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Auto Interior Behemoths Merge in Joint Venture

Johnson Controls spins off business to Chinese-owned company.

by on May.19, 2014

Alex Molinaroli, left, Johnson Controls chairman and chief executive officer, and Shen Jianhua, Yanfeng chairman, seal the deal on their new joint venture.

In a deal that is emblematic of how the rapid growth of the auto industry in China is changing the landscape, Johnson Controls is spinning off part of its collection of automotive assets to form a new joint venture with an expanding Chinese company that will focus on automotive interiors.

JCI and Yanfeng Automotive Trim Systems Co. Ltd., a wholly owned subsidiary of Huayu Automotive Systems Co., Ltd. (HASCO), the component group of Shanghai Automotive Industry Corp. (SAIC), announced they had signed a definitive agreement forming the new venture where Yanfeng will hold a 70% stake and JCI the remaining 30%.

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The noncash transaction creates the largest automotive interiors company in the world with annual revenues of approximately $7.5 billion. (more…)

Chinese Firm Nabs Battery Maker A123 Out from Under JCI

National security issues could scuttle deal.

by on Dec.10, 2012

Now Chinese-owned, A123 will provide the batteries for the new Chevrolet Spark EV.

Mega-supplier Johnson Controls has withdrawn its bid for the bankrupt battery maker A123 Systems after declining to match a higher, $256.6 million bid submitted by the Chinese company Wanxiang Group Corp.

JCI originally appeared to have landed a deal to take control of the automotive portion of A123 – but the deal was scuttled in bankruptcy proceedings – though it leaves open some national security concerns. Meanwhile, Illinois-based Navitas Systems will buy A123’s government business, including all outstanding military contracts, for $2.25 million.

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A123 currently is the principal supplier of batteries for Fisker, which has seen its deliveries interrupted since the company filed for bankruptcy in October. The battery maker’s other clients include General Motors which will use an A123 pack in its new Chevrolet Spark EV electric vehicle.


Johnson Controls to Invest $138.5 Million in Toledo Battery Plant

Plant will supply growth of vehicle start-stop systems.

by on Jun.28, 2011

Porsche's Panamera is one of the first vehicles offered in the U.S. with start-stop technology.

Another day, another company announcing expanded production of components for super-efficient vehicles featuring advanced battery technology.

Johnson Controls will invest $138.5 million to convert its battery plant near Toledo, Ohio, into a battery facility for start-stop systems and other high-efficiency vehicles. Subject to final state and local incentives, the facility will be the company’s first such plant in the United States.

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“Start-Stop vehicle technology is emerging globally as one of the most affordable options for consumers who want to buy a more fuel-efficient car for very little added cost up front,” said Alex Molinaroli, president of Johnson Controls Power Solutions. “We see this market growing to 35 million batteries globally by 2015, and the United States is an important piece of the market.”


Johnson Controls Buys Recaro

Recaro best known for performance seating.

by on Dec.31, 2010

A pair of Recaro seats.

Johnson Controls Inc., one of the world’s top automotive suppliers, has swooped in to acquire one of the top names in automobile seating – Recaro.

JCI has signed a purchase agreement to acquire the German automotive  supplier Keiper and the Recaro-brand specialty seat business. Financial details regarding the transaction were not disclosed.

“This acquisition further strengthens our metal components and mechanisms business through the addition of the Keiper and Recaro brands which are synonymous with quality, technical expertise and innovation,” said Beda Bolzenius, Vice President, Johnson Controls and President, Automotive Experience. ”

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“It provides leading technologies that we can leverage across our current seat component portfolio, and expand in China and North America,” he said.

Keiper, based in Kaiserslautern, Germany, is a leader in recliner system technology and is renowned for its engineering and manufacturing expertise in metal components and mechanisms. The acquisition will include approximately 4,750 employees globally in seven countries.


Active Headrests Fight Cervical Spine Syndrome

Ongoing developments prevent pain and save on medical costs

by on Aug.06, 2010

Millions suffer from injuries to their cervical spine caused by low-speed, rear-end collisions.

Millions of car drivers suffer from injuries to their cervical spine caused by low-speed, rear-end collisions. It’s a global problem. Whiplash, or more properly “cervical spine syndrome,” is a painful, expensive outcome of fender benders. With the latest technology, whiplash is also largely preventable.

