TRAVERSE CITY, MI – Tim Leuliette has been preaching the need for change for years, and he takes his own advice: He was CEO or president of five automotive companies and his own investment firm before taking the top job at Dura Automotive Systems last month.
Today, preaching about change is preaching to the choir. Most companies seem to know the old business models don’t work.
General Motors Corp., Ford Motor Co. and Chrysler LLC “have closed 35 plants and lost 89,000 manufacturing jobs,” he says, “and there are more closings on the horizon.”
Nonetheless, he says, a fourth of North American suppliers are on the edge of failure and “too many are still in denial or just beginning to grasp the idea that the world has changed.”
His message to the Management Briefing Seminars here is that companies have to be global, and if the U.S. is to be an industrial power, it must have a national energy policy.
“The United States is 20% of the global (gross national product),” he says. “If you are not out there, you are missing 80% of the market.”
Leuliette pledges Dura, which had emerged from 20 months of bankruptcy in June, will be global under his hand.
Crisis demands radical change, he says, and the global energy crisis is dividing the industry into two groups, “the quick and the walking dead.”
“Dura will be one of the quick ones now,” Leuliette proclaims. “We’ve been through the fire. We will prioritize around a worldwide opportunity set. We will be bold, innovative, willing to take risks.”
Global thinking means, for example, the end of spending huge amounts of research and development money on SUVs and pickups sold only in the U.S. market and favoring development of vehicles that can be marketed around the world.
Dura makes structural door modules, parking brakes and shifters, glass systems, external trim and other parts.
After his speech, Leuliette says he took the job at Dura because the company was well positioned for a successful recovery, being leveraged only 1.8 times.
“It has proprietary technology in all of its areas, and it has a lot of business in Europe,” he says. “There are a lot of opportunities for improvement.”
Working capital can be used better, Leuliette says. That alone could reduce the debt level below a factor of one by next year, and coordinating the company processes and design rules between Europe and North America will bring economy over time.
Leuliette is optimistic about the U.S. industry in general.
“Many say the buzzards are circling and say Detroit is doomed,” he says. “Detroit has fallen, but it can get up. This crisis is what the U.S. auto industry needed. It forced us as leaders to set our expectations higher than before.”
And yet, he says, “The next 12 months will determine if management at each of these companies is worth the money.”
Leuliette is adamant the country needs a national energy policy.
“We had warnings,” he says. “We knew that gasoline prices would rise. As a nation, we did nothing and as an industry we went on as if oil prices would be low forever.
“An energy policy needs to be at the center of presidential campaign,” he adds. Until now, neither Barack Obama nor John McCain “has laid out a comprehensive national policy that engages all the stakeholders.”
McCain’s proposal to increase off-shore drilling won’t get the country off the oil drug, and Obama’s idea of a windfall tax on oil profits is poor economics and would reduce oil company investment in alternative energy, Leuliette says.
The government should require nuclear-energy production and demand more electric cars and hybrids, he says, adding he also favors keeping fuel prices higher with taxes.
Leuliette wants a commitment like John Kennedy’s in 1961 to put a man on the moon, one that, quoting Kennedy, “demands a major national commitment of science and technical manpower.”
He says the nation has motivation and opportunity for an energy policy, “but we are short on cooperation.”