DETROIT -- Less than three years after a group of private equity firms formed Cadence Innovation LLC, they are shopping the auto parts maker.
Falling Detroit 3 production has undercut Cadence's plans to gain the new business needed to assure long-term viability, say sources who requested anonymity.
"The interior trim segment continues to be plagued with excess capacity even after the exit of Collins & Aikman," says turnaround expert John Groustra of Conway MacKenzie & Dunleavy in suburban Detroit.
Private equity entered the automotive interior trim business earlier this decade because it appeared cheap and promising.
Since then Detroit 3 production has tumbled while raw material prices have climbed.
Last month at the Automotive News World Congress, investor Wilbur Ross said a 750,000-unit drop this year in North American sales would quicken supplier consolidation.
Cadence, of suburban Detroit, was created in 2005 when Harbinger Capital Partners, of New York, and Yucaipa Cos. LLC, of Los Angeles, bought assets of the former Venture Holdings Co. LLC out of Chapter 11 reorganization.
In early 2006, Cadence landed a major contract for the interiors for General Motors' Lambda platform crossovers: the GMC Acadia, Saturn Outlook and Buick Enclave. Cadence stepped in when Collins & Aikman abandoned the GM business over pricing issues. Last year GM named Cadence a supplier of the year.
Today, Cadence operates seven plants in North America and 12 worldwide. Global sales total $753 million.
Cadence spokesman Russell Chick declined to discuss company plans.