JLR Business Gives Growing IAC Piece of Premium-Car Sector

HALEWOOD, U.K. – The success of the Range Rover Evoque, which likely will surpass last year’s production total of 108,000 units, has turned supplier International Automotive Components into a premium-car specialist in Europe.

The company was formed by investor Wilbur Ross and investment allies in 2006 with the purchase of Collins & Aikman and the interior systems division of Lear with a strategy to put together by acquisition a company that could be a global leader in interior systems.

In 2008, when the automotive market worldwide began reeling from the international fiscal crisis, IAC bought a factory from Visteon at Halewood and gained the Jaguar Land Rover Freelander as a customer.

The supplier keeps a low profile, and at $4.5 billion in sales it is not a large Tier 1. But one thing it has learned to do is grow.

IAC has made 15 acquisitions throughout North America, Europe and Asia, and has invested in greenfield manufacturing sites in Asia to keep up with global customers.

A key European acquisition helping with market penetration in Germany was the Stankiewicz group, which had several soft-trim plants in Germany and Central Europe. The company had 11 plants in Europe in 2006 and now has 27, employing 8,000 people.

At Halewood, IAC went from one shift with 80 workers in 2008 to two shifts in 2011 when Evoque production began, and a year ago it added a third shift to bring employment to 500.

The supplier, which competes globally with Johnson Controls and Magna International for interior business, recorded sales of $2 billion in Europe last year, 36% from Jaguar Land Rover. BMW and Daimler accounted for another 14%. And with some Audi business likely within the 11.5% coming from the Volkswagen Group, IAC tips decisively into the premium camp.

Rien Segers, senior vice president-engineering, lists craftsmanship as the first market driver guiding company decisions.

It is not obvious to talk of craftsmanship when a new console, headliner and cockpit are produced every 82 seconds. However, IAC defends the choice with its wrapping line, where leather and leatherette polyurethane surfaces, sewn at its Coleshill plant, are married to the underlying plastic dashboard by teams of two workers, who must stretch the covers perfectly so the sewn seams don’t deform when the piece goes into a heated press to set the glue. The company says it has no rivals for such an operation at such a volume.

Four hours after JLR specifies the features on the components it wants, IAC delivers them just in time and in sequence to the JLR Halewood assembly plant 10 minutes away on the same piece of property. Decoma a second supplier located on the campus, produces bumpers just in time.

The Evoque is highly customizable and can be had in a million variations, the auto maker says. The dashboard doesn’t have a million varieties, but it does have hundreds, starting with left- or right-hand steering and 16 different surface treatments.

“For every hundred cockpits we ship, there are only five the same,” says IAC spokesman David Ladd.

Plant Manager Trevor Warner says six weeks of training new employees and a clever recruitment policy helped the operation grow fast and keep its fault level at 5 parts per million.

JLR was recruiting at the same time as IAC and drew 35,000 applicants for the 1,100 posts it required for its third shift that began operation in July 2012.

“I went fishing in different ponds,” Warner says.

After the growth spurt for the start of 2-shift production in 2011, he noticed the quality of applicants was dropping off toward the end of the hiring phase. So for the third shift, Warmer found qualified employees by advertising a little further away and aiming for people who had been in retail or other non-automotive jobs.

Strategically, IAC’s reliance on JLR business in Europe may be risky, but it is unlikely to change soon.

At the JLR plant, stamping operations are running 24/7 to supply the body-in-white shop with enough parts to keep 3,300 assembly line workers busy on three 8-hour shifts, Monday to Friday. Of the 121,000 vehicles made in 2012, 108,000 were Range Rover Evoques.

The Evoque waiting list has shrunk to four to five months, says spokesman Neil Rosce, but a new 7-seat Freelander with an Evoque-like grille is in development, seen running around the neighborhood from time to time in camouflage.

The JLR stamping plant is installing a new line, its 12th, that will have a capacity for 1,500 aluminum parts an hour, which compares to the 600 parts per hour from its best existing stamping line, some of which were in place in 1964 when Ford built the facility for Anglia-model production.

IAC is not talking about anything in the future, as it has applied for an initial public stock offering, but in all likelihood it will supply cockpits, consoles and headliners for the new Freelander, as it does with the current model.

In 2012, IAC lost $38 million on its sales of $4.7 billion, which gives the supplier 12% of what it estimates to be the global interiors market. But at Halewood, at least, the company appears to be profiting from its 100% capacity utilization.