Federal-Mogul Advises Against Bankruptcy

TRAVERSE CITY, MI – Federal-Mogul Corp. is "counting the months" to when it expects to emerge from bankruptcy in both the U.S. and U.K., Jose Maria Alapont says here at the Management Briefing Seminar on Wednesday. Alapont, who became chairman, president and CEO at Federal-Mogul in March, laughingly says, "I knew I couldn't avoid that question," and offers this advice: "Do your very best to avoid

David C. Smith, Correspondent

August 3, 2005

2 Min Read
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More MBS CoverageTRAVERSE CITY, MI – Federal-Mogul Corp. is "counting the months" to when it expects to emerge from bankruptcy in both the U.S. and U.K., Jose Maria Alapont says here at the Management Briefing Seminar on Wednesday.

Alapont, who became chairman, president and CEO at Federal-Mogul in March, laughingly says, "I knew I couldn't avoid that question," and offers this advice: "Do your very best to avoid bankruptcy."

Although restructuring forced by bankruptcy can help a company become more efficient, Alapont says, "being in Chapter 11 can be very expensive. Even if you're a competitor, stay away from it.”

Federal-Mogul plunged into bankruptcy in the U.S. in 2001 shortly after its British affiliate was forced to take that route in the wake of mounting asbestos liabilities. Merely surviving in this environment has been a challenge – and costly. Legal expenses, alone, have been running $100 million a year, he says.

Federal-Mogul President and CEO Jose Maria Alapont.

Despite the black cloud of bankruptcy overhead, Federal-Mogul managed to boost revenues 4% during this year's first quarter and another 6% in the second, Alapont says. "Those are apples-to-apples comparisons” and were achieved despite tough conditions for suppliers, he adds.

Alapont, who participated in an MBS session entitled "Is There Calm After the Storm?” says to remain successful and profitable, automotive suppliers must develop "truly global strategies" that not only "drive beyond continuous improvement" but extend to "breakthrough performance."

Federal-Mogul is focusing on excelling in manufacturing, engineering and sourcing, as well as working as a global team.

The Southfield, MI, supplier's revenues reached $6.2 billion in 2004 split in two categories: 54% OEM, including heavy-duty and light-vehicle customers; and 46% aftermarket. It is a diversified producer of powertrain, sealing, safety and performance products, with 130 facilities in 30 countries and 15 technology centers.

Alapont says global growth between now and 2010 will be fueled by emerging markets, where he expects 89% growth to 16 million units five years from now.

A parallel trend will be compact-vehicle growth in these markets and a greater focus on larger vehicles with higher content in mature markets such as the U.S. and Europe, where demand will be flat.

China will drive the pace car: "By 2015, China will have half of the middle-income consumers in the world," he predicts.

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