GM's Alain Genouw, finance director - (seated left) and Teresa Holderer, executive director -- corporate strategies and business initiatives (seated 2nd from left) with Nexteer's Board of Directors. Nexteer, Largest Chinese Auto Investment in U.S.: Will Company Stay Here?
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The longterm fate of one of the greatest U.S. industries, the former Saginaw Steering Gear, appears to be very much in doubt.
Informal reports from the Nexteer plant are that some employees are growing increasingly nervous about stability of the firm and prospects for continuing their job here.
While the new Chinese leaders, who took over a few weeks ago, on Nov. 30, are making supportive noises, no commitment beyond five years reportedly has been given by company brass.
If the firm is moved to China in five years, that might prove troublesome since the State of Michigan has given tax incentives for 10 years and Buena Vista Township has granted concessions for 20 years.
There is an underlying current of suspicion among local business leaders and media observers that China acquired Nexteer mainly to secure the hundreds of valuable patents on technology owned by the firm.
Pacific Century Motors (PCM), an entity formed by PCAS and Beijing E-Town International Investment & Development Co., Ltd. (E-Town) an affiliate of the Beijing Municipal Government, acquired Nexteer Automotive, a global leading supplier in advanced steering and driveline systems, from General Motors.
The transaction marks the single largest Chinese investment in the global automotive supplier industry. The transaction was effective on Tuesday, November 30.
Saginaw will remain the worldwide headquarters for Nexteer and the key center for engineering, research and development, according to statements by the firm.
The current management team will remain in place under the leadership of Robert J. Remenar, CEO, Nexteer Automotive.
According to Moelis & Company, the investment banker of PCM, the Nexteer business includes global steering and half shaft operations in 22 manufacturing facilities, six engineering facilities and 14 customer support centers in North and South America, Europe and Asia.
Under the terms of the agreement, PCM will support the recently approved 5-year labor agreement with the UAW.
"We are committed to building on the hard work and success of the management team and everyone at Nexteer," said Mr. Zhao Guangyi, chairman of the board of E-Town and PCM.
"As the new ownership, PCM is proud to provide access to continued capital investment that will allow Nexteer to continue its global growth in technology and manufacturing, particularly in the China market."
"With a well-capitalized owner committed to growing the business, we can focus all of our resources on our industry-leading engineering and product development," said Remenar.
"This sale was an important move for us to strengthen a diverse, global customer base and build on our current growth trajectory. While we will continue to build in high growth regions around the world, our owner's relationships will open new channels to the dynamic and rapidly growing Chinese automotive market, particularly among Asia-Pacific OEMs and manufacturers globally."
Nexteer, organized in the wake of bankruptcies of Delphi Corporation, was regarded by industry media as "the only global Tier One automotive supplier exclusively focused on advanced steering and driveline technology."
Delphi was split into three components: GM Components Holdings (Delphi facilities in Kokomo, Rochester, Lockport and Grand Rapids), GM Steering Solutions Services Corporation (Saginaw steering operations and businesses in Europe, Mexico, South America and Asia) and Delphi itself, with electronics, safety, powertrain, thermal, OE service and the independent aftermarket businesses.
Delphi's North American airbag, seatbelt and steering wheel assets were sold to to the Swedish firm Autoliv, Inc., in a move out of the Occupant Protection Safety (OPS) business.
Nexteer sells to GM, Fiat, Ford, Toyota, Chrysler, and PSA Peugeot Citroen, as well as automakers in India, China and South America.
The Chinese automotive industry is expected to grow at an annual rate of 10 percent, creating tremendous opportunity for parts manufacturers.
While the global market for steering is currently largely hydraulic, the industry is fast moving to EPS systems. Nexteer anticipates that EPS will be standard on more than half of the world's vehicles by 2020.
Nexteer's product lineup is devoted to the development and commercialization of electric power steering, hydraulic power steering, driveline and columns. In the last 11 years, Nexteer has put 14 million EPS systems on the road globally, saving nearly 800 million gallons of fuel.
This transaction represents the culmination of 10 months of analysis and negotiations by PCM with Nexteer, General Motors and the United Auto Workers of America. PCM previously announced the signing of this transaction on July 7, 2010.
Nexteer Automotive is a multi-billion dollar global steering and driveline business solely dedicated to electric and hydraulic steering systems, steering columns and driveline products for original equipment manufacturers. Its 8,300 employees serve more than 60 customers in every major region of the world.
PCM is a joint entity formed by Beijing E-Town International Investment & Development Co., Ltd. (E-Town) as the major investor with limited investment from PCAS. E-Town is a state-owned enterprise under Beijing Economic-Technological Development Area (BDA).
Serving as the financing and investing arm of the Beijing Municipal Government, E-Town plays an active role in funding investments of strategic importance with high levels of technology.
E-Town has been granted over US$15 billion in the form of credit facilities provided by various banks and financial institutions in China for the purpose of financing acquisitions. More information can be found at www.bda.gov.cn.
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