Bayer pumps up plastics position; Monsanto acquisition adds $700 million to annual sales.

There's no end to the consolidation taking place among automotive suppliers. First-, second- and third-tier companies are trying to improve their position by expanding global reach, adding new technology and/or increasing their customer base by buying out other suppliers or entering joint ventures and strategic alliances.

Germany-based Bayer Corp. lacked an outlet for acrylonitrile butadiene styrene (ABS) in North America, so when Monsanto put its styrenics business on the block last year, Bayer was quick to open its checkbook.

For its $580 million investment, Bayer picks up Monsanto's Lustran resins, Triax ABS blends, Centrex weatherable polymers and Cadon styrene and maleic anhydride (SMA) co-polymer. The business had 1995 sales of approximately $700 million.

In North America, Bayer Corp. adds the Port Plastics manufacturing facility in Addyson, OH, an applications development center in Springfield, MA, and an automotive tech center in Auburn Hills, MI. Also included in the sale were plants in Muscatine, IA, and LaSalle, Quebec, which will be operated by Monsanto for Bayer.

"Adding ABS to our product line strengthens our position as a leading supplier of engineering resins," says H. Lee Noble, president of Bayer's polymers division. "It was a strategic move expected to boost our sales in key market areas, including the automotive industry and medical market."

The styrenic resins will complement Bayer's line of Makrolon polycarbonate, Apec high-heat polycarbonate, Bayblend PC/ABS blends, Makroblend PD/PET blends and Texin thermoplastic polyurethane.

"We expect the acquisition to start paying immediate dividends for Bayer and our customers," says Peter R. Mueller, Bayer senior vice president for plastics. "The synergies created by the combination of our engineering resin business and the styrenics business will allow us to provide our customers with a wider range of materials and more efficient service."

Mr. Mueller adds that the acquisition increases Bayer AG's worldwide sales from $2.3 billion to $3 billion and brings its total plastics sales to $1 billion. "We're roughly doubling our plastics business in North America," he says, adding that Bayer is now the No. 2 producer of engineering resins behind GE Plastics.

"Global presence is very important because of the world-car trend," says Mr. Mueller. "Bayer does make ABS in Europe, but not in the U.S. orasia. Now we can offer ABS around the world." He says Bayer is in negotiations to acquire an ABS plant in Thailand, a TPU Plant in India and a polycarbonate plant in China.

Plastics industry analyst Jim Best of Market Search Inc. in Toledo, OH, says Bayer got a good deal with the purchase of the Mon-santo business, yet there are caveats. "In the automotive plastics market, Monsanto has been a real leader," says Mr. Best. "But it's an uphill battle as ABS is losing share to polypropylene (PP) for automotive interior trim;

"The market share issue is significant and the trend is for it to continue," says Mr. Best, who adds that ABS is more expensive than polypropylene. In the last few years, the plastics industry has improved PP's heat resistance, resulting in a growing share of the pie.

Bayer's Mr. Mueller jokes that the Monsanto sign visible through the temporary Bayer sign on the outside walls of the Auburn Hills facility "is sort of symbolic of the transition."

Transitions and temporary signs abound these days in the supplier world. Recent examples:

Dana Corp continues consolidation feeding frenzy, mostly driven by increasing its global presence. Its acquisition of Michigan-based Mohawk Plastics Inc. is intended to bolster its sealing business. Mohawk will be part of the Plumley Companies, which was acquired by Dana in 1994.

On the global front, Dana's Victor Reinz Div. plans to take its multi-layer steel gasket technology to South America's freetrade area incorporating Argentina, Brazil, Paraguay and Uruguay. The new gasket operation will be in an existing Dana facility in Gravatai, Brazil, and is expected to reach $50 million in sales by 1998.

Johnson Controls Inc. is attempting to broaden its global reach by buying a majority interest in French interior manufacturer Roth Freres, which also manufactures seats for the European market.

Automotive glass producer Guardian Industries Corp. delves into the plastics market by acquiring Automotive Moulding Co., indicating a long-term business goal of adding interior trim to its glass offerings. This move also should give Guardian an advantage on complete window systems that include plastic interior trim components.

Stampings supplier Tower Automotive Inc. increases its customer base with the purchase of Masco Tech Corp. subsidiary Trylon Corp., which sells similar products to Ford Motor Co. and General Motors Corp. Tower's primary customers are Chrysler Corp., Honda of America Mfg., Mazda Motor Corp., Toyota Motor Mfg. USA Inc. and Nissan Motor Mfg. Corp., in addition to Ford and GM. Purchase price is reported to be $25 million.

Expecting to make an impact on the growing catalytic converter replacement market, Tenneco Automotive acquires catalytic converter manufacturer Perfection Automotive Products Corp. for an undisclosed price. It will become part of Tenneco's Walker Manufacturing exhaust system division.