Faurecia S.A.

2 Rue Hennape, ZAC des Champs, Pierreux
Nanterre, 92000
France
Telephone: (+33 1) 72 36 70 00
Fax: (+33 1) 72 36 70 07
Web site: http://www.faurecia.com

Public Company
Founded:
1998
Employees: 115,686
Sales: €20.2 billion ($24.17 billion) (2017)
Stock Exchanges: Euronext Paris
Ticker Symbol: EO
NAICS: 336390 Other Motor Vehicle Parts Manufacturing; 333613 Mechanical Power Transmission Equipment Manufacturing; 551112 Offices of Other Holding Companies; 337127 Institutional Furniture Manufacturing; 332510 Hardware Manufacturing

Headquartered in Nanterre, France, Faurecia S.A. is a leading supplier of interior systems, emissions control technologies, and automotive seating to automotive manufacturers. The company holds global leadership positions in the interior systems and emissions control categories and is the world's top supplier of seat frames and mechanisms. With a presence in 35 countries, Faurecia's operations include 300 different locations, including 30 research and development centers.

FRENCH AUTOMOTIVE ORIGINS

Faurecia S.A. was formed in 1998 through the merger of two prominent French automotive component suppliers: Bertrand Faure and Equipements et Composants pour l'Industrie Automobile (ECIA), the former components unit of PSA Peugeot-Citroen. In 2001 Faurecia acquired the automotive division of Sommer Allibert. Subsequently, the company became Europe's leading automotive component supplier.

ECIA stemmed from Peugeot's rapid growth during the post–World War II period, when automobile use became commonplace in France. The company began establishing new subsidiaries that specialized in the development and production of automotive components and subsystems. Peugeot also diversified into other product areas, such as motorcycles and scooters, power tools, hand tools, lawnmowers and other gardening equipment, and bicycles. Two of the primary subsidiaries to emerge from this period were Aciers et Outillage Peugeot and Peugeot Cycles.

During the mid-1970s, however, these subsidiaries began refocusing around their core automotive components business, launching a long-term divestment program. The last of these noncore activities was sold during the late 1990s. In the meantime, both Aciers et Outillage Peugeot and Peugeot Cycles began acquiring scale and competencies in a variety of automotive components. Among the components categories produced by the Peugeot subsidiaries were electric motors (for window mechanisms and sideview mirrors, and other uses), bumpers, hubcaps, steering wheels, and steering columns.

COMPANY PERSPECTIVES

Above and beyond excellence in its everyday operations, Faurecia aims to create long-term value for all stakeholders, including customers, suppliers and employees. This ambition is backed by a solid performance-based culture, underpinned by three key management values: Entrepreneurship, Autonomy and Accountability.

GROWING THROUGH ACQUISITIONS

Much of this effort came through a series of acquisitions starting in 1980 and culminating in the purchase of Bertrand Faure in 1998. Among the companies' purchases during this period were Quillery, a maker of molded plastics, and Tubauto, a maker of seat cages and racks. The companies became a major producer of exhaust systems through the acquisition of Eli Echappements, and also moved to add a number of foreign operations, including Leistritz of Germany and PCG of Spain.

The refocusing of the two subsidiaries around an automotive components core led to their merger in 1987. The combined company took on the name of Equipements et Composants pour l'Industrie Automobile. ECIA was then listed on the Paris Stock Exchange. Peugeot maintained majority control of ECIA and remained its primary company. Indeed, into the late 1990s Peugeot continued to account for some 94 percent of ECIA's automotive components-based revenues. That said, ECIA's spin-off was made in part to improve its efficiency by enabling it to compete for contracts from automakers other than Peugeot.

By 1997 ECIA had picked up contracts with a number of other automakers, including Volkswagen and Renault, which represented 18 percent and 11 percent, respectively, of ECIA's revenues that year, compared with PSA Peugeot-Citroen's 60 percent. Other customers included Daimler Benz, Opel Honda, and Mitsubishi. By then, the company's sales had topped €1.6 billion, double its sales in 1987. The percentage of automotive components in ECIA's total revenues had more than tripled during this time.

