|
Delphi Looks Beyond Autos for Growth Sun, Mar 28, 2004 By Susan Kelly CHICAGO (Reuters) - A sensor that measures air and fuel flow in a car engine may seem light years removed from circuitry that monitors a baby's vital signs, but not to Delphi Corp. (NYSE: DPH -news ). The world's biggest auto parts maker is looking to areas as wide-ranging as medical technology, household appliances and satellite radio for faster growth. The strategy is an outgrowth of the Troy, Michigan, company's emphasis on vehicle electronics and an attempt to diversify beyond the brutally competitive automotive sector, where attractive deals on cars squeeze the profit margins of those making the parts. "We are taking our existing technology in electronics and intellectual property and applying it to different markets," Chief Financial Officer Alan Dawes said. Revenue from nonautomotive sales, though small now, could "easily" achieve annual growth of 10 percent to 20 percent in the next several years, Dawes told Reuters. That compares with low to mid-single-digit percentage increases in the company's main businesses. Moreover, Delphi says the nonautomotive operations do not require costly investments in research, engineering and on the factory floor. That's key for a company that has focused on cost cuts, including a 12 percent work force reduction, since its spinoff from General Motors Corp. (NYSE: GM -news ) five years ago. In that time, it has faced many of the same challenges that have weighed on the automaker, including hefty pension and health care obligations and a portfolio of businesses it wants to divest. Delphi already has a big hit in the consumer electronics arena with the XM SKYFi satellite radio, which built on its expertise in audio systems. Since introducing it in late 2002, the company has shipped 750,000 of the portable units to retailers like Best Buy Co. (NYSE: BBY -news ) and Wal-Mart Stores Inc. (NYSE: WMT -news ) As a stand-alone company, Delphi has steadily expanded its customer base in what it calls its "transformation" beyond GM. Today it sells parts to every major light-vehicle manufacturer in the world, but GM still accounts for 61 percent of its business. Delphi has also shed nearly 25,000 jobs in the past three years as it closed or sold dozens of plants and businesses. But its stock has languished as investors focused on its retirement liabilities and underperforming businesses. While purely nonautomotive sales -- at $150 million to $200 million -- were a tiny part of Delphi's 2003 revenue of $28.1 billion -- the company's entry into such markets makes sense, analysts said. "Every automotive supplier needs to broaden their horizons out from under the severe price pressure of the auto industry," said Philip Gott, automotive consultant for research and consulting firm Global Insight. "You really have to love to make parts, because if your goal is to make money, it's not a good business to be in." While many suppliers strive to be No. 1 or 2 in their main business lines, a few have pursued markets beyond autos. Germany's Robert Bosch, which ranks second to Delphi, manufactures a full line of home appliances such as ovens, ranges and laundry machines. To diversify, Delphi has tapped related markets like heavy trucks, marine, and construction and agricultural equipment. Sales of consumer electronics, mainly for commercial vehicles, reached $1.3 billion last year. Products include the Forewarn Radar system that can alert truck drivers to obstacles alongside or behind their rigs, and a personal computer that combines on-board diagnostic capabilities, a global positioning satellite system and entertainment features. Delphi sees some of its most rapid growth in applications ranging from medical equipment and telecommunications to consumer entertainment and household appliances. The company's technology is used in everything from wheelchairs and medical monitoring systems, such as ultrasound equipment, to dishwashers and cooling systems for computer servers. So keen is Delphi on reaching beyond the automotive sector that it would consider an acquisition in the medical, sensor or connector areas, said John Blahnik, head of mergers, acquisitions and new markets. Still, analysts say the company will always be, first and foremost, an auto parts manufacturer. The expansion into new businesses "could be a substantial contributor, but it's never going to be who they are," said Chris Struve, credit analyst at Fitch Ratings. The challenge is raising Delphi's profile among consumers. To that end, the company, which dropped the word "automotive" from its name two years ago to emphasize its expansion goals, recently launched a brand-recognition campaign that includes TV spots and racing tie-ins. "The question is, does the Delphi brand in consumer electronics have value?" Struve said. Analysts said a company that can meet the exacting quality standards of the auto industry and survive its price wars could give less battle-tested incumbents in other industries a run for their money. In the automotive industry, Gott said, "they've taken a very harsh environment, in a very demanding consumer marketplace, and developed products that are trouble-free." Copyright © 2004 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Copyright © 2004 Yahoo! Inc. All rights reserved. |
|
“The greatest danger in times of turbulence is not turbulence; it is to act with yesterday’s logic”. — Peter Drucker The shift from manual workers who do as they are being told — either by the task or by the boss — to knowledge workers who have to manage themselves ↓ profoundly challenges social structure …
“Managing Oneself is a REVOLUTION in human affairs.” … “It also requires an almost 180-degree change in the knowledge workers’ thoughts and actions from what most of us—even of the younger generation—still take for granted as the way to think and the way to act.” …
These pages are attention directing tools for navigating a world moving toward unimagined futures. It may be a step forward to actively reject something (rather than just passively ignoring) and then figure out a coping plan for what you’ve rejected. Your future is between your ears and our future is between our collective ears — it can’t be otherwise. A site exploration starting point
To create a rlaexp.com site search, go to Google’s site ↓ Type the following in their search box ↓ your search text site:rlaexp.com
Donations: Please click the button below to make a donation through PayPal. Copyright 2001 2005 2007 2010 2011 2012 2013 2014 2015 2016 2017 © All rights reserved | bobembry | bob embry | “time life navigation” © | “life TIME investment system” © | “career evolution” © | “life design” © | “organization evolution” © | “brainroads toward tomorrows” © | “foundations for future directed decisions” © | #rlaexpdotcom © | rlaexpdomcom © rlaexp.com = real life adventures + exploration |
