of GM's North American Operations. No longer.
'Now we see all their purchasers in the same room,' Campbell said. 'That's new. Ford and GM have gone global.'
Suppliers that don't go global already are losing out, he says. Recently, one automaker - he won't say which - took bids on seats for a future vehicle.
'The package included production in Mexico, Portugal, Spain, Colombia and Argentina,' Campbell said. 'There were several suppliers who were not invited to bid. And that's how they got the message that they are not invited to the big game anymore.'
Automotive News Staff Reporter David Sedgwick is based in Detroit.