MONROE, La. - When Delphi Automotive Systems Corp. put its sprawling lighting business up for sale more than a year ago, a hotly contested bidding war should have begun.
After all, a buyer would win a company with a huge slice of the North American automotive lighting market. For more than a decade, General Motors had awarded Delphi most of its business.
As it turned out, rumors of problems and unprofitable performance soured some potential suitors.
'This had not been run as a focused lighting organization for the better part of 10 years,' said Michael Hammes, chairman and CEO of Anderson, Ind.-based Guide Corp. 'While the depth of technology was there, it was not energized. The company was not challenged to be the best in the world.'
Hammes' words carry considerable heft: His company now runs the former Delphi Lighting plants. Guide's corporate parent, New York-based Palladium Equity Partners LLC, purchased the two Delphi Lighting plants in November 1998.
A NEW SIGN
For Palladium, the first order of business was calling the new company Guide - a name symbolic of the old, independent Guide Lamp plants of the 1970s that eventually were swallowed by GM.
But after the sale, the least of Guide's worries was hanging a new sign on the door. A sweeping overhaul has started, including construction of a new plant in Monterrey, Mexico, and a stem-to-stern renovation of both existing presses and engineering work.
Guide quickly has rolled out plans. The company will invest more than $20 million in the Monterrey plant, which is being built from scratch, said Allen Traylor, Monterrey plant manager.
The plant will make forward and signal lighting, although the latter will be more prevalent, he said. The facility also will include a paint line and perform top coating and assembly.
Meanwhile, the company is expanding equipment and trimming space on the U.S. side of the border. Guide plans to downsize its Anderson plant by about two-thirds, trimming the 2.3 million-square-foot space to 700,000 to 800,000 square feet within two years.
Overall, Guide owns more than 300 presses, including 45 machines in its Monroe plant.
The company claims to have the largest number of multicolor injection presses in North America, with 23 machines producing signal-lamp lenses. Many of the upgrades will go on those presses, Updike said.
Since the Guide sale, Delphi itself has been spun off from GM, and is now attempting to find new customers. So is Guide, since about 95 percent of its parts go to GM. Guide would like to expand but at the same time shrink its reliance on that single customer.
This year, Guide will do about $650 million in business. Its target is to have 80 percent of its business with GM within three years and 50 percent within five years, said Carey Winkel, Guide vice president for sales, marketing and planning.
This year, the company has been awarded $145 million in new contracts, a mix of old GM business that Guide has retained and some new work. Retaining GM's business is significant, Hammes said.
For years, the lighting division of Delphi was a slumbering giant, Hammes said. While Delphi had the automaker's business locked up, some leaks had sprung in a loosely run ship. Equipment was in neglect and getting creaky with age. The company's flagship Anderson plant had been plagued by a series of strikes. Product development had taken a backseat, and engineering was slow to move.
Delphi officials had not made a major financial commitment to its lighting group, tending instead to the rest of its automotive-parts flock that had larger profit margins or stronger growth potential.
Now, Guide must operate as an independent company rather than part of GM, said Mike Phillips, Monroe plant manager.
'We have to make it on our own, with no big umbrella protecting us,' he said.
'Our work force takes pride in that. We've gone from a fat, dumb and happy mentality to a hungry company.'