increase European presence

September 30, 2OO2
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CRAII{'S DETRoIT BUSINESS
-:
show
brings
back
SAE
Metaldyne
would
acquisition
topsuppliers,
automaker
presence
increase
European
BY TERRYKosnnosxy
C Il A I N'S D E T I I Ol I fJ U.5/iVl,'.S.S
BY TERRY KosDRosKY
CIU I N'SDETRO/?A'IS/A'f,SS
Metaldyne Corp. is poised to nearly double its European levenue and
gain access to new custonrers with
its proposed purchase of Belgian
geat'-maker VCSTIndustrlal Produc,ts.
The two companies signed a letter of intent last week for Plymouth-based Metaldyne to acquire
all the shares of VCST. based in
Sint-Truiden, Belgium.
VCST reported sales of 9175million last year and employs 900 in
Belgiunt, Germany and the United
States. The cornpany designs and
nranufactures gears, gear sets and
shafts for automotive transmissions, engines and brakes. Abont
9210 million of Metaldyne's $1.4
billion in automotive sales last
year were in Europe.
Just as important are VCST's
ploducts, which give Metaldyne
more chances to build complete
chassis and engine modules. Metaldyne desigrrs and manufactures
metal components for automotive
transrnissions, engines and chassis. VCST was a supplier to Metal-
lllt's & great t,i,m,e
t,o
bc a,bu,qet'.,,
RaleshKotharl,SenecaPartnersInc.
dyne and a custonler',said Kult
Ruecke,Metaldyne'sdirector of
corporateconrnrunications.
"It givesus greatel capability to
build tnore finished assernblies
and the ability to add value to our
products,such as folgings, which
is the Metaldynemodel,"he said.
Rueckewouldn't say which new
customersVCST brings to Metaldyne. The deal is still subjectto a
final review by both partiesand to
regulatoryapproval.
Metaldyne is owned by Bloomfield Hills-basecl
Heartland
Industrlal
PartnersL.P.,a pl'ivate-equityfinn.
VCST is owned by private-equity
investorsin Europe.
The VCSTdeal is the secondmajor acquisition target annourrced
by Metaldyne in the past few
months. The parts-maker aud
DalmlerOhrysler
AGsigneda lettel of
intent in July for the cornpaniesto
joiutly operatea forging plant in
New Castle,Ind.
Metaldyne's strategy is to glow
internally and via acquisition,
Rueckesaid.The trick is to manage
acquisitions without overloading
on debt,an analyst said. Metaldpre
reporled long-term debt of $1.1billion and total liabilities of $2.2billion in its 2001annnalreport.
"It's a great time to be a buyer
becausevaluationsfor companies
are down,but there'salsothe challengeof saying:'We'vegot a lot of
debt.How do we manageit?' " said
RajeshKothari, managingpartner
of Birmingham-basedSenecaPartners Inc., an investment-banking
and venture-capital company.
"They'll probablystructure it in a
way that limits the amoulttof cash
they haveto put in."
Even with Metaldyne'sdebt, it's
hard to turn down a companythat
looks like a good match, Kothari
said. Prices for companiesal'e
much lower than a few years ago.
Terry Kosdrosky:(313)44G1626,
t ko sdrosky@,
cra in.corn
TnsslecontinuesatNovi Center
BY ANDRDWDrnrnnnlcH
c:R;I N'Snr:7'R()/T/tU.SIA'&S.S
Squabblingbetweenthe NovlExpoGenterInc.anclits
landlord continuesin a new larvsuitfiled Aug. 2?and
in strong talk from the presidentof the company,who
said he isn't about to drop a separatecase filed irr
March.
The new suit wasfiled in Oakland
CountyClrcultCourt
and claitnsthat the landlold,AdellBros.Chlldren's
Trust,
is breachingits leaseagreententwith Novi Expo Center by not allowing it to sublease
part of the building.
At the sametime, a sepal'atelawsuit filed in Marclr
is moving forward. That suit asks the court to rule
that ifa hotel is ever built on the site,S0percentofthe
revenuemust go to Novi ExpoCenter.
The court activity is the latest in a chain ofevents
that haveseenthe once-good
relationshipturn sour -a relationship that fosteredthe transformationof a
formel liquor-distribution center into one of nretro
Detroit'smostpopular conventioncenters.
"We subleasea portion of our building and didn't
receivea reasonableresponse,so we saw fit to move
forward with legalaction," Bowmansaid.
RobertCarson,an attorneyfor the trust at Birmingham-basedCarsonFlscherplc, did not return three
phonecalls by presstime.
The latest suit involved the Novi Expo Center's
neighbor to the west - Comauplco, a division of
Italy's FlatSpA.
Pico has leasedabout 3?.000
squarefeetofthe Novi
Expo Center for eight years to use for storage,Bowman said. The leasebetweenNovi Dxpo Center Inc.
and the Adell Bros.Children'sTrust allowsthe cenrer
operatorsto subleaseportionsof the building as long
as the tntst consents.
According to court docurnents,Novi Oxpo Centel
wantedto extendthe leasefor a year and has tried to
contact the trust since July. However,the company
has not leceiveda response,Bownransaid.
"I don't think there's any logical reason why we
wouldn't be able to extend the lease,"Bowman said.
