Johnson Controls Inc.'s $435 million acquisition of the automotive electronics business of Sagem SA of France represents a major strategic move that takes JCI well beyond vehicle interiors and batteries.
With Sagem, JCI will be a producer of fuel injectors and engine controllers, putting JCI in a market already saturated by Delphi Automotive Systems Corp., Robert Bosch GmbH, Siemens VDO Automotive and Denso Corp., among others.
Sagem's one U.S. plant — in Greenville, SC, supplies fuel injectors for gasoline engines. In Europe, Sagem's customers for fuel injectors and engine controllers are the French automakers.
But Sagem's business with U.S. automakers is growing. It has a contract to supply instrument clusters for a future car produced in the U.S. A decision has not been made on whether a new U.S. plant will be needed.
With $552 million in automotive sales, it's the instrument cluster business that made Sagem so attractive to JCI, says Jim Geschke, vice president and general manager of electronics integration. With Sagem, JCI will have the internal capability for integrating clusters in a fully dressed instrument panel (IP).
On the new Jeep Liberty, JCI supplies the full IP, but Mr. Geschke says his company doesn't make much money on it because other companies supply the necessary components. The bottom line: greater future profitability for JCI.
