Executives on the move

While most supplier executives bask in profits and look forward to more of the same with a strong 1997 auto motive market, two big names in the supplier community are moving on to greater challenges.

ITT Automotive President Timothy D. Leuliette goes to a similar post at Penske Corp. and Tenneco Inc. President Richard A. Snell becomes chairman and CEO at the troubled Federal-Mogul Corp. in the wake of Dennis Gormley's September resignation.

Mr. Leuliette, who was president of Siemens Automotive prior to his stint at ITT, takes one of the many titles previously worn by Chairman Roger Penske. Mr. Leuliette will focus his efforts on the Penske holding company's industrial concerns, which include Detroit Diesel Corp., AG Kuhnle, Kopp A Kausch and Diesel Technology Co.

One source familiar with the situation speculates that Mr. Leuliette made this move before he faced a General Motors Corp. imposed improve-the-quality-or-lose-the-business early '97 deadline on the Delco Chassis motors and actuators business that ITT acquired in March 1994 for $375 million. An ITT source refutes that and notes that the division's Rochester plant has QS-9000 certification and booked business with GM beyond March 1997. Mr. Leuliette was touring Penske's European facilities immediately following the announcement and couldn't be reached for comment.

At Federal-Mogul Mr. Snell says he will have to improve the company's customer relationships, return on assets and lower its operating costs. "I'm an old hand at that," he says.

Observers blame the relationship troubles on Mr. Gormley's threat to withhold delivery (a la GE Plastics) from GM until certain price increases were met. The demands, by the way, weren't met, says a GM source. Others say Mr. Gormley's focus on the aftermarket, with little or nothing to show for it on the bottom line, ended his tenure with the company.

While at the Tenneco helm, Mr. Snell oversaw revenue growth from $1.8 billion in 1993 to an anticipated $3 billion in 1996 fueled by an aggressive global expansion program and strong market share growth in its aftermarket brands.

"The chance to become a chairman and CEO doesn't come along very often," he says explaining his job change. "Despite all that's been written, (Federal-Mogul) is solid. It's got good, solid brands and OE market position. And the debt isn't unmanageable. I did a good amount of due diligence and (the situation) didn't seem like it was anything I couldn't overcome. I think it's going to be a lot of fun."

Could the moves of Messrs. Leuliette and Snell be a harbinger of things to come? No, says Marc Santucci, president of the Elm International supplier consulting company.

"Most of the auto parts guys are pretty entrenched," says Mr. Santucci. "Most promote from within and should continue to do so."

Other more stationary supplier executives are bullish on the industry in 1997 and aren't predicting a downturn anytime soon.

"We see the industry fairly stable," says Robert A. Calder, president of Rockwell International Corp.'s light vehicle systems business. "We're not expecting a downturn, so as far as demand for current products, we see demand as fairly stable."

The industry's global nature also helps. "As the products become more similar in different regions, then you can use capacity in America to produce volume for Europe or Asia," Mr. Calder says. "Chances are the whole world's not going to go into recession at the same time."

Mr. Calder says he expects automakers to continue to transfer engineering responsibility to first-tier suppliers. "It's a major change in philosophy, and it'll take time to evolve," he says. "It's not going to happen fast."

Thomas F. Beddow, the new executive director at 3M Corp.'s automotive industry center in Southfield, MI, says he's optimistic about the industry. "If you look at the global opportunity, when you have slowness in one part of the world, there's usually speed somewhere else that can make up for it," says Mr. Beddow.

Mr. Beddow notes that 3M has never been affected too dramatically by economic cycles, and doesn't anticipate a downturn in the automotive market. But just in case, "we spun off Imation Company (data storage, medical imaging and film) earlier this year, which was probably (3M's) largest cash user."

Alfmeier Corp. is new to the North American market. It arrived to supply injection-molded fuel system components to BMW and Mercedes-Benz. Sam Konduros, Alfmeier's executive vice president-North America, says he has no experience operating in a cyclical market, and he doesn't expect to.

"We feel the market is supporting our growth." says Mr. Konduros. "Our feeling, with the robust economy in the states and Germany's improvement, is that the market is stable. We don't see any reason for a downturn any time soon."