Automotive: Johnson Controls forms interiors JV with Plastech

Plastech Engineered Products (Dearborn, MI) will emerge from bankruptcy as part of a new joint venture with Johnson Controls Inc. (JCI; Plymouth, MI), wherein Johnson Controls retains a majority 70% stake. The business is built around the interior product assets of Plastech and will have 29 plants in North America, to which JCI contributed five injection molding facilities and $135 million in cash. The deal’s constituents believe the resulting venture will break-even in 2009 and increase earnings/share (EPS) by fiscal 2010. Products will include injection molded components and assemblies such as door panels and floor consoles, with JCI expected to be the largest customer, generating $500-$600 million of the $1.2 billion in anticipated annual sales. JCI says it has already negotiated multiyear production contracts with other “key” automotive customers.

As of July 2006, Plastech operated 38 manufacturing facilities in North America, following the addition of operations in Owensboro, KY; Gallatin, TN; and Lansing and Monroe, MI. The company’s 2004 acquisition of LDM Technologies doubled its total facilities and employees. In addition to injection molding, Plastech also blowmolds underhood components and decorative parts. The company has operations in 10 states, with sites in Texas, Louisiana, Alabama, South Carolina, Illinois, Indiana, and Ohio, in addition to the aforementioned presence in Michigan, Kentucky, and Tennessee.

Johnson Controls includes three businesses, with building efficiency and power solutions joining automotive, which is the largest segment with $17.6 billion in fiscal-year 2007 revenues and 75,000 employees. In the first quarter of 2008, JCI’s automotive net sales rose 9% to $4.6 billion, with North America up 5% and Europe rising 14%. The $78 million in income compared to a first quarter 2007 loss of $35 million. In the second quarter of 2008, JCI’s automotive sales were up 2% from 2007’s second quarter, to $4.6 billion, with North American sales down 7%.—[email protected]