New Venture Gear Inc., the historic joint venture between the manual transmission businesses of General Motors Corp. and Chrysler Corp., celebrates its fifth year with a black-ink bottom line and a government grant to explore composite materials for driveline products.
NVG turns its first profit in fiscal 1993 and improves its bottom line in 1994 on the heels of $1 billion in sales. "I think we achieved (profitability) faster than the business plan said," says Erick Reickert, NVG president and CEO.
Initially formed to relieve the parent companies of responsibility for manual transmissions, a shrinking market in the U.S., NVG has "achieved all of the objectives established," says Mr. Reickert. And then some.
In addition to landing the manual gear box business for Chrysler's Neon and Cirrus/Stratus plus GM's pickup trucks and 4-cyl. engine-equipped passenger cars, NVG's customer list includes BMW AG, Rover Group plc, AM General Corp., Diamond-Star Motors Corp., Beijing-Jeep Corp. Ltd. and another yet-unnamed Chinese manufacturer. Even with these automakers buying NVG goods, non-GM/Chrysler business accounts for less than 10% of NVG's sales.
"We have a very tight flow across the Atlantic," says Mr. Reickert, who adds that NVG is being very careful as it plans its globalization strategy. "It's very capital-intensive; not something you jump right into."
But jump into it the company will eventually because manual transmissions are continuing to lose market share in the U.S. While most of the market for manuals is outside the U.S., Japanese and European OEMS keep that business close to the vest, "so we basically have to fill niches," Mr. Reickert says. "We are clearly helped by the booming sport/utility market."
Basking in success at the half-decade mark, Mr. Reickert recalls some trying times in bringing two entities together and the challenges associated with joining people from two separate cultures. "We tried to select separate nomenclature, personnel policies, logos and color schemes," he remembers. "We had to pull away from both parents."
On the other hand, Mr. Reickert says, NVG benefits from both GM and Chrysler. "We're taking liberally from both our parents and the outside world," he explains. "In terms of knowledge, we've benefited. There's a good cross-fertilization."
NVG also gets the benefit of GM and Chrysler's manufacturing experience. "Both parents had things the other didn't. Therefore we could choose the best practices from each, he says."
The U.S. Department of Commerce, meanwhile, chooses a consortium led by NVG called Composite Venture to receive a $3 million grant to develop composite materials and manufacturing methods for use in automotive drivelines. Other members of the consortium include North Carolina State University; Lansing, MI-based Quantum Consultants Inc., specialists in computer simulation and analysis of composite materials; Ashtabula, Oh's Premix Inc., a manufacturer of molding compounds and compression-molded parts, and Wilmington, DE-based Hercules Inc., a carbon-fiber producer.
NVG forms Composite Venture to support the government-industry Partnership for the Next Generation of Vehicles (PNGV) development of the supercar. The use of composite driveline components will help significantly reduce weight, NVG says. The first product being designed by Composite Venture is a shift cover assembly for NVG's 1998 NV 4500 manual transmission.