Mergers, acquisitions change OEM supply landscape
By Staff -- Purchasing, 5/6/1999
A number of OEMs and automotive corporations have changed ownership in the past few months. The trend toward consolidation means a number of smaller companies are disappearing from the scene and the larger companies are gaining market share.Here's a rundown of some recent major changes in the OEM supply base:
* Gardner Denver, a manufacturer of industrial compressors, blowers, and pumps, acquired Allen-Stuart, a Houston-based maker of custom-engineered packages for blower and compressor equipment in air and gas applications. Last year Allen-Stuart did about $14 million worth of business. Gardner Danver purchased the company in a cash-for stock transaction, with the expectation that it would give them better access to their customers in the Southwest.
* Industrial Rubber Products has acquired Irathane Systems, a division of Illinois Tool Works, for $8 million. David Burkes, the president/CEO of Industrial Rubber, says that the addition of the new company will expand its product line and open up new markets. Irathane Systems makes rubber and urethane linings for several industries.
* Peregrine Inc. has sold its Windsor, Ontario, plant to Lear Corp., an auto-parts maker. Peregrine makes seat assemblies and door panels for several divisions of GM. A few weeks before the Peregrine buy, Lear bought UT Automotive from United Technologies Corp. for $2.3 billion.
* National Equipment Services has made three acquisitions in rapid succession: Mayer-Hammant, Wellesley Crane Service, and Baricade and Light Rental all became part of the company at the end of March. National Rental rents specialty and general equipment to industrial and construction end users. Mayer-Hammant is a supplier of air compressors and pumps; Wellesley Crane makes cranes; and Barricade and Light Rental specializes in traffic-control equipment.
* Sabroe A/S has gone under the hammer to York International, in a $590 million deal that will create the world's leading refrigeration company. York makes heating, refrigeration, and ventilation products, and Sabroe A/S is a leading supplier of refrigeration systems and products in Europe. York will also become the world leader in marine refrigeration products.
* Harmon Industries, a supplier of train control and communication products, has bought out Golden Gate Switchgear for an undisclosed amount. Golden Gate makes AC and DC Switchgear for electrified rail and commercial applications.
* A merger of MTS Systems and DSP Technology was announced by the two companies at the end of March. The new company will be known as MTS Systems Corp. and will be headquartered in Eden Prairie, Minn. It will specialize in boosting design productivity for engine and powertrain manufacturers. MTS has been involved in computer-based mechanical design and system integration, and dspt has focused on software, data acquisition and control systems for engine and powertrain design as well as aerospace and advanced research.
* Deere & Co. has owned 50% of InterAg Technologies since 1996 and will now acquire the other 50%. InterAg provides agribusiness customers with software and electronics for equipment businesses. Its main businesses were Phoenix International, a designer of custom electronic products for heavy-duty OEM applications, and Agris, maker of agribusiness information management systems.
* An Italian manufacturer of diesel engines, Lombardini, has been purchased by Mark IV Industries. The deal was worth $148 million. Mark IV, located just outside of Buffalo, makes power transmissions, fluid transfer systems, and specialty filtration systems and components for global markets.
* Toshiba has announced that its alliance with Carrier is finally official, as the two makers of air conditioning, ventilation and refrigeration components agreed to form a joint venture headquartered in Fuji City, Japan. The new venture will specialize in air-conditioning equipment.
These consolidations, along with the many others among carmakers and and OEMs in the past year, represent hundreds of billions of dollars in transactions and considerable hidden cost involved in amalgamating different corporate cultures. And the configuration of the different companies' supply chains will of necessity be disrupted, requiring in almost every case a close look on the part of the new management at how the supply chain is structured and exactly how purchasing best fits.
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