Thierry Morin has been chairman of Valeo's management board since March 2001. He took over from Andre Navarri, who was forced out by major shareholder CGIP after disagreements concerning the company's strategy. Morin, 50, joined the French supplier in 1989 as financial director of the clutch division. He was appointed vice president for finance, strategic operations and purchasing in 1996, senior vice president in 1997, and then chief financial officer in 2000. Morin talked to Automotive News Europe's Edmund Chew.
How does 2002 look for Valeo?
We keep gaining market share. But during eight years of industry growth in Europe, we developed a lot of bad habits. It is important to take the opportunity of -- if not a downturn, a plateau -- to restructure and get fit again for the next period of growth.
How is Valeo's restructuring going?
I am always dissatisfied because we have given ourselves some difficult targets. But, in terms of management, we have filled 80 senior positions. We have hired almost 2,000 engineers in research and development and in manufacturing.
How are Valeo's various operations performing?
In engine cooling, we are out of the poor situation that we were in at the beginning of 2001. I believe this branch is really back in shape. In lighting, it has been more complicated. You must change your manufacturing process because a part that used to be purely functional is now a cosmetic part. Our market share is holding up very well, but our costs are far too high because of this new styling trend.
What is the current situation at Valeo Electrical Systems, your troubled US operation in Rochester, New York?
We are negotiating with the unions and I hope we can get a convergence of viewpoints. Rochester lost E70 million in 2001. The factory has progressed in manufacturing efficiency, but we really need to eradicate these losses before it is too late.
How intense is the pressure to cut prices?
The pressure is always high. I have never seen a period when there was not high pressure on prices. But a company can accommodate this pressure through technology. If you have a unique technology, then you are not under as much pressure. Alternatively, you can offer some productivity gains. We had 170 plants when we started our recovery program in March 2001. Now we have 143. We have a better cost structure [with] the same products in fewer plants. In purchasing restructuring, we reduced the number of suppliers by 900 in 2001. I want another 600 in 2002. That will give us just over 3,000 suppliers.
Why are you doing that?
We had acquired supplier relationships with our various acquisitions. If you do not create synergies [with an acquisition], it is not profitable. If you want to create synergies, you often have to change suppliers.
How are customer requests changing?
We are getting more engineering and systems business. We are working on projects that are complete domains.
How does that work?
For example, Valeo created rain and speed sensors -- you integrate that with specific computers and actuators and you have an automatic wiper system that doesn't require switches anymore. In lighting, Valeo created light or tunnel sensors, and you have headlamps that switch on automatically when needed. We can combine things for the client at acceptable prices. We can actuate the wiping and headlamp systems with only one sensor. It is not only a matter of cost, but also of space. It is better to have just one sensor rather than three.
Which areas will grow fastest?
Electrical and electronic. Valeo has more than half its business in the electrical and electronic areas. When I joined Valeo, 85 percent was mechanical.
You have several alliances. Do they create advantages?
We created several alliances over the last five or six years. We have one in lighting with Siemens in North America, called Valeo-Sylvania. We created a partnership in Japan in clutches and transmission components, and we took a financial stake in [Japanese lighting supplier] Ichikoh. And we have a joint venture with Bosch in the air-conditioning business, called Zexel. In each we are looking for cross-fertilization in technologies. This is how it works: Valeo helps its partners in manufacturing capability and management control, while we get new technologies.