Faurecia CEO Says North American Expansion Driving Rapid Growth
The Paris-based supplier holds the leading share of the North American interiors market thanks to its globalization strategy dating back to 2006.
DETROIT – Yann DeLabrière, chairman and CEO of interiors-systems supplier Faurecia, sees good fortune ahead for his company in North America, but admits its home region of Western Europe will continue to ride a rocky road well into 2013.
DeLabrière says the Paris-based supplier, majority-owned by French auto maker PSA Peugeot Citroen, holds the leading share of the North American interiors market thanks to the company’s globalization strategy dating back to 2006.
“Our top priority has been to become a global company capable of running global products and global programs, with all the purchasing capabilities and manufacturing capabilities to be everywhere in the world,” DeLabrière tells WardsAuto on the sidelines of an event here to open a new Faurecia manufacturing facility.
“Globalization is the primary driver of our expansion in North America,” he says, crediting moves by key customers such as Ford, General Motors and Renault-Nissan to shift to common global platforms.
Faurecia’s newest North American plant will supply interior systems to programs such as the Ford Mustang muscle car and F-150 pickup, two of the auto maker’s largest-volume products, which would vault it to the sixth-largest supplier in North America.
Just a few years ago, Faurecia’s ranked as the region’s 15th biggest supplier. Today, it’s the sixth-largest supplier in the world, delivering exterior parts and emissions-control technologies in addition to its interiors business.
The new Detroit facility is unique. The manufacturing venture is majority-owned by Wayne, MI-based supplier Rush Group, which will manage production. Faurecia retains a 45% stake in the so-called Detroit Manufacturing Systems, a Native American Women Owned Business enterprise.
“It’s a global deal that makes a lot of sense and positions Faurecia as the largest interior-systems supplier in North America and (it) allows us to concentrate on the part of the business that we know the best, the upstream technology,” DeLabrière says, adding the venture introduces the supplier to a minority-run business for the first time.
The move also will push Faurecia’s North American business this year to more than 25% of its global activities for the first time. DeLabrière credits growth in the supplier’s core German and premium-OEM customers. Both segments comprise 40% of its North American sales.
“The expansion of the German makers in North America underpins our growth,” he says.
North American production by Germany-based auto makers grew 22.8% to 8.9 million units in the first seven months of 2012, compared with year-ago, according to WardsAuto data. Sales of luxury vehicles in the same period increased 12% to 982,986.
DeLabrière says Faurecia benefits from being relatively new to the North American market in that it operates up-to-date facilities, making it a “reasonably cost-efficient” source for auto makers in the region.
Faurecia in recent years posted significant losses globally, and in North America until as late as 2007, when DeLabrière took over the supplier after predecessor Pierre Levi resigned amid a bribery scandal.
The restructuring has taken hold. Through June, Faurecia saw a 7% uptick in revenue, although the European debt crisis and uneven growth in other markets, such as South America, have kept a lid on operating-income gains.
Sales in the key North American and Asian markets soared 38.5% and 28.2%, respectively in the year’s first half, leading the supplier in July to raise its outlook to between €17.0 million and €17.4 million ($21.3 million-21.8 million) from €16.3 million and €16.7 million ($20.5 million-21.0 million) in February.
However, Faurecia does see a decline in operating income ahead, due to a forecast for further contraction in the European market of as much as 7%.
“We don’t see any (second-half) rebound,” DeLabrière says. “And unfortunately, we don’t see any rebound in 2013. So it is very important for us to build our presence in North America and Europe and be global.”
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