First deal in what could be a wave of Chinese acquisitions of U.S. auto part suppliers

The largest Chinese investment in a U.S.-based automotive supplier was completed earlier this week with the acquisition of steering and driveline systems supplier, Nexteer Automotive (Saginaw, MI) by PCM, an entity formed by PCAS and Beijing E-Town International Investment & Development Co., Ltd. (E-Town), which is itself an affiliate of the Beijing municipal government. Under the agreement finalized Nov. 30, Nexteer, which was part of General Motors, will maintain global headquarters in Michigan, with the current management team, including CEO Robert J. Remena, remaining in place. The agreement is the culmination of 10 months of analysis and negotiations, between all involved parties, including the United Auto Workers (UAW).

This is not likely to be the last acquisition by E-Town, the state-owned enterprise under Beijing Economic-Technological Development Area (BDA). That entity serves as the financing and investment arm of the Beijing Municipal Government, and currently has more than $15 billion in hand to fund acquisitions.

The deal included global steering and half shaft operations, with 22 manufacturing sites, six engineering facilities, and 14 customer support centers in North and South America, Europe, and Asia. PCM has also agreed to support the recently approved 5-year labor agreement with the UAW.

Nexteer, which has focused on the development and commercialization of electric power steering (EPS), hydraulic power steering, driveline, and columns, believes it's in a position to not only tap the growing Chinese market, slated to expand at an annual rate of 10%, but also an industry-wide shift to EPS systems from today's predominantly hydraulic focus. The company is forecasting that EPS will be standard on more than half of the world's vehicles by 2020, and over the last 11 years, it has placed 14 million EPS systems on the road globally.

Pioneering plastic couplings in steering columns
In October, Nexteer launched a lightweight, flexible plastic coupling, replacing steel in a system it says further improves the refinement of column-mounted units. The plastic-based technology was introduced on the Citroën DS3 premium compact car, with work on other applications underway.

On-demand EPS systems can replace hydraulic steering systems, offering up to 4% reductions in fuel consumption and carbon dioxide emissions. In a column-mounted EPS, the electric motor and control electronics reside inside the passenger compartment, instead of under the hood. The rigid steel couplings that are typically used to connect the motor to the rest of the system can transmit road noise to the interior, so to overcome this, Nexteer engineers have developed what they called a robust thermoplastic part, injection molded from high-performance, high-temperature glass-fiber-reinforced polyamide. The finished part is 17% lighter than its steel equivalent and 50% cheaper. Nexteer's work on the coupling won the Society of Plastics Engineers (SPE) European Automotive Innovation award. 

 

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