THE GLOBAL AUTO INDUSTRY IS LOOKing at a period of “strong cash generation over the coming cycle,” says James Kamsickas, co-CEO of International Automotive Components and president ofGroup North America and Asia.
While uncertainties are numerous, he says, three fundamental factors are aligned positively:
- Growth is assured in coming years, thanks mainly to emerging markets.
- OEMs and suppliers have improved their balance sheets by reducing debt and improving their borrowing power.
- Profits are rising, even though U.S. volumes are relatively low.
Kamsickas says he is a simple guy from a simple supplier, with a strong belief that the industry needs to “stick to basics, but make sure you know what they are. Maintain a conservative balance sheet and focus on invested capital.”
Smart capital investment is crucial, he says. While capacity has been restructured in North America and particularly in the vehicle-interiors business, future investments must be made intelligently.
“Pick your spot; put it in the right location,” Kamsickas says. “You can't overspend. Your business is cash generation. We need to focus on returns vs. margins and allocate investments across the growth regions.”
One changing element atis that investments supporting recycled and lighter-weight materials are moving up in priority. The supplier also is making capacity investments where growth will occur.
Capacity to make interior systems was reduced during consolidation of the industry.
Global suppliers for interiors numbered about three dozen in 2006, but that has fallen during the economic crisis to about a dozen.
IAC is a result of consolidation. Private venture capital from Wilbur Ross funded the purchase of operations fromand Collins & Aikman in 2007.
For complete coverage of the CAR Management Briefing Seminars, go to: