By naming Peter Pestillo chairman and CEO of Visteon Automotive Systems, Ford Motor Co. has taken a giant step toward the spinoff of its in-house component maker.
Last week, Ford announced Pestillo will give up his position as Ford vice chairman Jan. 1.
He will be replaced by John Rintamaki, 57, now Ford's general counsel. Rintamaki will take the title of group vice president and chief of staff.
Craig Muhlhauser will remain president and COO of Visteon.
At Ford, Pestillo built his career on the strength of his close ties to the UAW. For more than a decade, Ford has avoided the periodic strikes that have plagued General Motors.
For much of that time, Pestillo guided Ford's labor relations, trading on his personal friendship with UAW President Steve Yokich.
Now that friendship will be put to the test. Without the union's tacit support, Ford will be hard-pressed to convert Visteon into an independent parts maker with a bright future.
Ford has not said exactly how it plans to make Visteon independent. However, the automaker softened the union's opposition to a future separation when it guaranteed generous wages for Visteon's 23,500 UAW employees. The company's new labor contract calls for Visteon to pay hourly workers the same wages and benefits as Ford's employees.
Pestillo also must convince Wall Street that Visteon, with estimated 1999 sales of $18.2 billion, can compete.
Bear Stearns analyst Eric Goldstein said he expects instrument panels, cockpit modules and electronics to remain core products. Visteon's broad array of products gives it a foothold in these hot market segments.
But analysts say Visteon also must streamline operations, a difficult task at a time when the UAW wants to preserve jobs.
Pestillo faces tough decisions, said industry analyst Craig Cather, CEO of CSM Corp., an automotive forecasting firm in Northville, Mich., 'because of the necessity to remove some products.'
For example, Pestillo must decide the future of Visteon's glass-making operation, which Ford earlier tried to sell until it encountered union resistance. Visteon also may have to take a hard look at wiper systems, and the parts maker faces tough competition in the exhaust systems business.