King Lear: how competitors view Lear/Automotive Industries deal

Racing to establish itself as a first-tier supplier of complete automotive interior systems, Lear Seating Corp. announces in mid-July plans to aquire Automotive Industries Holding Inc., a major supplier of interior components.

Under the merger agreement, AI will become an operating division of Lear.

Lear Seating Chairman Kenneth L. Way says AI's expertise in interior trim combined with Lear's seating products will make Lear the largest independent supplier able to provide seating and interior systems to automobile manufacturers worldwide.

The synergy of the two companies does promise to ensure Lear Seatings' first-tier status, and its boast is technically accurate. But rivals such as General Motors Corp.'s Delphi Interior and Lighting Systems and Johnson Controls Inc. cite their own less-publicized product expansions and acquisitions and dispute Lear's intimation that it now will be able to dominate in interior systems. All major interior component suppliers are striving to achieve total system supplier status, they argue, but it may often be achieved through more informal business arrangements rather than mergers and acquisitions.

A Delphi spokesman points out that his company produces instrument panels and steering wheels and has expertise in air bags -- areas in which Lear/AI still don't compete. He adds that his Delphi division -- although not independent -- is larger than the new combination of Lear and AI.

A JCI spokesman points out that in addition to seats his company currently is a major producer of interior trim components such as load floors, arm rests, package trays, instrument panel cluster covers, trim garnishes, blow-molded plastics and consoles for a wide range of vehicles. By 1998 he says JCI may also be the No. 2 supplier of headliners in North America, second only to Davidson-Textron, another major competitor in the interior systems war along with Magna International.