DETROIT - US-based supplier Visteon is transforming itself into a Third World manufacturer.
Ford Motor Co.'s former parts operation has emerged from its recent bailout as a leaner company that is betting its future on low-wage Mexican and Asian operations.
A new, lower-cost Visteon could pose a competitive threat to European suppliers with operations in the US ranging from electronics giant Robert Bosch to climate control supplier Behr.
In a confidential presentation, Visteon CEO Michael Johnston detailed an ambitious plan. His goal: Slash the company's average wage and benefit structure in North America to less than
$8 (nearly E6.70) an hour.
Currently Visteon's average North American wage is $17 an hour. Visteon workers in Mexico receive a wage and benefit package of about $3.25 an hour.
The draft copy of that report was obtained by Automotive News, Automotive News Europe's sister publication.
"After restructuring, we will have the most competitive North American footprint in the industry," according to the remarks in the report.
Automotive supplier analyst Craig Fitzgerald says Visteon's $8-an-hour wage-and-benefit target could be bad news for other Tier 1 companies with extensive US operations. "It could put pressure on them to move out of the United States," says Fitzgerald, a management expert at Plante & Moran, in Southfield, Michigan.
To help Visteon, Ford will take back the 23 operations from the supplier. This will leave Visteon with 120 factories around the world - and just 19 in the US.
Johnston now turns to Visteon's 14 plants in Mexico as the engine of growth in North America.
The Mexican factories make satellite radios, instrument clusters, family entertainment systems, instrument panels, heater cores, air conditioning and lighting.
With the Ford bailout, Johnston was handed a radically altered company. Before the rescue, Visteon relied on North America for 63 percent of its revenue, or $12.3 billion.
After the bailout, that dependence should drop to just 39 percent, or $4.6 billion. Visteon's global annual sales should shrink to $11.4 billion from $18.9 billion.