By the late 1990s ECIA had focused its automotive components operations around three primary areas: exhaust systems, cockpits (including acoustic packages), and front ends. The company's merger with Bertrand Faure in 1998 doubled its sales again. It also positioned ECIA as a leader in a new automotive component category.

MERGING FOR SCALE

Bertrand Faure had its origins during the early 20th century as a seat-maker for France's trams and the Paris Metro. The company established its first workshop in 1914, shortly before the outbreak of World War I. During the 1920s the company became interested in the growing automobile market. A significant step in this direction came in 1929, when Faure acquired the patents for the Epéda spring system. This spring system enabled the company to begin producing a new generation of more comfortable automobile seats, which in turn allowed the company to emerge as a French leader in this category.

The spring technology also encouraged Faure to begin producing a new type of mattress, and that activity became a major source of the group's revenues as well. In 1973 the company acquired another mattress maker, Mérinos, becoming a leader in that segment in France. In the meantime, Faure had continued building its automotive seating operation by acquiring two French companies: Cousin Frères, which produced seat frame systems, and Autocoussin, which specialized in rear seat designs.

Faure began a diversification drive of its own during the late 1980s. In 1987, for example, it acquired Delsey, a leading maker of suitcases. That year also saw Faure enter the defense industry when it acquired Luchaire. That company manufactured components for the aerospace industry, but also produced automotive components through its subsidiaries Allinquant (shock absorbers) and Eli Echappement (exhaust systems).

THWARTS TAKEOVER

Bertrand Faure fought off a hostile takeover attempt by Valeo, a major French automotive components maker, in 1988. To prevent Valeo, then controlled by Italy's CERUS, from gaining control of its stock, Faure turned to several investors, including Peugeot, Michel Thierry, and Michelin. These companies backed a leveraged buyout of Faure, which, through a complex financial structure, protected the company from the takeover attempt. However, the buyout left Faure in an extremely precarious financial system.

The company's difficulties were quickly exacerbated during the early 1990s. In 1991 it acquired control of Germany's Rentrop, a major seating systems manufacturer. Faure also bought a stake in Italy's Sepi. However, the company's bid to establish itself as a major player in Europe's automotive seating sector stumbled due to the deepening economic recession in the region during the early 1990s. Adding to the company's problems was a push by its major U.S. competitors, Lear and Johnson Controls, to enter the European automotive components market as well.

KEY DATES
1914:
Bertrand Faure opens a workshop to produce seats for trams and Metro trains.
1929:
Faure acquires the Epéda spring patent and begins production of seating systems for the automotive market.
1945:
Peugeot begins production of automotive components, bicycles, and motorcycles through the subsidiaries Aciers et Outillage Peugeot and Peugeot Cycles.
1987:
Aciers et Outillage Peugeot and Peugeot Cycles are merged to form Equipements et Composants pour l'Industrie Automobile (ECIA); Faure acquires Delsey and Luchaire.
1988:
Bertrand Faure is acquired in a leveraged buyout backed by Michelin, Michel Thierry, Peugeot, and others to block a takeover attempt by Valeo.
1997:
Faure agrees to be acquired by ECIA, forming Faurecia.
2004:
Faurecia wins a $2 billion contract for the production of cockpit components for Chrysler in the United States.
2009:
Emcon Technologies is acquired and combined with Faurecia Exhaust Systems, forming Faurecia Emissions Control Technologies.
2015:
Faurecia sells its automotive exteriors operations to Compagnie Plastic Omnium SA.
2018:
The company partners with technology leaders to form the Paris Artificial Intelligence Research Institute.

Faure began a restructuring effort during the mid-1990s to restore its financial balance. As part of that process, the company refocused around a core of automobile seating systems, selling its bedding operations in 1994 and its aerospace and defense operations in 1996. By 1997 automobile components accounted for more than 91 percent of Faure's sales, which topped €2.4 billion that year.

