ZF Scores 1st GM Axle Contract

The ZF Group found a great opportunity to land its first axle-system contract for General Motors Corp.

But the German supplier has to go halfway around the world for it.

ZF announces at the North American International Auto Show it will supply GM's Holden Ltd. with front and rear axle assemblies for a new vehicle that begins production in mid-2006 as an '07 model.

ZF has five facilities employing 150 people in Australia, but no axle production, until now. The new plant will employ about 200 people.

Crews have cleared a site in Adelaide, northwest of Melbourne, in an industrial park adjacent to Holden's assembly plant, says Jim Stacey, president and chief operating officer of ZF Lemforder (chassis and axle business).

He identifies the vehicle as a car, rather than a pickup, but declines to specify volumes or say if it is front- or rear-wheel drive. Although the plant is being built to supply GM Holden, Stacey says it could accommodate other customers as well.

The new business in Australia fits with ZF's aggressive growth strategy in Asia/Pacific. The supplier has opened several plants in the region in recent years, specifically in China.

“We've had a long-term philosophical direction of following the customer wherever they're going around the world to build cars,” Stacey says. “And if they're going to build cars, then more than likely we will be with them very nearby to build the components or systems they need.”

In Shenyang in northern China, for instance, ZF supplies full axle assemblies to a BMW AG joint venture, with components for the axle assemblies shipped from as far away as Europe and South Africa.

For the Holden contract, a small number of parts may come from the U.S., Turkey and China. However, ZF is attempting to source many of the axle components directly in Australia to keep costs down, says Julio Caspari, president of ZF Group North America.

The opportunity to supply the world's No.1 auto maker was highly enticing, even as far away as Australia. “It was available business, and we wanted it,” Caspari says.

Elsewhere in the U.S., ZF continues integrating its North American operations into its new technical center in Northville, MI. The center, incidentally, will lead module-engineering activities for the Holden contract. The facility will add 150 new jobs during the next four years.

Caspari says ZF revenues worldwide in 2004 were about $12.8 billion, and that North American sales of $1.9 billion reflect the dissolution in 2004 of joint ventures with Ford Motor Co. (continuously variable transmissions in Batavia, OH) and ArvinMeritor Inc. (heavy-truck transmissions).

Ford and ZF jointly ran the Batavia plant for four years until the auto maker took control of the operation a year ago.

The CVT, which features a significant amount of ZF engineering, appears now in the Ford Freestyle cross/utility vehicle and Ford Five Hundred and Mercury Montego sedans. Caspari says he has driven the cars and finds the CVT enjoyable.

“The CVT is very smooth,” he says. “You have to get used to it because you are expecting the shifting all the time and it (the shift) never comes. When you look at the price, it is effective overall.”