Valeo Opens New North American HQ

Valeo SA has moved its North American headquarters from Auburn Hills, MI, to nearby Troy and plans a grand opening for spring, Valeo Chairman and CEO Thierry Morin tells journalists during the North American International Auto Show.

Making the move were some 200 employees working in research and development, marketing, finance, human resources and sales.

The old building in Auburn Hills “was not appropriate” and did not foster effective communication, Morin says.

“We always like our employees to be in a nice environment,” he says. “It was not easy for our people to work. The new building has been designed by our people and for them.”

Morin visited the facility for the first time during his stay in Michigan for the auto show. “It's a great building, and I'm very, very proud of it,” he says.

Throughout North America, the French supplier employs 7,200 people and has 14 facilities dedicated to production and 12 to R&D.

Valeo has no additional plans for new plants in North America, but Morin says, “we might expand existing plants.”

In addition, he says Valeo “might acquire plants” with proceeds from divesting non-core operations. The supplier already has sold half of the $2 billion in assets it plans to sell.

Meanwhile, Valeo still hasn't closed its acquisition of the former Visteon Corp. air-conditioning plant in Plymouth, MI, although Valeo signed a memorandum of understanding more than a year ago to purchase the plant from Ford Motor Co.'s Automotive Components Holdings LLC.

At the Frankfurt Motor Show in September, Morin told journalists the deal could fall through because the company has been unable to reach a labor agreement with the United Auto Workers union, which represents 1,000 hourly workers at the Sheldon Road plant.

At NAIAS, Morin said Valeo remains committed to the deal and maintains a strong connection to Ford. “We are very much aligned with Ford on this acquisition,” he said. “We need to find the appropriate solution vis a vis the unions. It's very important for us that each of the parties have the same understanding. This is what we will be working on.”

The UAW has resisted Valeo's attempts to cut the hourly pay rate at the plant by a third, from about $30 currently to $20, or less.

When asked how much longer Valeo can wait to close the deal, Morin says, “Not very long. It has been too long.”

But he says there is “no specific date” by which Valeo wants to finalize it. Morin says negotiations for the UAW's master agreement with Ford, General Motors Corp. and Chrysler LLC took priority through the fall, making the Sheldon Road plant deal a lower priority.

Overall, Morin says Valeo has made money globally the past five years and will be even more profitable in 2008, despite expectations for weak vehicle sales in North America.

The supplier does not break out earnings by region, so Morin declines to say whether Valeo is profitable in North America.

Worldwide, Valeo reported a 3.4% operating profit margin in 2006. Morin anticipates that figure will reach 6% or more in 2010.

Morin also says he considers Pardus Capital Management LP's increased holdings in Valeo “a vote of confidence in this company.” The hedge fund announced Jan. 15 it raised its stake in Valeo from 16.3% to 19.7%, making it the supplier's largest single shareholder.

Pardus also has a stake in Visteon and in the past has pressured Valeo to take over the ailing Van Buren Twp., MI, supplier, Reuters reports.

In Detroit, Morin says he would consider granting Pardus a seat on Valeo's board of directors, as long as Pardus is aligned with the supplier's long-term strategy.

“If they truly share our vision, then why not?” Morin says. “But if the idea is to come to the board and to change the strategy in order to benefit themselves and not benefit the other shareholders then I would have to say no. We are not going to change our vision every six months.”