Much research and development work has been devoted to whiplash because of the billions of dollars spent on medical treatment each year, to say nothing of the legal costs from lawsuits, real or frivolous.

Independent studies show that head rest protection systems can reduce the risk of long-term damage caused by whiplash more than 50%, while the danger of injury to the cervical spine is lessened by about one-third.


Johnson Controls Still Pursuing Visteon

Former Ford Motor parts maker rejects JCI proposal. Ford claims neutrality; likely working behind scenes to protect itself.

by on Jun.07, 2010

Johnson loses nothing by buying the parts operations or delaying Visteon's eventual bankruptcy emergence.

Johnson Controls (NYSE: JCI) has confirmed that it sent Visteon Corporation (OTC: VSTNQ) a letter late last week that said it remains interested in pursuing its rejected proposal to buy some of the bankrupt company’s assets. It gave no further details on how it would enhance the $1.25 billion cash bid for Visteon’s electronic and interior businesses, leaving the climate control operation behind.

The businesses JCI wants generated more than $4 billion in sales during 2009, the worst automotive market in decades. In 2009, Visteon had product sales of $6.42 billion – down $2.7 billion from the prior year. There clearly is upside potential for the eventual owner.

The latest development complicates what is already a long running bankruptcy that was filed under Chapter 11 in May of 2009. Shareholders and bondholders are currently vying to see who will control the plan that will let Visteon emerge from receivership. At stake is ownership of the assets, including the ones that JCI wants to buy – or steal, depending on your point of view.

It also could be a business tactic since Johnson Controls is a direct competitor that stands to benefit by introducing delay or complexity into the Visteon reorganization process.

Visteon, the former Ford Motor Company parts maker, has used bankruptcy to improve its balance sheet, and its first-quarter profit rose to $233 million from $2 million a year earlier. The businesses in question are largely based in China, now the world’s largest auto market.

A Ford spokesperson declined to comment specifically on the JCI Visteon issue.

“JCI is a strong company and one of our long-term suppliers. At the same time, Visteon and Ford have a long business relationship. We have been, and remain, supportive of Visteon as it works through its bankruptcy restructuring process,” the spokesperson said.

“Whatever happens, Ford is going to want to make sure that Visteon remains viable, and at some point will make its views known to the court,” said Joe Phillippi of the AutoTrends consultancy.


UK Proposes First EV Subsidies for Businesses

Both businesses and consumers, if they can afford electric vehicles, stand to benefit from the costly subvention.

by on Dec.10, 2009

That would be taxpayer money, lots of it, at the other end of the cord.

That would be taxpayer money, lots of it, at the other end of the charging cord.

Since batteries for electric vehicles can cost as much as the car itself, and much more for larger ones, automakers are asking for huge taxpayer subsidies to aid EV sales.

The United Kingdom is the latest government to propose EV financial assistance.

In an historic announcement for the island nation, Chancellor Alastair Darling in his pre-budget report proposed that consumer incentives worth £2,000 to £5,000 ($8,100) would be available starting in 2011 to reduce the purchase price of electric and plug-in hybrid vehicles.

Substantial assistance for businesses buying EVs is also part of the budget; and it appears that the UK is the first government to do so.

“To help boost the number of electric cars on our streets, I have decided to exempt them from company car tax for 5 years. And I can also announce a 100% first year capital allowance for electric vans,” Darling said.

The latest announcement follows a £30 million “Plugged in Places” program launched last month to support the development of charging infrastructure in several UK cities.

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The European Union is moving ahead — over automakers’ protests — with new CO2 standards for passenger cars that dictate a reduction in average CO2 emissions from new cars to 120 g/km. Fewer than 9% of the cars sold in the EU in 2006 met this level of emissions. The costs of are estimated at about €3,600 ($5,108) on average per car.


Johnson Controls Says Hybrids Not Competitive

Largest global producer of batteries is challenged by their cost.

by on Oct.13, 2009

Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG, Head of Mercedes-Benz Cars presenting the new S 400 BlueHybrid at the 2008 Paris Motor Show

“The industry has done a good job of making people comfortable with hybrid technology, but the economic equation is not there.”

The largest maker of automotive batteries in the world said today that without government subsidies, the batteries used in electric vehicles and hybrids will not allow for commercialization on a large scale.

The analysis is significant since Johnson Controls launched the industry’s first mass production lithium-ion battery plant in France, and is a leader in battery technology.

