The ante is raised in the battle to create the holistic interior supplier for the 21st Century.
Johnson Controls Inc.'s $1.35 billion purchase of Holland, MI-based Prince Automotive temporarily puts's annual revenues close to or slightly above that of arch rival Corp. (Projected 1996 automotive revenues of $6 billion. Lear's 1995 sales were $4.7 billion and it has since added Masland Corp.)
But as bothChairman James H. Keyes and Prince President John Spoelhof insist, this deal isn't about size. JCI gains Prince's R&D firepower in headliners, interior door panels and onboard electronic information. For Prince, the main attraction is JCI's European manufacturing network that can catapult it from an intriguing fast-growing Western Michigan enigma into a global player. Prince has seen its work force, nearly all in the Holland area, double to 4,500 since 1990, but up until now it has had no presence in Europe or Asia, something most OEMs are requiring.
About 30% of JCI's automotive business is done outside North America and it operates about 50 just-in-time seating plants in Europe.
"We look at their infrastructure around the world and we say, 'Wow! We could be there tomorrow,"' says Mr. Spoelhof. Except for one Mexican plant, all of Prince's manufacturing is now done in seven plants in and around Holland. Prince, unlike JCI, has no collective bargaining agreements with any labor unions.
The suitors, including, have been lining up along US-31 ever since founder Edgar Prince's tragic death from a heart attack in March 1995. His widow Elsa, who assumed his role as chairman, says, however, that her husband had been mapping a global strategy that would have required selling sooner or later.
"If Ed were here, it still would have happened the same way," says Mrs. Prince.
Mr. Spoelhof will remain as president and CEO of what becomes the Prince Div. of Johnson Controls Inc., and Holland becomes the headquarters of JCI's automotive interiors business, except for its core product seats. That business will continue to be run from its Plymouth, MI, engineering center.
While JCI in the U.S. has been a peripheral player in headliners, adding Prince will more than double its share of the North American market from 9% to 21%, according to a study by Lansing, MI-based CSM Corp. It also adds incrementally to JCI's door panel business. But Prince's headliner technology is far more sophisticated, especially in the area of overhead consoles.
It shows up in products like HomeLink, which integrates a garage-door opener and home-security lighting feature into the sun visor, and AutoLink, which brings together satellite navigation and two-way paging technology.
Prince executives believe their expertise in adding electronic content to overhead consoles should complement the instrument panel joint venture JCI entered earlier this year with Japan's Inoac Corp.
Mssrs. Keyes and Spoelhof say there will be no layoffs or plant consolidation. Right now the honeymoon continues. But the deal, which will probably be consummated this fall, does fold Prince's insulated and publicity averse corporate culture into a large publicly held company that must face up to the demands of Wall Street and the probings of a curious press.
"They have kept very much to themselves. They have never even had a Detroit sales office," says Craig Cather, president of CSM.
Indeed, during the press conference announcing the acquisition, Prince officials sheepishly recalled that Edgar Prince's only authorized media interview occurred in the late 1970s or early 1980s. After feeling he was misquoted, he vowed never to speak on the record again.
"We are control freaks around here," says one Prince executive who asked not to be named.
What JCI gains:
* An innovative partner that spends heavily on research and development
* Added value in headliners
* Added door panel business and capacity
What Prince gains
* Ability to compete globally
* Access to money for capital and technology
* Critical mass to remain a Tier 1 player into the 21st Century
Even though the two companies will span nearly every interior component a vehicle needs, both Mr. Spoelhof and John Barth, executive vice president of JCI's automotive systems group, remain skeptical that their original equipment customers will be demanding complete interior modules any time soon.
Lear Chairman Kenneth L. Way has been a strong advocate of the concept of an interior pod that a Tier 1 supplier will deliver to the assembly plant where it will simply be inserted as one piece into the body of a car or truck.
"I'm not sure the customer is ready for a total interior as it is defined today in the press," Mr. Spoelhof says. "When they decide they are, we will be able to deliver it, but that is not necessarily what we wake up in the morning thinking we must sell."