BIRMINGHAM, England - Wagon PLC is one of the European leaders in door systems and automotive stampings, with sales of 304 million ($484 million) last year.
Wagon has pursued an active disposal and acquisition program over the past 21/2 years. In February 1998, it bought Blaimer International, a Czech manufacturer of stampings and assemblies. The door-systems business of German company Ymos AG was acquired the following June. In October, Wagon bought Aries Structures, a French supplier of door systems and body structures.
Wagon's transformation has been overseen by Chief Executive Nick Bradshaw, who joined the company in May 1997 after a career at United Kingdom conglomerate RTZ and building materials group Caradon. He was interviewed by Automotive News Europe's Edmund Chew.
What are your objectives for Wagon?
I think there is an opportunity to create a major European components supplier within the sector where we are operating. With the acquisition of the Ymos business in Germany and Aries Structures in France, Wagon has created a pan-European business. I think it's quite possible to develop that model on a bigger scale in Europe.
Where did Wagon stand before 1997?
Wagon was a company with no strategy, about 25 operating businesses and an outdated management concept. So we set about a strategic review process, and identified four key strategic headings.
First, we wanted to establish leading positions within a limited number of target markets. Second, we wanted to put more emphasis into the design and engineering aspects of the overall package. Third, we wanted to broaden our international base, and diversify away from a predominantly U.K.-based business. And finally, we wanted to ensure those businesses operated to world-class standards.
We identified businesses that either fit those criteria or could be molded to do so. There were three areas of the group that matched the criteria, particularly the leading positions in target markets. One was door frames - an area we now call door systems. The second area was five pressing businesses that together actually made a big player. And the third was the nonautomotive storage business.
We have been making a number of acquisitions - of which Aries Structures is the most recent - to strengthen those target market positions. By definition, the other companies within the portfolio failed the strategy test.
When did you start talking to Aries Structures?
In the late summer of last year. We were aware of each other as suppliers in the same sector of the industry. They were considering a change of ownership at that time.
What does Aries Structures bring to you?
The Aries deal brings us a body-structure capability. It also brings us the door-systems market in France and Italy.
How big do you think you have to be in each of your key automotive areas?
I don't think there is actually a size that one has to be. But it's clearly a business which is driven by increasing scale. Critical mass is emerging which component suppliers have to at least exceed - and that's going up all the time. Our short-term target is to get our automotive sales over 1 billion ($1.59 billion).
Can this be done from the U.K.?
The one thing that the U.K. brings is the largest stock market in Europe. This is the access to capital funds. We are finding a number of privately owned companies in Germany and France that are interested in helping to create a panEuropean group while using our PLC (public limited company) stock market listing in the U.K. for access to capital funds.
How do you make sure acquisitions are successful?
We have a 100-day plan for an acquisition. This is a template that actually identifies the various tasks that need to happen from day one through to longer term issues. We benchmark different areas of the business. If the acquired company demonstrates best practice relative to our existing operations in a particular area, then that practice will be adopted across the rest of Wagon. It is important to give that two-way opportunity to people in an acquisition process.
What are the potential problems with acquisitions?
It's unusual to find an acquisition that fits exactly with your chosen direction. You need to make sure that an acquired business will allow you to retain long-term relationships with the customers.
Many European acquisitions - particularly those by North American businesses - have been driven so quickly in this rather undignified search for scale that they cannot possibly have been integrated properly. It would have been impossible to have created a proper structured integration plan at the rate at which some companies have been making acquisitions. Either a recession in volumes or a change in stock markets will bring some of those issues to the surface.