Visteon Shakeup

Ford Motor Co. is taking control of 24 Visteon Corp. plants and facilities in a $1.1 billion bailout expected to lighten its largest supplier's load and better position the parts maker for future growth.

The deal is dependent on approval by the 17,500 United Auto Workers employees of Visteon who would flow back or be leased to Ford under the agreement. Ford previously leased employees to Visteon, and those employees now return to the auto maker. If approved, the transaction is expected to be closed by Sept. 30.

Visteon, formed from a collection of disparate parts operations, was spun off from Ford in 2000 and now relies on the auto maker for 70% of its revenue. With the takeover, Ford will account for about 50% of Visteon's annual sales, which drop from $18.7 billion in 2004 to $11.4 billion.

Ford's plan is to take on Visteon operations that are not core to the supplier's strategy, including parts plants in the U.S. and Mexico and engineering facilities. About half of the operations are in Michigan.

Although Ford receives some climate control and interior component plants, those sectors will remain core to Visteon's business, as do electronics and lighting.

Ford will treat its new parts operations as a temporary Ford subsidiary. The group will be managed by retiree Frank Macher, who ran Ford's parts operations before becoming chairman and CEO of Federal-Mogul Corp. Macher will report to Greg Smith, Ford executive vice president and president-The Americas.

Al Ver, a 33-year Ford manufacturing executive, becomes the entity's president and chief operating officer, reporting to Macher.

Ford's plans hinge on its ability to successfully shed, close or absorb operations from the new portfolio by 2008-2009.

“Over time, Ford would prepare most of these transferred Visteon operations for sale to companies with the expertise and capital to supply Ford with parts, systems and technologies that are competitive in price and quality,” says Ford Chief Financial Officer Don Leclair.