Despite the third-quarter slump at Eaton Corp., Robert McCloskey is attempting to keep the automotive parts group one of the bright spots.
With his ascension in September to senior vice president and group executive, McCloskey has a dramatically reshaped automotive business portfolio. The group is enjoying new business and rising sales.
McCloskey's group was reconfigured when Eaton reduced its five operating groups to four in September, with the automotive business gaining the former Automotive Components Group and all of the former Controls & Hydraulics Group, except Hydraulics Operations and Eaton Vorad Technologies.
McCloskey's responsibilities include all eight of Eaton's components divisions. Products include engine valves, lifters, superchargers, viscous fan drives, locking differentials, engineered fasteners, actuators and sensors, mirror actuators and a wide array of convenience switch controls.
The changes were made to provide closer coordination of Eaton businesses that served the global car and light-truck markets, and to place stronger emphasis on the management of its suppliers.
With his new job, McCloskey's cost structure will be lessened as his automotive components division closes two Indiana plants early this year. The Hamilton plant, part of Eaton's actuator and sensor division, will move the work to its Rochester Hills, Mich., plant. The vehicle switch production at the Winamac plant will move to Mexico.
Eaton will take a $33 million charge against fourth-quarter earnings. Truck parts and auto-parts divisions will each account for $10 million.
Eaton recently posted a 30 percent decline in third-quarter profits, primarily because of slow sales of semiconductor equipment. Profits before charges fell 39 percent to $85 million, or $1.18 a share from the year-ago quarter.
Eaton's revenue fell 16 percent to $1.62 billion. Sales and prices of semiconductor-making equipment fell on weak demand from Asia, more than offsetting stronger sales at its truck-parts and automotive components groups.
Because of fourth-quarter charges, analysts expect Eaton to earn $1.10 per share for the final period.
JOINED EATON IN 1965
For McCloskey, 59, the new responsibilities are a long way from the practice of patent law. McCloskey, a law school graduate from American University in Washington, D.C., joined the U.S. Patent Office before moving to Eaton in 1965. By 1978 he was the company's general patent counsel. A law degree combined with a degree in electrical engineering 'helps with the analysis of problems,' he said.
It also helped his steady move through the management ranks. He held a succession of management jobs at Eaton in its Transmission, Axle & Brake and Electric Drives Divisions before being selected as manager of the Airflex Division in 1984. Later he was appointed general manager of General Products Operations and promoted to vice president of General Products and Hydraulics.
Now he faces the task of increasing Eaton's combined automotive business. Prior to his taking the helm in September, Eaton's automotive production posted a 2.5 percent growth in sales to $1.44 billion for the first nine months of 1998.
Eaton's automotive business constitutes about 28 percent of Eaton's total revenues.
Several of McCloskey's divisions are facing problems with investments in lesser-developed countries where Eaton has followed automakers. 'Short term, things are going to be difficult,' he said.
McCloskey's immediate challenges are in the economically troubled Brazil, where Eaton has two joint ventures building cylinder heads and medium-duty truck transmissions. In South Korea, where Eaton builds automotive controls and limited-slip differentials, uncertainty also reigns, he said.
'Some are making money, some are not. It's a mixed bag,' he said. Eaton remains focused on growth in emerging markets, he said.
McCloskey's immediate goal is to maintain revenue and profit growth of 10 percent annually at his eight divisions. Each remains No. 1 or No. 2 in its market, he said, and Eaton remains committed to them.
McCloskey said the realignment of his automotive group was made to provide closer coordination of Eaton businesses that serve the global passenger car and light-truck markets. The goal was a stronger emphasis on the management of its suppliers around the world.
Said McCloskey: 'We're looking to grow the business, and this gives us a new platform.'
Eaton is ranked 11th largest on Automotive News' list of the top 150 original equipment suppliers to North America.