After the battle: as smoke clears, mirror makers aren't looking back

Holland, MI - For most of the last seven years, Gentex Corp. and Donnelly Corp. spent so much money - a collective $30 million - trying to destroy each other in court that most folks forget, if they ever knew, what exactly these two western Michigan automotive suppliers actually manufactured.

They make mirrors - regular prismatic mirrors and electrochromic mirrors, the kind that can sense when that thoughtless SOB behind you is running his brights as he bears down on your bumper, and automatically darken the review mirror so you're not blinded by the awesome display of amperage.

Gentex also makes smoke detectors and other fire-protection equipment. Donnelly also produces door handles, modular windows and sunroofs. But the real growth is in mirrors.

Conflict is generally frowned upon in these parts. Donnelly, based here, and Gentex, headquartered in near-by Zeeland, would seem to embody the self-reliant, Christian Reform ethnic that has tuned this part of Michigan into an idyllic Lake Woe-begon of the automotive industry. All workers are dedicated. All managers value their workers. And all the children are above average, or so the local Chamber of Commerce would have you believe. Labor strife is merely a distant echo from the other side of the state.

So why did these guys beat each other's brains out in court for seven years? And was the effort worth it?

Each felt it had a competitive edge in the method used to make the automatically dimming, glare-reducing devices, and they were willing to enrich dozens of New York lawyers to establish their legal dominance. Today, eight months into their legal truce - Gentex agreed last April to pay Donnelly $6 million to end all pending patent litigation for at least four years - the two neighboring rivals are hustling to capitalize on an electrochromic mirror market estimated at $150 million this year and growing.

"It diverted resources. Did it slow us down? I don't know," says Kenneth L. Lagrand, Gentex's executive vice president. "It wasn't something I would care to repeat. Some of our research and development people were spending 20% of their time preparing depositions. Both of us underestimated the time and money it would take to fight it out."

Ironically, electrochromic (EC) mirrors, as they're called, already may have seen their most rapid growth.

"There are going to be trade-offs," says Craig Cather, president of CSM Corp., an automotive research firm in Lansing, MI. "There's competition for certain safety-related options and content. Each manufacturer is asking What components must we install?' like passenger air bags and `Which ones will add more cost than protection?'

"Right now I would be surprised if consumers would consider electrochromic mirrors to be a critical piece of equipment relative to, say, a side air-bag system. I feel the market is fairly saturated in the U.S., except to the degree they can get more exterior mirrors on models that already have the interior system."

Gentex and Donnelly are betting Mr. Cather is wrong.

Both companies see EC mirrors evolving into a main entree in the increasingly sophisticated menu of automotive safety.

Originally offered in large luxury cars favored by elderly drivers, the mirrors can cut the required stopping distance when driving at night by nearly 50%. And last year, Dr. Alan Lewis, dean of Ferris State University's College of Optometry, found that the Troxler Effect on the eye's retina, in which momentary exposure to rearview reflected glare causes an after-image and temporary blind spot, affects all drivers, regardless of age.

Since Gentex sold its first automatically dimming mirrors in 1987, they have been limited to selected luxury cars and heavily equipped sport/utility vehicles (SUVs). But that is changing. Gentex sales of Night Vision Safety mirrors nearly doubled from 958,000 in 1993 to 1.8 million last year. This year's shipments should approach 2.4 million.

And the list of models offering them as an option includes such mid-market sedans as Dodge Intrepid, Eagle Vision, Chrysler Concorde, the new Toyota Camry and Buick LeSabre.

Mr. Lagrand says about 12.5% of all cars and trucks built in North America offer EC mirrors. "We expect the eventual penetration of EC mirrors in North America to reach 50% by sometime in the next decade," he says.

The technology is leading to other features that do more than shield you from the bright-light bullies of the highway. Donnelly certainly turned heads this year with its Illuminator, the mirror on the 1997 Lincoln Mark VIII, that projects the left-turn signal as a red arrow onto the driver's side mirror, thereby enabling vehicles behind to clearly see the Mark VIII driver's intention. It also has a downward-directed light in the bottom of the mirror, adding to the driver's sense of security in dark parking places.

The challenge, as is true for every widget maker along the supply chain, is to add value and subtract cost so that when Ford, Chrysler, GM or Toyota turns that $30,000 car into a $25,000 car your system isn't left out.

Within the electrochromic mirror market, Gentex has a dominant 90% today, while Donnelly has between 3% and 5%. But Donnelly expects to grow its share to between 20% and 30% by the end of the century.

Gentex recently opened a new 127,000-sq.-ft. plant next to its Zeeland headquarters, more than doubling its worldwide mirror-making capacity to 7 million-plus units annually. Donnelly, meanwhile, has positioned itself more aggressively on the international front. It holds a 48% stake in a partnership with Hohe GmbH, a German supplier of automotive mirrors, door handles and tooling, and also has two joint ventures in China - one to make framed automotive glass in Shanghai, the other to make film glass coatings used in liquid crystal displays.

And Donnelly is working on something it calls Camera Vision, which uses three video microchip cameras in the rear of a vehicle that transmit three images roughly corresponding to what the driver would see in a conventional three-rear-view mirror system. The picture is transmitted to a flat-panel display terminal near the center of the instrument panel. Presto! No more mirrors.

But don't hold your breath: the system today would cost between $300 and $500 compared with $80 to $140 for a system with at least one EC mirror.

But in the never-ending quest for unnecessary weight and for a rear view without a blind spot, the mirrorless car could be here sooner than you think.

The next frontier for electrochromic technology is to integrate it into glass so that windows and sunroofs would darken automatically with the intensity of sunlight, thus making the heating and cooling system more efficient and less expensive. They call it "smart glass."

"We're at the point where (electrochromic glass) will last up to two years, but to make it feasible for automotive applications we need a life of closer to six or eight years," says Gentex's Mr. Lagrand. "For architectural glass, where the real potential is, we need something that approaches a life of 20 to 25 years.

"We think EC glass has a chance if it gets down to $25 per square foot. Today, the way we are prototyping it, the cost is about $100 per square foot."

Donnelly is just as aggressive in bringing its derivative of "smart glass" to market. Smart patent attorneys are paying close attention.