Metaldyne Eyes Engine Block Business

Two more well-known names will creep out of the auto supplier lexicon after Simpson Industries Inc. and MascoTech Inc. are combined with a third supplier to create Metaldyne Corp.

The Plymouth, MI-based company wants to become the transportation industry's leading supplier of low-cost metal-formed components, assemblies and modules.

The driving force behind the new company is Heartland Industrial Partners LP, a private equity firm that is buying and consolidating automotive suppliers. Heartland acquired MascoTech in August for about $2 billion and Simpson in September for $350 million.

The last piece arrived Jan. 16 when Heartland acquired Global Metal Technologies Inc. of Solon, OH, a supplier of aluminum die-cast transmission, engine and chassis components, with $230 million in annual sales.

Combining all three companies, Metaldyne's annual sales exceed $2 billion, with 9,500 employees at 50 facilities in 11 countries. Interim President Tim Leuliette is planning two or more acquisitions to make the company bigger.

You see we don't have a big ductile iron position, he tells Ward's. You can see our aluminum die casting operation is very unique and very specific, but it is not broad enough. And we need to broaden ourselves in Europe a bit.

Mr. Leuliette sees major opportunities for Metaldyne as a systems supplier. MascoTech, for instance, produces forged powder-metal connecting rods, and Simpson does the fine machining. Seldom does the producer of the forging also machine a connecting rod. The company also supplies transfer case and transmission components.

And with GMTI, Mr. Leuliette tells Ward's it's possible Metaldyne could get into the engine block business (casting and machining), given the industry's migration toward aluminum engine blocks. He says his company can machine at one-third the cost of the OEMs.

Metaldyne is private, fitting with Heartland's strategy to acquire companies, consolidate them and eventually take them public. For example, the company recently acquired 60% of interior specialist Collins & Aikman Corp.

As for the Metaldyne name, Mr. Leuliette says he and other top executives thought it up by themselves without paying any high-priced consultants.

Heartland partner Cynthia Hess, when asked recently if Heartland was interested in operations divested by General Motors Corp., such as Guide Corp. or Peregrine Inc., says: Our goal is to go after the undervalued companies that are out there, not necessarily the underperforming.

We don't plan to be, don't want to be, turnaround specialists. So I would say that we wouldn't say no to any offers. But clearly we have a set of criteria as we go in and evaluate companies that we look for.

For the record, exterior lighting supplier guide was acquired Feb. 12 by Vehicle Lighting Inc. VLI was formed by turnaround specalist B.N. Bahadur of Southfield, MI.

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