PLYMOUTH, Mich. - Freudenberg and NOK Group Cos., encouraged by at least one automaker, plans to enter the North American brake hose assembly market.
But the timing may be risky now that automakers are thinking about replacing traditional hydraulic brakes with brake-by-wire systems.
'If development of electrical braking systems goes well, the whole hydraulic system will be history,' said Hiro Mori, a project manager at Automotive Consulting Group Inc. in Ann Arbor, Mich. 'There is a risk (that brake hoses) will be phased out in 10 to 15 years.'
Freudenberg and NOK supplies seals, along with suspension, fuel and electrical systems. The company decided to pursue the brake-hose market after an automaker invited it to bid on a $21 million contract. Freudenberg and NOK did not win the business, but the invitation was encouraging, said John Van Alstyne, general manager of the business development group overseeing the new product line.
'Having been nominated and been taken that far with the customer validated the fact that we have something unique to offer the North American marketplace in terms of technical capability and total value to the customer,' he said.
Only one automaker is seriously interested right now, but preliminary meetings with others have led Freudenberg and NOK to believe there are other opportunities, Van Alstyne said. He declined to name the automakers with which his company has had discussions. Freudenberg and NOK hopes to focus initially on North American automakers. Later the company will enter the aftermarket, he said.
The joint venture's corporate parent, Freudenberg & Co., has produced brake hoses for nearly 30 years. It now supplies about 30 percent of the European market, Van Alstyne said.
Freudenberg and NOK already has invested in engineering, sales and marketing resources for the new product line, but has not decided how much to invest or whether to build a new plant.
Initially, brake hose will be shipped in from Freudenberg & Co., but once it has secured business, Freudenberg and NOK may begin making the hose itself.
Within the next month, Freudenberg and NOK should have concrete plans for both investment and location of the new business, Van Alstyne said.
But faced with a diminishing market, newcomers to brake-hose assembly are taking quite a risk, Mori said, especially if they start costly brick-and-mortar projects. But brake hose coupling or assembly is not as capital-intensive as production of the hose, especially if the producer can obtain its technology from an affiliated company as Freudenberg and NOK can, he said.
Freudenberg and NOK already markets a total sealing package for brake systems to the automakers.