TOLEDO, Ohio - Faced with pressure to conserve capital, Dana Corp. Chairman Joe Magliochetti plans to expand the company's global presence by making its Brazilian plants more efficient and shifting some Brazilian assets to other countries.
Magliochetti, who became chairman in April, said, 'What we're focusing on now are ways in which we can redeploy those assets to developing countries, like China, like Thailand - various places where we know there are growth opportunities - and making better use of those assets, and at the same time better leveraging our investment in Brazil. It will take place probably over the next three to five years.'
2005 is target
This falls in line with Dana's Transformation 2005 plan, which states the Toledo, Ohio, supplier's goal to support its global customers and pursue markets outside North America where it can achieve an 'appropriate' return on investment by 2005. By reallocating assets, Dana can follow its transformation strategy without having to spend additional capital.
Dana ranks No. 3 on Automotive News' list of the top 150 suppliers to North America and No. 8 on the list of the top 100 global original-equipment parts suppliers.
Magliochetti's plan for Brazil is to find opportunities where it makes economic sense to tool Dana's machines so they can serve customers in all three of its major product segments: automotive, commercial vehicles and off-highway vehicles. Dana has plants that serve these three markets individually.
The goal is to triple the company's return on assets on those operations.
Dana also will look for synergies with existing plants before building new plants in Brazil. This strategy also may result in Brazilian plant closings, but none are planned.
The focus on cooperation among plants is a way of reducing investment in markets with volumes much lower than they are in North America.
36 locations in Brazil
In Brazil, Dana has more than 6,000 employees and 36 facilities that manufacture and assemble key products such as driveshafts; engine, chassis and sealing components; and structural products such as frames. Dana supplies all major automakers with operations in Brazil.
Dana has a Brazilian plant that in 1998 began supplying complete chassis to DaimlerChrysler for its Dodge Dakota pickup. The chassis includes a frame, axles, driveshaft, suspension and other parts that are provided on a just-in-time basis to the automaker's plant in Campo Largo, Brazil.
Although 65 percent of the world's population of vehicles is outside North America, about 70 percent of Dana's business is in North America.
'We're interested in growing within that 65 percent opportunity, but only if we can do it competitively and achieve a reasonable return on our investment,' Magliochetti said.
Less than 5 percent of Dana's $13.2 billion in 1999 revenues came from Asia. The supplier has three operations and 600 employees in China.
The company's two Chinese plants make filters and driveshafts. Dana's two plants in Thailand manufacture driveshafts and axles.