DETROIT - Siemens AG and Yazaki Corp. plan to combine some of their global business into three joint ventures that will serve Ford Motor Co., Renault SA and BMW AG.
The combination of Yazaki's vehicle wiring harnesses and Siemens' electronics to create electrical and electronic distribution systems would supply 2.3 million vehicles its first year. The volume could grow to as many as 7 million within five years, officials with both suppliers said.
The joint ventures were crucial in winning a major Ford contract earlier this year to supply the next generation Ford Explorer and as many as six variants that could be launched in 2005 as 2006 vehicles, according to sources familiar with the deal. At least one of the variants will have a 42-volt electric system to handle the heavy power demands of added electronics.
John Sanderson, CEO of U.S. subsidiary Siemens Automotive Corp., said the Yazaki-Siemens combination will serve as a driving force in advanced vehicle electrical and electronic distribution systems. He called it the next high-impact area in vehicle engineering and design.
More wiring demands
Automakers are demanding more complex electrical systems than just the basic vehicle wiring harness. Telematics, vehicle entertainment systems, smart airbags and other systems require a more sophisticated harness with electronics to control the switching of electrical power.
The new Ford business strengthens Yazaki's North American business, where it provides harnesses for the Big 3 as well as every major Japanese carmaker.
Yazaki Vice President George Perry, who is to be named president of Yazaki North America next month, declined to discuss the Ford contract.
But he said Yazaki 'is now positioned to become Ford's largest global wiring harness supplier.'
Other major Ford contracts
Alcoa Fujikura Ltd. is believed to be Ford's largest wiring harness supplier.
But the Yazaki/Siemens ventures also were named as the designated suppliers on two other major Ford contracts, the sources said.
'They have an awesome combination,' said industry consultant Paul Hansen. 'Yazaki has significant penetration with every major carmaker in Japan. Siemens offers electronics and has deep pockets. I can't thing of a better combination.'
Yazaki is a global leader in wiring harnesses, which generated $4.2 billion in sales last year for the privately held company.
Siemens is a major electronics supplier, but its wiring business last year generated less than $500 million in sales.
Perry, who headed Siemens Automotive Corp. as CEO before his retirement there in December 1999, said the Siemens effort to find a joint venture partner began well before he joined Yazaki in early 2000.
Siemens was in the process of tuning its portfolio with more profitable businesses. The wire harness business is labor intensive and lacks the profit margin Siemens wants.
Siemens and Yazaki will share 50-50 ownership in two joint ventures, one based in Germany and the other in the United States.
They will provide the design, development, program management and sale of integrated vehicle electronic and electrical distribution systems.
Most of the employees for these ventures will come from Yazaki's operations in Detroit and Europe, and from Siemens' operations in Detroit, Regensburg, Germany, and Tou-louse, France.
A management board with equal representation from both companies will oversee the yet-to-be named companies.
Revenue projections were not disclosed.
The third joint venture will manufacture vehicle-wiring harnesses.
Yazaki is expected to have 75 percent ownership and Siemens 25 percent.
The company will include Siemens manufacturing plants in Slovakia, the Czech Republic, Lithuania, India, Turkey and Brazil.
Yazaki said the joint ventures would give it an increased presence in Europe and broaden its customer base.
The company also said the joint ventures could be operating by July.
Separately, Siemens Automotive is in the process of acquiring another German supplier, Mannesman VDO AG.