In 1996, however, the complexity of Faure's leveraged buyout package turned against the company, when Michel Thierry decided to sell its 16.6 percent stake in Faure to ECIA. This move precipitated talks between the two companies, which led to a full-scale takeover offer by ECIA for Faure at the end of 1997. The merger, completed in 1998, created a new French and European giant: Faurecia. Although Faurecia remained controlled by PSA Peugeot-Citroen, which held more than 70 percent of its shares and remained its primary customer, the new company was established as an independently operating company.

GLOBAL COMPONENTS LEADER

Faurecia immediately began developing its position as a leading European and global automotive components player. It launched a new strategy to focus on a more limited range of systems, narrowing its operations to a smaller array of core areas in which it was able to establish leadership positions. As part of that process, the company sold its steering wheel operations in 1999, and divested noncore operations, such as Peugeot Motorcycles and Delsey, both in 1998.

Instead, Faurecia began expanding its international presence, opening new plants in Brazil and Poland in 1998. The following year it turned to North America, acquiring AP Automotive Systems, that market's third-largest producer of exhaust systems. Faurecia's North American presence was boosted that year as well when it was awarded a major production contract for the General Motors Company. The company quickly began extending its production capacity in North America, opening or acquiring factories to reach nearly 30 facilities in that market by 2005.

By then, however, Faurecia had taken a place among Europe's leading automotive components groups and, in its core components areas, had lifted itself to place in the top-three worldwide. The most significant step in this growth was in 2001, when the company acquired the automotive division of France's struggling Sommer Allibert. That company's diversified product range included plastic products for bathroom and kitchen; its automotive segment, however, accounted for the largest part of its revenues, some 61.5 percent of sales of nearly €3.5 billion. Sommer Allibert brought a new specialty to Faurecia, that of automotive cockpits, including acoustic packages.

Despite these financial difficulties, Faurecia continued making headway to expand its geographic base. The company established new production joint ventures in China in 2002 and in South Korea in 2003, as well as a cockpit production joint venture with Siemens VDO. That same year it launched construction on a new manufacturing plant in China, in the city of Wuxi.

DIVERSIFICATION

Faurecia also diversified its client base. By 2005 it had added contracts for a widening range of automakers, including Volvo, DaimlerChrysler, Saab, and BMW. Faurecia also emerged as a major supplier to General Motors at mid-decade. In October 2004 it began production of cockpits for the new Pontiac G6, beating out the usual favorites Johnson Controls and Lear for the contract. Then, in November 2004 Faurecia received a contract worth $2 billion to produce instrument panels, door panels, center consoles, and other cockpit components for Chrysler's U.S. automobiles.

Growth continued during the second half of the decade. Four months after opening a $14.3 million seating plant in Auburn Hills, Michigan, the company announced it would build a $40 million interior systems plant in Sterling Heights, Michigan. In western Europe Faurecia trimmed more than 1,300 jobs from its workforce during the first half of 2005, impacting employees in France, Germany, and Spain. The cuts came as the company began shifting production to countries with lower costs, in a move that was expected to generate annual savings of $124 million.

Faurecia then proceeded to bolster its presence in China. In August 2007 it established a new seat manufacturing operation in Wuhan, along with an interior trim facility in Nanjing. Adding to a network of four Chinese exhaust parts facilities that included locations in Wuhan, Shanghai, and Changchun, Faurecia proceeded in 2007 with the construction of a fifth exhaust parts facility in the Qingdao Industrial Zone that would add the capacity to produce 1 million parts annually.

EXHAUST SYSTEMS LEADER

In late 2009 Faurecia struck a deal to acquire the exhaust systems company Emcon Technologies. By merging Emcon with Faurecia Exhaust Systems, the company formed Faurecia Emissions Control Technologies, the largest supplier of exhaust systems in the world, with revenues of $7.7 billion. Another major transaction followed in June 2012, when Faurecia acquired the Ford North American Interiors business in Saline, Michigan. With 2,100 employees and annual sales of €1.1 billion, the facility made door panels, center consoles, and instrument panels for Ford and Lincoln vehicles.

