The head of powdered metals parts manufacturer GKN Sinter Metals insists the buying spree by parent GKN plc is helping the industry and says acquisitions will continue even though it has bought 20 operations since 1997, including a controversial purchase of the largest U.S. powdered metals material producer Hoeganaes Corp.

“The weakness of the industry is that not enough money is being spent on innovation,” says Seifi Ghasemi, president and chief executive officer of GKN Sinter Metals, “often because the companies are too small.”

That's not a problem facing GKN. It has 35 plants in 11 countries, and will increase those numbers. GKN's expansionist business posture has sparked dissent because it already dominates the world market for powdered metal parts, which are used often to replace forged or cast auto components, such as connecting rods, main bearing caps and transmission parts.

GKN claims a 16.1% market share, compared to 4.4% claimed by its closest competitor Federal Mogul Corp. Besides its dominant stake, GKN even makes money off its rivals. Since purchasing Hoeganaes in 1999 to secure its own steady source of ferrous powders, GKN has been a top supplier to its U.S. competitors. Angered industry insiders blamed the U.S. Dept. of Justice for approving a purchase that paired the top material producer and largest partsmaker. Others predicted GKN competitors supplied by Hoeganaes prior to the transaction would switch to another source for ferrous powders. “We were determined to have our own material source,” says Mr. Ghasemi, explaining the Hoeganaes deal. “And there was a significant uproar. But we have demonstrated we are going to run the company in a very professional manner.”

Part of the displeasure aimed at GKN likely comes from its speedy consolidation of an industry personified for decades by small independent businesses. But Mr. Ghasemi says GKN's moves are improving an industry that slowed its own growth because it could not meet the demands of the global economy. Even with GKN's buying binge, more than 200 manufacturers make up 47.4% of the market. So it's easy to see why GKN has more acquisitions on its mind. “We are very interested in the Far East,” says Mr. Ghasemi, specifically mentioning interest in China. “In time, we have to have substantial operations there.”

With its global reach and $20 million spent annually on research and development, GKN believes it will be a primary player increasing automotive use of powdered metal parts in the U.S. from 30 lbs. per vehicle in 1998 to 40 lbs. per vehicle by 2002.

Predicted growth in Europe and Asia is slower because those markets have fewer 4-wheel-drive vehicles than the U.S., and GKN is counting on making most of its gains in transmission parts and driveline components.