US parts supplier consolidation seen

By David Bailey

DETROIT (Reuters) - Consolidation is inevitable among U.S. auto parts suppliers after two years of bankruptcies and declining Big Three vehicle production, but mega-mergers may not be in the cards, industry executives and investors said this week at Reuters Autos Summit in Detroit.

"There's going to be continued consolidation," Visteon Corp. (VC.N: Quote, Profile, Research, Stock Buzz) Chief Executive Michael Johnston said. "But if you're global, you have the ability to mitigate any one customer, any one region in the world."

Visteon, a former Ford Motor Co. (F.N: Quote, Profile, Research, Stock Buzz) parts unit, has started to shop plants under a three year plan to focus on interiors, electronics and climate controls.

Johnston declined to comment on reports Visteon may be entertaining offers to be acquired. The industry may look more toward alliances on global technologies than acquisitions or takeovers, Johnston said.

"I can't predict that," Johnston said of mergers among the largest global parts suppliers. "But the largest suppliers ... they probably don't need to."

Johnson Controls President and Chief Operating Officer Keith Wandell said he expected consolidation to run the next few years, but remains committed to the company's interiors business, an area of the U.S. auto parts sector under pressure in recent years.

"We think we will be well-positioned to compete in that reconfigured landscape," Wandell said.

Production cuts at the biggest U.S. automakers will add to the cash crunch in the supplier industry next year and potential investors may be better off to wait, despite a deep buyer's market of plants and other facilities now on the block.  Continued...