International growth continued in September 2012 with the establishment of a technology center in Pune, India, which was Faurecia's second research and development facility in the country. In the United States, a second facility opened in Fraser, Michigan. The 160,000-square-foot facility produced interior parts for the Ford Motor Company and General Motors. Around the same time, the company acquired the plastic body parts manufacturer Plastal France SAS, a supplier to Daimler AG. Faurecia already had acquired Plastal Spain and Plastal Germany in 2010.

As technology and globalization led to industry consolidation Yann Delabrière, the CEO of Faurecia, indicated in 2014 that, as a “megasupplier,” the company was well positioned to serve the needs of automotive manufacturers worldwide. “Automakers are willing and ready to launch their vehicles and platforms across the globe while offering the same level of quality and engineering anywhere in the world,” he explained to Bruce Gain in a December 2014 Automotive News article. “We need to offer the same level of engineering, capacity and quality everywhere. To do this, you need to be a large supplier.”

Building on joint ventures that had been established with other companies earlier in the decade, Faurecia continued in 2015 to establish tie-ups with other industry players. These included an automotive interior and exterior components business with the Chinese-based Dongfeng Motor, which included a research and development facility in Wuhan. Additionally, a Brazilian interior and exterior parts joint venture was also established with the Italian-based Magneti Marelli S.p.A. to supply Fiat Chrysler Automobiles.

DIVESTS EXTERIORS BUSINESS

A significant divestiture occurred in late 2015, when Faurecia sold its automotive exteriors operations to Compagnie Plastic Omnium SA for $732.4 million. The company's joint ventures in China and Brazil were not part of the transaction. In 2016 Faurecia's Detroit Manufacturing Systems LLC joint venture with the Rush Group opened a new 102,000-square-foot facility in Toledo, Ohio, to supply the Jeep assembly operations of Fiat Chrysler Automobiles.

It also was in early 2018 that Faurecia partnered with companies such as Amazon.com , Inc., Facebook, Inc., Google LLC, and the Microsoft Corporation to establish the Paris Artificial Intelligence Research Institute, which focused on advancing knowledge in the field, participating in solving concrete problems, and training. Additionally, Faurecia established a new technology center in Yokohama, Japan, for its seating, interiors, and clean mobility operations. During the middle of the year the company announced that shareholders had approved plans to convert Faurecia into a European company. Following the formation of a European Company Committee, the organization planned to change from Faurecia SA to Faurecia SE. Heading into 2019, Faurecia remained a leader in its industry and appeared to be positioned for continued growth.

M. L. Cohen
Updated, Paul R. Greenland

PRINCIPAL SUBSIDIARIES

Asientos de Castilla Leon S.A.; Faurecia Abgastechnik GmbH (Germany); Faurecia Automotive GmbH (Germany); Faurecia Autositze GmbH (Germany); Faurecia Exhaust Systems s.r.o. (Czech Republic); Faurecia Interieur Industrie SAS; Faurecia Interior Systems India Private Ltd.; Sielest SAS; Siemar SAS.

PRINCIPAL DIVISIONS

Faurecia Clean Mobility; Faurecia Seating; Interiors.

PRINCIPAL COMPETITORS

Lear Corporation; Meritor, Inc.; Visteon Corporation.

FURTHER READING

Beecham, Matthew. “Faurecia: Company Profile.” just-auto.com , May 2004.

“DMS to Open Plant in Ohio.” Plastics News, September 12, 2016, 8.

“French Company Forms Two Joint Ventures in Iran.” Iran Daily (Tehran), December 3, 2016.

“Full Year 2017 Faurecia SA Earnings Call—Final.” Fair Disclosure Wire, February 16, 2018.

Gain, Bruce. “Faurecia Expects Tech to Fuel Growth.” Automotive News, December 22, 2014, 13.

Jansen, Kerri. “Faurecia Selling Exteriors Business.” Plastics News, December 21, 2015, 3.

Saint-Seine, Sylviane de. “Faurecia Adjusts after Buying Sommer-Allibert.” Automotive News, May 19, 2003, 28F.

Sedgwick, David. “Will Cockpits of Tomorrow Require One-Stop Suppliers?” Automotive News, February 6, 2017, 18.

White, Liz. “Faurecia Gets Bigger.” Urethanes Technology, December 2000, 6.