In a presentation to analysts today, MaryAnn Wright, Vice President and Managing Director Business Accelerator for Advanced Energy Storage Solutions at Johnson said that a positive economic equation is not possible without subsidies of at least $7,500.

“We can achieve — with subsidies  — a total cost of ownership that is competitive with internal combustion engines,” Wright said. She was using a three-year analysis of a vehicle, which included an above average retention residual value.

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However, even with Johnson’s goal of reducing costs of advanced Li-ion batteries by 50% during the next five years, taxpayer grants are still needed for mass production.


Chrysler Picks Future Suppliers

Bankruptcy Court Filing lists some winners and losers.

by on May.15, 2009

Scott Garberding, Chrysler LLC

Chrysler will continue to work with those suppliers who wish to become part of the new enterprise.

Chrysler LLC today announced this morning that it would begin the process of assigning the “overwhelming majority” of the company’s supplier contracts to the new company established in with Fiat SpA once an asset sale is completed as it emerges from bankruptcy. Some of the winners are Alcoa, Continental, Delphi, Johnson Controls, Magna International and Penske Corporation.

Chrysler has also started a process by which suppliers may be paid pre-bankruptcy accounts receivable. Chrysler claims that the amount it is willing to pay is higher than those normally assigned during a bankruptcy process, a contentious assertion no doubt with some suppliers.

About 40% of what is owed is offered immediately, with the balance to be assumed by the new company and paid back over time. Whether its ailing suppliers can last that long is an open question. Roughly 20% of Chrysler suppliers were in the “high risk” or “risk” categories Chrysler uses to assess their financial health, and that was before all of its plants were shut down last month. Typically it takes Chrysler 45 days to pay a supplier after it has received the parts.

The bankruptcy continues to have potential dire consequences for Ford Motor and General Motors since 96 of Chrysler’stop 100 suppliers also supply both of those loss-making companies.

Chrysler will mail letters to approximately 1,200 of its suppliers setting forth the amounts that Chrysler has determined will be required to “cure” all contracts to be assumed and assigned to the new company.

It appears Chrysler will attempt to not negotiate the amounts that it will pay. Some struggling suppliers may have little bargaining power to ask for more.

Suppliers have ten days to dispute the Chrysler amount, and a court hearing is scheduled for June 4th to resolve differences.

Some of Chrysler’s biggest creditors were not on the list in the court filing, which could mean that they will not be part of the supply chain for the new company.

However, the “list is not a complete or final listing of suppliers” for the new company. “Chrysler will continue to work with those suppliers who wish to become part of the new enterprise,” Chrysler said.    (more…)

Bob Lutz Joins List of Chrysler Creditors

Some surprising companies and people stand in a long line of those with unsecured claims against bankrupt Chrysler.

by on May.11, 2009

Bankruptcy lightning has already stuck twice at companies Lutz has led. GM will make it thrice.

Bankruptcy lightning has already stuck twice at companies Lutz has led. GM will make it thrice.

The list of creditors that are owed big money by bankrupt Chrysler LLC includes many of the usual companies that are suppliers to the auto industry. But not all of them are immediately obvious, even to veterans of what remains of the auto supplier’s beat. So it’s not surprising that Johnson Controls is owed $50 million, or Continental Automotive, $46 million, or Cummins Engine, $44 million. These are all large, global companies that have been in the auto arena for decades or more, and are among the biggest creditors that would lose the most money if Chrysler doesn’t revive itself.

It’s puzzling that Chrysler’s ad agency, BBDO Detroit Incorporated, is the second largest creditor, at $58,055,133.44? Who would have thunk it! Well maybe it’s like American beer, the advertising and promotion cost more that the production of the stuff inside the can. Still, this is more money owed for advertising than steel, since U.S. Steel Corporation is owed only $16,182,772, as of April 30. 

Subscribe to TheDetroitBureau.comThen we have an order entered Saturday by the Honorable Arthur J. Gonzalez, the presiding judge in the Chrysler bankruptcy matter. It grants a motion for admission to practice pro hac vice, or for the occasion, to Michael S. Leib, a member in good standing of the bar in the State of Michigan to practice in this one case before the Federal court in New York for a $25 fee. This without question is going to be much smaller than the fee he charges his client, creditor Robert A. Lutz.   (more…)