Chalk up another record for 1999.
As a group, the biggest of North America's big auto suppliers grew like they never have before.
The 10 largest companies on the Automotive News list of the 150 top suppliers to North America saw their combined sales of original equipment parts increase by 21 percent last year. That was the first time the year-to-year increase for the top 10 had reached double digits since 1994.
What a difference five years make.
In 1994, the combined North American sales volume of the top 10 suppliers jumped 14 percent to $54.2 billion. Last year's 21 percent increase pushed the collective sales of the top 10 from $67.4 billion to $81.6 billion.
In 1994, the U.S. industry still was pulling out of recession. Last year, North American sales and production shattered records.
The size and scope of supplier mergers and acquisitions has increased as well. The biggest deals of 1999 - Lear Corp.'s acquisition of UT Automotive Inc. and TRW Inc.'s purchase of LucasVarity PLC - aided the hike in sales for the top 10. In 1998, their last full year of independence, UT Automotive placed 15th and LucasVarity was 19th on the annual Automotive News list.
Eric Goldstein, an analyst with Bear, Stearns & Co. Inc. of New York, said 'strong merger and acquisition activity and strong vehicle production in North America, particularly from General Motors, was the driving force.'
Yet the pace of mergers and acquisitions slowed during the latter half of 1999. Some of the industry's top consolidators suffered declining share prices, which makes acquisitions most costly. And cash deals are complicated for those whose balance sheets have become more heavily leveraged from merger-related debt.
Status quo uptop
Still, last year's top 10 parts makers remained the same as in 1998. That is the first time that has happened since Automotive News began its annual ranking of the industry's biggest suppliers eight years ago.
Delphi Automotive Systems Corp., with $22.4 billion in North American original equipment sales, and Visteon Automotive Systems, at $14.97 billion, remained No. 1 and 2. Delphi's North American sales jumped 8.3 percent; Visteon's jumped 3.3 percent. Dana Corp., the giant drivetrain supplier, saw its sales jump 41 percent last year and moved up a notch to No. 3.
Lear, with help from the UT Automotive purchase, also jumped a place, to No. 4. That put the giant interiors supplier ahead of archrival Johnson Controls Inc., which dropped from No. 3 to No. 5 despite a 23.1 percent increase in sales.
Johnson Controls has not made an acquisition since July 1998 and appears to have shifted strategies. Last year the company began a string of partnerships with key electronics suppliers.
TRW, despite the LucasVarity acquisition, was displaced by Robert Bosch Corp. for the No. 7 spot. Magna International Inc. (No. 6), Denso International Inc. (No. 9) and Eaton Corp. (No. 10) kept the same places they held in 1998.
But the rising sales numbers masked some darkness.
As a group, suppliers suffered swooning share prices last year as investors forsook parts makers for technology and Internet stocks. Many suppliers reacted by announcing share buyback plans to boost prices. Still others signaled their intent to pay off shareholders and take their companies private.
Few suffered as badly as Federal-Mogul. Chairman and CEO Richard Snell acquired four companies alone during 1998.
But the company stumbled in efforts to meet Wall Street's lofty earnings expectations. Investors reacted by sending Federal-Mogul's share price on a breathtaking decline of 77 percent since last July to a five-year low last week of $12.88. The company stood pat in the rankings at No. 27.
A number of smaller companies made big jumps in the rankings
Dura Automotive Systems, for example, which ranked No. 61 two years ago, now stands at No. 34. Dura CEO Karl Storrie acquired $130 million in annualized sales from his December purchase of the seat-track business from Meritor Automotive Inc. Earlier in the year, he acquired Excel Industries.
Which company rose the highest on the list? Paul Campbell started 1999 as president and CEO of the 146th-largest supplier to North America. Then his Hutchinson FTS Inc. - a supplier of anti-vibration products, fluid transfers and sealing systems - was combined with sister company Paulstra CRC Inc., a supplier of sealing systems.
Then Campbell acquired a unit of Harvard Industries Inc. with $135 million in sales. The acquisition pushed Hutchinson to No. 99.
Harvard, which has shed assets as it recovers from bankruptcy, took the biggest plunge; it dropped to 112 last year, from No. 59 in 1998.