Crain News Service
DETROIT - Dura Automotive Systems Inc. could be the poster child for auto suppliers in the 1990s.
Since its creation in 1990, Dura has mirrored the rest of the industry - fighting off an early-1990s recession, holding a mid-'90s initial public offering and using acquisitions in the late '90s to become a supplier of entire systems rather than single parts.
This year Dura stepped from the shadows when it announced two deals that effectively tripled its size - from sales of around $850 million to sales of about $2.5 billion. More important to Dura, the company expanded its European presence, lessened dependence on the automotive cable business and added sales to automakers with whom it previously did little business, such as Volkswagen AG.
'I think we were below a lot of radar screens before these acquisitions,' said Dura CEO Karl Storrie. The company has its operational headquarters and most of its executives at a 150-person technical center in Rochester Hills, Mich. 'But acquisitions are clearly a big part of our strategy,' he said. 'We want to be the consolidator in the industries we get into.'
What Dura has gotten into are systems that have been its staples since inception - parking brakes, gear shifts, cables and hinges - plus a new segment that it had left a few years ago: car-window systems.
The two deals vaulting Dura up the ranks were its $475.6 million acquisition of Indiana-based Excel Industries Inc., which had annual sales of $1.1 billion, and a $320 million purchase of Adwest Automotive PLC, an England-based supplier with annual sales of $400 million. These deals, expected to close in the first half of 1999, would push Dura from the 98th-largest auto supplier to North America, according to Automotive News' rankings, to about 20th.
The deals also make Dura well diversified among customers. Ford Motor Co. will remain its largest customer, with 32 percent of Dura's business. General Motors is next at 13 percent, followed by DaimlerChrysler AG at 10 percent, VW at 9 percent and BMW AG at 5 percent.
The company also will become reliant on specific systems, such as car cables, which were 48 percent of Dura's pro forma sales in 1997. Now, they are just 17 percent, the same percentage as car windows.
Dura's buying binge is by no means done, Storrie said. The company has a goal of annual sales of $3 billion to $5 billion by 2002. 'That was before these last two deals, so 2002 is probably a bit too far off now,' he said.
Long before Dura and Storrie were worried about exponential growth into the next century, they were worried about just getting through the recession.
The company was formed in 1990 when Tony Johnson and his Minnesota investor group, Hidden Creek Industries, bought Dura Automotive Hardware and a mechanical components division from Wickes Manufacturing Co. The two divisions had sales of $116 million.
Hidden Creek and Johnson previously had started Automotive Industries Holding Inc., which they eventually sold to Lear Corp. In 1993, Johnson started Tower Automotive Inc., now a major stamping company.
Storrie and Johnson met constantly with customers such as Ford, which threatened to dump Dura.
Dura eventually appeased customers, steadied sales at $150 million and was ready for acquisitions. Beginning with a 1994 purchase of Alkin Co., Dura has been on a steady buying pace, snapping up 13 companies.
'The whole trend in the parts industry is consolidation, and Dura has been very successful at it,' Excel CFO Joseph Robinson said. 'They've really made some good moves, and Hidden Creek has been integral to that.'
In Adwest, Dura has acquired a major competitor in driver-control systems.
Much like other suppliers, Dura has consolidated many operations. It closed Michigan plants in Warren, Grand Haven and White Cloud in 1998 and transferred that work to a 160,000-square-foot plant in Fremont.
Dura also is scheduled to close an 80-person plant in Windsor, Ontario, this summer. Much of that work will be moved to a plant in Brantford, Ontario.
Storrie said, 'There's going to be more consolidation, some closures' following the Excel and Adwest deals, but he said it was too early to know details.
Of the two most recent deals, the Adwest acquisition has been praised more widely by analysts. Many question Dura's decision to buy Excel, which brought Dura back into the car-window business that it had left in 1995.