Metaldyne CEO Sees Future Without Life Support

To some, Tim Leuliette's vision of the future sounds like a dark science fiction movie: a hydrogen-powered world full of cruel choices and the walking dead.

But to Leuliette, who is both CEO of Metaldyne Corp. and co-CEO of Asahi Tec Corp., the future is an orderly Darwinian world, where the strong thrive because the weak are culled from the herd, and superior technology leads to a cleaner, more prosperous place to live.

Speaking at the recent Global Automotive Conference in Louisville, KY, Leuliette says by 2015, Chinese auto makers will be the second-largest exporters of vehicles to the U.S., and there will be only 10 major auto makers selling fewer brands.

And, even before private-equity firm Cerberus Capital Management LP announced plans to acquire the Chrysler Group, he predicts private equity will consume and transform the auto industry, mercilessly and with laser-like precision.

“In the end, it will come down to performance and economics,” Leuliette says. “If assets are underperforming, there will be no stopping this incubator of change. That is what private equity does. That is what it has always done.”

But that's a good thing, he tells attendees here, because the auto industry is separating into two groups: the quick and the walking dead.

The walking dead are the sick companies with broken business models that are dragging down the rest of the industry. They are kept on life support by bankruptcy laws or customers who are afraid to lose a supplier that will keep prices artificially low.

It's better they die a swift and certain death, Leuliette suggests.

“Burdensome overcapacity is not expunged from our industry in a timely manner and tough decisions our industry so sorely needs are disastrously postponed,” he says.

Equally controversial is Leuliette's stance on hydrogen and ethanol.

By 2015, Japan, China and those countries that have implemented national energy policies to reduce their dependency on foreign oil will have a growing number of hydrogen-powered vehicles, while the U.S. will have fallen behind, its economy mired by $5 per gallon gasoline and an inability to reach consensus, he says.

“We will have learned that ethanol was but a crutch — and a very expensive crutch — and we will have wasted years in addressing the strategic redeployment of our energy needs with this inefficient consumption of our food stocks.”

The legacy of federal corporate average fuel economy standards will be that U.S. producers will build a vehicle fleet unsuited for the global market, Leuliette says.

“And as gasoline prices rise, unsuited for this (U.S.) market as well,” he adds.