Lear CEO Simoncini resigns; seating boss Ray Scott is successor
Executive declines comment on his future plans
DETROIT -- Lear Corp. CEO Matt Simoncini is resigning from the supplier, ending a six-year run in the company’s top job that took it from the aftermath of a bankruptcy to record sales.
Simoncini, 56, submitted his resignation to the board of directors Wednesday, with plans to leave on Feb. 28. Ray Scott, president of Lear’s seating business unit, will replace Simoncini as the top executive.
Scott, 52, will also be appointed to the company’s board upon Simoncini’s departure, the company said. Simoncini said he will be an adviser to Scott through next year.
“This decision was personal and reflects the strength of organization and was part of a succession plan,” Simoncini wrote in an email to Crain’s Detroit Business, an affiliate of Automotive News. “I know the best days for Lear are in front of us and Ray will be an outstanding CEO.”
Future plans unclear
Simoncini did not comment on his plans -- though he’s often been rumored to be a potential candidate for public office, specifically governor of Michigan.
He was named to Lear's top post in 2011 after the retirement of the late Bob Rossiter. He had been Lear CFO and chief accounting officer.
The candid Simoncini has become a vocal advocate for the city of Detroit. He is on the boards of Wayne State University Foundation, Detroit Economic Club, Business Leaders of Michigan, Michigan Opera Theatre and the Parade Co. He led the company to open its $10 million Detroit Innovation Center last year, an idea to boost technological transformation for the company and a return to the city in which it was founded and the place where Simoncini was raised -- he attended Clark Elementary on the city’s east side.
It’s unclear whether Simoncini will take on a new role tied to the city’s resurgence.
Simoncini joined Lear in 1999 after the supplier acquired competitor United Technologies Automotive, where he held senior financial roles. He rose through the ranks quickly at Lear, becoming the heir apparent to Rossiter after the company's bankruptcy.
Reorganization and turnaround
During the 2008 economic downturn, Lear’s value fell by as much as 90 percent because of collapsing pickup and SUV sales. Its stock price fell to $3 per share and the company filed for Chapter 11 bankruptcy in July 2009.
Simoncini, under Rossiter, worked tirelessly to create a prepackaged plan that was approved by Lear’s customers, union and bondholders hours before a major bond payment was due.
“We worked around the clock,” Simoncini told Crain’s in 2011. “At 1 a.m., we received the last commitment from our bondholders, putting us over 51 percent [approval]. We knew with very little uncertainty that this was the watershed moment for our plan.”
At the time of the deal, Lear’s stock was trading at around 40 cents. The prepackaged reorganization converted $3 billion of debt into a combination of new debt, convertible stock and equity warrants. Shareholders were wiped out during the process, but Lear stock has since skyrocketed, closing at $173.13 on Wednesday.
Lear reported net income of $975 million last year. In the recent third quarter, the company reported a 38 percent uptick in net income to $295 million as sales hit record levels after a key acquisition. Revenue rose 10 percent to $5 billion.
Lear has also been aggressive in acquisitions in recent years.
In January 2015, it closed on an $850 million acquisition of automotive leather supplier Eagle Ottawa. Nearly half of the cars on U.S. roadways contain leather supplied by Eagle Ottawa. It generated nearly $1 billion in revenue in 2014, up from $485 million in 2011.
Also in 2015, Lear bought the intellectual property and technology of Autonet Mobile Inc., a Santa Rosa, Calif., Internet-based telematics and app service provider for the automotive market, and acquired Arada Systems Inc., a Michigan automotive connectivity supplier that provides vehicle-to-infrastructure technology on roadways.
Lear also is building a plant on part of a massive former manufacturing site in Flint, Mich., the first major auto supplier plant built in Flint in three decades. The roughly 33-acre $29.3 million project, on the former home of Buick City, is expected to start production in April and employ about 600 workers when it reaches full production.
But it’s Detroit where Simoncini has wanted to make the biggest impact.
Lear has kicked around the idea of opening a factory in Detroit for several years, but to create the 500 to 1,000 new union-represented manufacturing jobs in Detroit, Lear has asked for a new classification at a lower hourly rate than at its other plants.
Simoncini discussed creating those jobs in the city instead of Mexico if it could attain a new wage tier with the UAW that pays in the mid-teens per hour with some benefits. A specified pay rate and benefits would need to be negotiated and are subject to moving up or down, the company had said.
Lear pays $35 per hour, which includes the cost of benefits, at its just-in-time seating plants and upward of $25 per hour at its component plants.
It’s unclear whether those plans will ever come to fruition. But Simoncini told Crain’s that his attention to Detroit wouldn’t define his legacy.
“I want to be remembered as the CEO that left Lear better than he received it,” he said in 2016. “This is my hometown. Of course I want to be part of its success. But we take pride in every community we work in, whether that’s Detroit or Munich or Beijing.”
Lear, headquartered just north of Detroit in Southfield, Mich., ranks No. 9 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $18.56 billion in 2016.
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