"Wejust haven'treceiveda r€sponse."
The problemsbetweenthe Novi Dxpo Center and
its landlord go backfive years.
In November1997,the Adell Bros.Trust suedNovi
Expo Center, claiming it
owedrerrt.The next rrronth.
the center sued the trust.
CONTR(}VIRSYclaiming it had been prevented froln rnaking inrThe problems between
provements.
the Novi Exoo Center
Oakland Circuit Judge
and its landlord go back
Fred Mester consolidated
five years. Highlights
include:
the cases,and the sidesnegotiated a settlement apI November1997: The
provedin July 1998.
Adell Bros. Trust sued
The setNovi Expo Center Inc.,
tlement
included
a
claiming it owed rent.
provision allowing Novi
The next month, the
ExpoCenterthe right to recenter sued the trust,
new its leaseevery l0 years
claimingit had been
until 2042and required the
preventedfrom making
landlordand tenantto jointimprovements.A
ly build a 300-room
hotel.
settlement was signed
Borvman said he likely
in July 1998.
will sublet the building and
I March 7,2OO2zA
lawsuit is brought by the property to another user,
possibly a light-industrial,
trust, asking the court
to evict Novi Expo
manufacturing or wareCenter and contending
houseand distribution cenit hasn't lived up to its
ter, once the new $18milend of the settlement.
Iion Novi Expo Center
Novi Expo Center
planned for Grand River
countersued. The suit
was partiallydismissed. Avenue and Beck Road is
built. Bowman said he
hopesconstructioncanbeginnext year.
The March ? larvsuit brought by the trust, asking
the court to evict the tenant,contendsthat Novi Expo
Centerhasn't lived up to its end of the settlementby
failing to fornt a limited-liability companywith the
trust to build a 300-roomhotel.
Novi Expo Center countered,contendingits landlord wantedto sell the highly visible and valuablelancl.
Keefe Brooks, an attolney for Novi Expo Center
with Detroit-basedButzetLon( p.C.,said OaklandCircuit JudgeNanci Grant threw out much of the casein
an Aug.8 order of partial dismissal.
The only thing left to hashout, he said,is who will be
responsiblefor building a hotel on the site and what
poftion of the revenuewill go to Novi Expo Center.
Andrew Dietdericlt: (313) 446-0JIS,adietdericltGa.
crain,com
CnnmR
or
Ask and ye shall receive, say
the organizers of the 2003 Soclety
of Automotlve Englneers World Congress.
Tier-one suppliers have politely excused themselves the past
few years fi'om exhibiting at the
annual automotive show at Cobo
Center in downtown Detroit.
and Dalmler0hrysler AG plan to
hold panels each day and conduct
purchasing meetings at Cobo. All
automaker executives will be at
the vice president level or higher.
Amati said. SAE also plarrs to
build a 350-seattheater on the exhibit floor for the panels.
Fewer tier'-ones exhibited at
SAE because automakers have
private showirrgs throughout the
year'. So SAE has nrade an effort
Their main customers.
to bring automakers
the automakers,didn't
back,said Herb Everss,
have enough of a pressenior automotivecor.lence there to walrant What ls lt?: The
sultant to SAE. Everss,
the expense.
Societyof
a fornrer supplier execThat's changing for' Automotive
utive and presidentof
the 2003show. sched- Engineers
the Troy-basedconsultuled for March 3-6.All WorldCongress.
ing cornpany Global
three domestic au- When?:March 36. Emergent
t.t.C.,said the
tornakersand the BMW Who?: Domestic
changes
ale a response
automakersand
Grouprvill havedisplays BMW
to feedback.
Grouowill
featuring cars and the havedisplays;
"There's a turn
key suppliers for each auto execswill
that's being made."he
system,said Dave Am- holdpanels.
said."The groundrules
ati, director of automochanged, and we know
tive businessfor the Warrendale, that. We have to be able to tell
Pa.-based
SAE. Talks ale contin- tier-onesupplierswhat's in it for
uing with two otherautomakers, them,and they needto feel value
he said.
doingit."
Amati hopes to draw tier-one
Visteon said it's still considersuppliels such as VlsteonCorp., ing whetherto attend.
LearCorp.and TRWInc. to drive
"Certainly, we're taking a looh
more tier-two and tier-threesup- at the changesand the greater
plier attendanceand exhibitors.
Ievel of (original-equiprnent
Attenclance last year was manufacturer) participation,"
37,233,down from the peak in said Greg Gardner',manager of
2000of49,300.
corporateand financial news for
"The tier-twos need the tier- the Dearborn-basedsupplier.
ones to have a better chance to "We haven'tnradea decisionas
get to the automakers," Amati ofyet, though."
said. "They're really the missing
Besidesexhibits. the top 30
link. Now the (automakels)are supplierswill plesent 153techhere,and ifyou're not there,you nical papers at the 2003show,
don't get the direct accessto the Amati said. About 400technical
papel'sale expectedfrom autoexecutives."
Besidesdisplays from the au- makers.
(3/3)446-1626.
tomakers, exectttivesfrom Ford
Tern, Kosdrosky:
Motor Co., GeneralMotorsCorp. t ko sdrosky @,
cra in.cont
SAE
wHm?
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