Lear Corp. wants to divest its interior-trim business. Ideally, Lear would contribute the nearly $2 billion in trim sales to a joint venture with billionaire investor Wilbur Ross. But Ross so far has been unable to buy trim maker Collins & Aikman Corp., which is in Chapter 11 reorganization, to make the joint venture viable. Lear said last week it may also consider an outright sale of the business.
Lear President Douglas DelGrosso discussed the future of Lear's trim operations with Staff Reporter David Barkholz.
How confident are you that Wilbur Ross will be able to acquire Collins & Aikman and put the assets in a joint venture with Lear?
He's well-positioned to do that through his ownership of some of the secured debt. The combination with Lear addresses the issue he has: the management team to actually operate the venture. We believe it provides a good answer to the problem.
How is the financial performance of the interiors business right now?
Very financially stressed. It's had a negative weight on the overall performance of the company. If we look at our three business segments, our electronics business is very strong.
Our seating business just went through a transitional year in 2005 where it rolled over about 70 percent of its business but still maintained a relatively healthy return on that business. 2005 was difficult on our interiors business, and 2006 is marginally better but still a negative.
How long can you carry the interiors business?
With the market relatively stable, we can continue to support that business if we choose to support it. We need a strategic solution to it. Right now our focus is on Ross and Collins & Aikman.
But if at some point that doesn't turn out to be an attractive alternative for our shareholders, then we'll look for other ways to address our issues. Our immediate focus is to continue to fix the business so that consolidation is a better fit for everyone.
Are you winning new business in interiors, or is it treading water?
We've been relatively successful. But we're selective about the business we win.
We're launching a brand new plant in San Antonio for Toyota, for instance. It'll supply small trim. In that case, we're continuing to support that investment.
You may e-mail Dave Barkholz at [email protected]