Vehicle production set a record in 2000, but it didn't translate to record revenue for North American suppliers.
Delphi Automotive Systems Corp. and Visteon Corp., the two largest automotive suppliers, as well as No. 5 Dana Corp., had lower sales of original-equipment parts last year, according to the Automotive News list of top 150 suppliers to North America.
The top 10 companies reported $85.5 billion in North American sales in 2000, up 2.9 percent from $83.1 billion in 1999. Seven of the top 20 suffered a decline, in contrast to 1999, when all of the top 20 had higher sales. Overall, 46 of the top 150 companies showed year-to-year declines.
The 150 companies on the list posted overall North American original-equipment sales of $191.7 billion, up 5.1 percent from $182.4 billion in 1999.
Dana was the hardest hit among the top 10, with North American sales of original equipment dropping 9 percent for the year. The decline caused the company to fall to No. 5, from last year's rank of No. 3. The Toledo, Ohio, company was hurt by production cuts for light and heavy trucks during the last half of the year.
Magna International Inc. fared the best among the top 10, gaining more than 19 percent in 2000 and keeping the No. 6 spot. TRW Inc., Denso International America Inc., Johnson Controls Inc., Robert Bosch Corp., ArvinMeritor Inc. and Lear Corp. were the other top 10 companies that had higher original-equipment revenue in 2000.
The July combination of Meritor Automotive Inc. and Arvin Industries Inc. created a new top 10 player. ArvinMeritor Inc. ranked No. 9 on the list for 2000.
Former top 10 member Eaton Corp. fell to No. 13.
Hurt by slowdowns
Production slowdowns were key reasons behind the sluggish performance of many of the top 150. Though 2000 light-vehicle sales came in at a record 17.4 million vehicles, up 2.7 percent, the market skidded during the last few months of the year, especially among the Big 3.
The heavy-truck market, which affects fewer suppliers, boasted robust numbers until June; then sales plunged 23.4 percent through the end of the year.
'The first half of the year was exceptionally strong; production not only set records, but significantly exceeded prior records,' said Greg Salchow, equity analyst for Raymond James in Detroit. 'But then in the fourth quarter, for some automakers, production almost dropped off a cliff.'
Other factors included continued price pressures from automakers; grabs for market share by competitors, especially some European suppliers; divestitures by some companies; and a slowdown in merger activity.
In previous years, aggressive acquisitions had fueled the growth of many suppliers, but major deals were less frequent in 2000 as supplier stocks languished and lenders tightened credit.
But consolidation will continue, especially among smaller companies, said Jeff Sands, managing director of the automotive investment banking practice at Raymond James. A case in point: Meridian Automotive Systems doubled its North American sales and leaped from No. 68 to No. 42 on the list after its July acquisition of Cambridge Industries Inc.
The bar rises
The cutoff point to make the list grew. The 150th company on the 2000 list - Tokico USA Inc. - had $216 million in North American original-equipment sales. In 1999, the 150th company - Neaton Auto Products Manufacturing Inc. - had sales of $178 million.
The number of suppliers at the $1 billion and $500 million levels increased slightly. Last year 42 companies surpassed the $1 billion mark, compared with 39 in 1999. Seventy-nine companies posted more than $500 million in North American original-equipment sales, up from 77 in 1999.
The 2000 list also underscored the growth of European suppliers in the North American market. European companies making significant moves up the list included Autoliv at No. 24, Continental AG at No. 25 and ZF Group at No. 30.
'The playing field is more even today than it was in the past in terms of penetrating the North American market,' Sands said.
That balancing of the market should continue in 2001, along with more declines for suppliers as production falls. Light-vehicle sales are expected to drop to 15.5 million to 16 million units. Sales of heavy trucks are expected to suffer even steeper declines.
More severe price pressures from customers, especially the 5 percent demand from troubled DaimlerChrysler, also will be felt on 2001 North American sales.