North American and European automakers will outsource about three-fourths of their seats by 1998, andSeating Inc. (LSI) is taking steps to make certain more backsides on both sides of the Atlantic are cushioned by its seats.
Already the No. 1 seat maker in North America with 34% of the $3.9 billion outsourced market -- Johnson Controls Inc. is hot on its heels with a 32% share --plans to stay in the cat bird's seat here and grow in Europe. By 1998, analysts say 17 million to 18 million light vehicles will be sold in North America and 16 million to 17 million in Europe.
"Based on future purchase orders, we will up our share (of the seating market) in North America to 39% by 1998," says Lear Chairman Kenneth L. Way. In Europe, Lear plans to get 20% of the burgeoning outsourced seat market that he predicts will nit $3.1 billion in 1998, up from $1.5 billion in 1993, as the major European automakers move that work outside the company.
About 71% of the seats will be out-sourced by 1998 in Europe, says Mr. Way, compared with only 41% in 1993. In North America, it jumps from 65% in 1993 to 78% in 1998. As the scramble for extra share shakes out, Mr. Way naturally predicts more North American market share by 1998:
* LSI - 39% (35% in 1993)
*- 31% (32% in 1993)
*International, 13% (9% in 1993)
* Other stays constant at 21%.
Lear boughtMotor Co.'s Mexican seating operation in 1993. With current annual sales of about $500 million that'll boost the bottom line in North America, even with the devaluation of the peso, says Mr. Way. "We don't feel it will have a major impact on our $3.1 billion in sales (forecast in '94, compared with $1.95 billion in 1993)," he says, nor does he expect much of an effect in the future. "The production market is good because there is need to export to the U.S., and that is our market."
Lear plans to attract even more business by becoming a full interior systems supplier between now and the end of the decade. Mr. Way says Lear Seating still needs side panel, headliner and soft-trim instrument panel operations to complete the circle. "We are working with consultants to find those companies," he says.
Adding those components could double the size of Lear's market from $9.6 billion to $20.4 billion, says John Casesa of Wertheim Schroder & Co.