SYRACUSE, N.Y. - No clouds in this supplier's crystal ball: New Venture Gear will have more capacity, new technology and a few more European customers in its pocket by 2001.
The fortunes of the Troy, Mich., joint venture between DaimlerChrysler and General Motors are rising with North America's feverish demand for trucks.
The company says it will supply 2.8 million manual transmissions and four-wheel-drive transfer cases this year, mainly to U.S. automakers. But more customers are knocking on its door. New Venture Gear expects to build 3.5 million transmissions and transfer cases in 2001.
The firm has won contracts to supply some models built by BMW AG's British Land Rover subsidiary, stealing longstanding business away from archrival Borg-Warner Automotive Inc.
The new Rover business is icing on the cake, since New Venture Gear also won a contract to make transfer cases for BMW's X5 wagon.
Moreover, New Venture Gear also will supply transmissions and transfer cases to Volkswagen AG and Porsche AG for their jointly developed sport-utility in 2001.
And New Venture has joined with Visteon Automotive to produce a complete all-wheel-drive system - including the transmission, transfer case and axles - for an unspecified future General Motors product.
To relieve manufacturing bottlenecks, New Venture Gear is adding capacity. Next May, a new plant in Roitzsch, Germany, will launch production. In June, a new $100 million transfer case line will start up in the company's Syracuse factory. That line will require 300 additional workers.
The expansion will help New Venture Gear grow sales from $1.5 billion in 1998 to nearly $2 bil-lion next year, company President Fred Hubacker said.
'All indications are that the truck market will stay strong, so we're optimistic,' he said. With its massive contracts with U.S. automakers, the company already has 75 percent of the U.S. market for transfer cases and 55 percent of the world market.
New Venture Gear's ownership is split between GM, with 36 percent, and DaimlerChrysler, with 64 percent. The company has grown dramatically since it was formed in 1990, when the company built just 800,000 transmissions and transfer cases.
Maintaining quality during the expansion has been a major challenge. Over the past five years, New Venture has increased the number of computer-controlled flexible tooling machines to replace its old transfer machine lines.
It has added quality inspection points, and a new team-oriented error proofing system that tries to predict problems before they occur.
As a result, the number of transfer cases that failed end-of-line testing fell from 20 percent last year to 9 percent currently, the company says.
New Venture also beefed up its engineering department, doubling the number of technical personnel to 350. The r&d staff is developing new four-wheel-drive and all-wheel-drive features.
Automakers 'are looking for niche features that differentiate themselves from each other,' says Ron Frawley, director of transfer case development. 'They want to be able to say that their truck has something the other guy's doesn't.'
New Venture Gear currently builds 17 families of transfer cases, compared with five when it was founded.
It also is exploring new products, such as limited-slip devices for cars. At the Specialty Equipment Market Show in Las Vegas this month, Ford Motor Co. exhibited a new high-performance Mustang Cobra R with a pump-type limited-slip device supplied by New Venture Gear.
But niche products can be tricky to produce. New Venture Gear builds more than 10,000 transfer cases daily for its Big 3 customers, but it will make just 160 per day for the BMW X5 at full production.
The high-volume cases come off rolling assembly lines, whereas a small group of employees work on each BMW transfer case, assembling the entire unit from start to finish.
The line was designed for BMW's original volume estimate of 35,000 units, says Jim Lanzon, executive vice president of engineering. Since then, the automaker has raised its volume estimate to 75,000 units, forcing New Venture to re-evaluate its process.
'The volumes are getting high enough where we may have to adjust some things,' Lanzon said.