Greener Pastures

Visteon Corp. executives want to make something clear: The dark clouds looming over the embattled supplier are concentrated in North America and do not threaten the company's momentum in Europe.

Visteon Europe, which handles South American operations, presents a picture of health to journalists in Kerpen, Germany. The portrait stands in stark contrast to North America, where 24 operations have been handed back to former parent Ford Motor Co., while Ford hands out more than $1 billion in assistance.

“Now Visteon is a leaner, competitive company positioned for growth, and Visteon Europe is also in the best position to support a larger number of customers with a focused product portfolio,” says Heinz Pfannschmidt, president-Visteon Europe.

In terms of sales, Europe (with South America) becomes chief breadwinner of the new Visteon, expected to rake in 43% of global revenue in 2005, followed by 39% in North America and 18% in Asia, he says. The unit has new business booked at a 6%-8% growth rate over the next three years. Pfannschmidt says the unit was profitable in 2004, although the company does not disclose regional numbers.

During a recent interview with Ward's, Michael Johnston, Visteon chairman-elect and CEO, reiterated Europe's relative immunity to the restructuring. “Europe remains virtually untouched by this agreement,” he says.

Johnston says 520 people will move from the supplier's Swansea, Wales, plant to Ford's Bridgend Engine plant (U.K.) as the sole reorganization effort stemming from the May 25 announcement of Visteon and Ford's latest agreement.

Ford of Europe has been involved in past reorganization efforts, including a 30% reduction of labor costs in the U.K. and Germany.

“We see Ford of Europe as a separate customer, and we have relationships with them that have been on a continuous improvement path for several years. We would expect that to continue as well,” Johnston says.

Ford now accounts for 50% of Visteon Europe's revenues, down from 75% in 2001. Although some of the decline comes as Ford adjusts inventories downward, especially at struggling Jaguar Cars Ltd., most of it comes from rebalancing its customer base to include more non-Ford OEMs, including a growing tie with Renault SA.

The Renault tie paid off handsomely when the French auto maker acquired Nissan Motor Co. Ltd. and located parts procurement responsibility in Paris, giving Visteon new chances to sell in Asia and eventually vaulting the Nissan relationship to $1 billion in new business.