Metal Bender No More

ArvinMeritor Inc. jumped into the light-vehicle chassis business head first in 2002, when it began developing three suspension modules off one common platform for the '05 Jeep Grand Cherokee.

Having proven itself to its largest customer on an important vehicle contract worth $200 million, the Troy, MI-based supplier grabbed another $150 million worth of business with the '05 Dodge Dakota pickup and will continue the streak by supplying another Chrysler Group product — likely the C-Segment Dodge Caliber (Neon replacement) — later this year.

Now ArvinMeritor would like to ride that undercarriage success toward additional future growth, partly as a way to diversify. But the company also wants to use its entry into that sector as a way to prove it has the capability to provide a bulk of the content on a vehicle program in the U.S. or Europe.

The ultimate endgame in the undercarriage business is for ArvinMeritor to hone a complete start-to-finish capability, beginning with component design and ending with production.

The supplier currently is designing future undercarriage components at a new 22-engineer development facility in Troy and building modules in Detroit at a 300-worker factory that turns out sunroofs and 1,100 suspension modules daily.

Its undercarriage business is estimated to grow to $600 million annually by 2008, says Sidney Del Gaudio, vice president and general manager-Light Vehicle Systems (LVS) Undercarriage Systems. Suspension modules will carry much of the load.

Annual LVS revenue, derived mainly from exhausts, door systems, roof components, filtration products and wheels, totaled $4.8 billion in 2004 on a global basis — with Europe buying 48% of its parts, North America 43% and Asia and others 9%.

The undercarriage sector, which theoretically could include a smorgasbord of components, is seen as an ideal way to expand both ArvinMeritor's customer base and technological capability.

“The suppliers that have (complete) systems are the suppliers that are going to survive in the future,” Del Gaudio says, pointing to a struggling supply chain falling victim to bankruptcy as proof that only the strongest suppliers will last.

In order for the fledgling undercarriage unit to be competitive, it has to extend its reach globally beyond Chrysler, which is virtually down the road from the supplier's headquarters.

ArvinMeritor utilized the annual Vehicle Dynamics Expo in Stuttgart to reveal recent moves to target European OEMs. The supplier says it has scored some new undercarriage business and is in deep talks with auto makers on additional programs, but declines to be specific about potential customers and contracts.

Officials say European OEMs typically view ArvinMeritor as a “metal bender” and want to be assured the supplier has the electronics expertise to produce entire chassis modules, which increasingly require integrated active safety sensor technology and electronics to improve handling.

Del Gaudio points to the Grand Cherokee's three different suspensions as proof ArvinMeritor can handle the “active and integrated” requirements of future chassis. ArvinMeritor's Commercial Vehicle Systems unit, which has a rich chassis pedigree rivaling Dana Corp., is leading the research into electronic controls.

The supplier's production-ready LVS suspension portfolio includes a cross-car cradle module, wheel-end module and coil-over-shock module. The coil-over-shock unit is supplied to Magna Steyr Fahrzeugtechnik AG & Co. KG, which assembles the Grand Cherokee in Graz, Austria, for the European market.

Europe likely will get a bigger taste of ArvinMeritor's suspension capabilities with the Caliber, which bows in the U.S. in the fourth quarter and hits Europe shortly thereafter.

The company has dished out a portion of the $438 million in total research and development dollars spent since 2002 towards four other not-yet-released electronically enabled systems: air suspension, active roll control, active damping and hydraulically coupled electric power steering.

The air suspension will be in production by 2008 on a European vehicle and likely will meet the needs of a higher-echelon vehicle.

ArvinMeritor is developing the electronic steering with Techco Corp., a private automotive steering technology firm. The partnership shows ArvinMeritor's willingness to delve deep into the supply chain to offer new technologies previously considered non-core.

The steering system could change the way electronic steering components are packaged, because it doesn't need to be placed on or near the rack, Simon Dean, manager-LVS Advanced Undercarriage Systems says. The unit promises to compile active return, autonomous parking, lane departure warning and fuel-sipping technologies in one control box.

ArvinMeritor admittedly is late to the game when it comes to undercarriage development. But the supplier is looking to leverage that tardiness by offering simpler, more interchangeable solutions that ultimately reduce cost and complexity, Dean says.

The supplier's undercarriage unit lives and dies by the “let's start simple” mantra, bucking the rush-to-market trend of including every failsafe component and sensor possible for durability and performance reasons, then simplifying as the technology proves out.

ArvinMeritor starts by benchmarking other systems on the market, and designing a more simplified setup from the get-go.

Dean says the supplier needs to provide more than a carbon copy of other systems already on the market, looking instead to win OEMs over with more economic, flexible designs.

“We can't just have a ‘me too’ business case,” he says.

ArvinMeritor surely has its work cut out for it, running against well-established European players such as ZF Group, Continental AG and Robert Bosch GmbH, some with chassis R&D budgets that dwarf ArvinMeritor's investment.

One place ArvinMeritor will not go with its undercarriage strategy in the near- to mid-term is Asia, where OEMs tend to keep much of the design work in-house or within their established supply chains.

Asia is ArvinMeritor's weakest market, representing less than 9% of the U.S. supplier's global LVS business.