DETROIT -- At Visteon's headquarters in a western suburb, technicians are preparing a durability test for the audio speakers in a set of four pickup doors.
The four white door panels are installed in jigs, which will jiggle every latch and handle until something breaks. This is standard test procedure for an automotive supplier, but for the workers in Building 25 it's a new lease on life.
This year CEO Tim Leuliette announced Visteon's electronics unit would be one of the company's two core operations, along with heating, ventilation and air conditioning systems. Both divisions have passed two key tests: Each is profitable, and each is global.
"These are strong businesses ... with strong global positions," Leuliette told Automotive News. Automakers "are looking for suppliers that have a global presence and the technology to bring value."
You can boil this strategy down to three precepts:
1. Strive to be No. 1 or No. 2 in each product category.
2. Each product must be profitable; no "loss leaders" allowed.
3. If you can't afford the r&d, sell the operation to someone who can.
Like Visteon, many suppliers no longer want to be an automotive "department store" that stocks every major component.
Companies such as Delphi Automotive and Johnson Controls Inc., behemoths once known for vast product lines, are selling noncore divisions so they can focus on their specialties.
"It's better to be smaller and more profitable than larger and less profitable," said Leuliette.
This trend is mostly good news for automakers. By focusing on core products, suppliers can afford bigger investments in r&d and global production.
By contrast, vendors that market a wide variety of components often offer low prices for so-so technology. In the long run, a supplier that spreads itself thin risks financial ruin -- like Visteon, after Ford Motor Co. spun it off in 2000.
At the time, Visteon was a $19 billion giant that produced seats, interior trim, batteries, HVAC systems, instrument panels, headlights and more.