The proposed joint venture between Johnson Controls Inc. and Recaro North America Inc. is a bittersweet moment for Douglas Eriksen.
As a former Findlay Industries executive, Mr. Eriksen had worked for nearly a year trying to put together a joint venture between his company and Recaro.
When the Findlay deal fell through at the 11th hour, Mr. Eriksen decided he liked the prospects for the high-end German seatmaker. In September 1997, he moved less than a mile down the road from the Findlay headquarters in Troy, MI, to the Recaro digs in Clawson, MI, and took over as president and CEO of Recaro North America.
He already knew he'd have his work cut out for him.
While Recaro has high brand recognition in key markets of Europe and Japan, awareness in North America barely registers. But Mr. Eriksen was often called to lead turnarounds in his previous jobs at Findlay.
Besides capitalizing on's market penetration to gain more OEM business, Recaro also is working on joint ventures to provide additional seating to the commercial and heavy vehicle markets. The company also is developing a niche in office furniture and will offer child safety seats in the U.S. later this year.
Thedeal ends more than a year of haggling for Recaro, which has been seeking a North American partner. Recaro will own 51% of the joint venture, Recaro Johnson Controls LLC. A six-member board will run the operation, half from each company. The chairmanship will rotate every two years, with Mr. Eriksen taking the helm during the first shift.
Recaro officials initially talked withCorp., but last summer started talking to JCI.
Johnson Controls gains the expertise Recaro has in developing high-end specialty and luxury seating. The partnership should mean additional JCI business in special-edition vehicle interiors, says Rande Somma, JCI president of interior trim, marketing and business development.
Recaro will retain separate specialty, aftermarket, heavy truck and bus seating business in North America outside of the JCI partnership, says Mr. Eriksen. But Mr. Somma adds that in the future the two companies may consider cooperation outside the U.S.
Corp. and Motor Co. continue to place No.1 and 2, respectively, in the Fortune 500 list of the largest U.S. corporations for 1997, while Corp. moves up to seventh from ninth. These rankings are based on revenues, however, not profits. GM's revenues climbed 5.8% to $178.174 billion and Ford's rose 4.5% to $153.627 billion. GM's $6.698 billion profits bested 1996 by 35%, and Ford's profits zoomed up 55.6% to $6.920 billion. Chrysler's revenues were steady at $61.147 billion, but profits dropped 20.5% to $2.805 billion. Despite their profit gains, GM ranked only fifth in that category, while Ford was fourth. No.1 profit maker: Exxon, which netted $8.5 billion on $122.4 billion sales, the latter placing it third in revenues behind Ford. Chrysler finished 29th on the profit side. Fortune's awesome statistical compendium is loaded with startling facts. Based on market value, GM's shares at $54.2 billion ranked No.40 and Ford's $73.9 billion finished 21st. Compare that with General Electric Co., which led the pack with a market value of $260.1 billion - five times GM's. GE's $90.8 billion revenues put it in fifth place behind GM, Ford, Exxon and Wal-Mart, but its $8.2 billion profits ranked No.2 behind Exxon. Looked at in yet another way, GM's profit percentage on revenues was 3.8%, placing it at a lowly 305 in that important category. Ford's was 4.5%, good for 268th. Chrysler's 4.6% finished in 264th place. The leader: Microsoft with 30.4% by earning $3.5 billion (15th spot in overall profits) on $11.4 billion revenues (137th on that scale). And how about this factotum: Intel's $25.070 billion revenues ranked 38th, but its profits at $6.945 billion beat out both GM and Ford to finish third on the Fortune list behind Exxon and GE.