GM admits it's selling steering business, but won't say who's buying
Chinese buyer still negotiating acquisition --Automotive News
DETROIT -- General Motors Co.acknowledged today that it is selling its steering business, although the auto maker quietly has been negotiating the sale of the unit to a Chinese buyer for at least four months.
Yubei (Xinxiang) Power Steering System Co. Ltd. remains a leading candidate to buy from GM the former Delphi Steering, now known as Nexteer Automotive, a Nexteer source said today.
In December, Automotive News reported that Yubei was pursuing the acquisition. GM bought the steering business and four other UAW-represented U.S. plants back from Delphi Corp. in October to smooth the way for Delphi to leave Chapter 11 bankruptcy.
Delphi,the former GM parts unit, spun off from its parent company in 1999 to create an independent public company. Delphi filed for bankruptcy in2005 and spent the next four years operating under court protection until emerging in October 2009.
Customer issues
In a four-sentence statement released today, GM publicly revealed the business was being shopped.
“We've responded to some informal inquiries, but that's the extent of the activity,” said GM spokeswoman Renee Rashid-Merem.
Nexteer CEO Robert Remenar said today that leaving GM would help Nexteer with some customers made uneasy by GM's ownership. “This certainly isn't true of all customers, but certain customers had a reluctance to buy from an entity owned by a competitor,” Remenar said.
Nexteer isa global leader in electric and hydraulic power steering. Yubei primarily serves the Chinese market with hydraulic steering modules.
Nexteer,which operates as a company separate from GM, is expected to post 2009 sales of about $1.6 billion, down from about $2.1 billion in 2008,according to Nexteer internal documents obtained by Automotive News.
Despite a down 2009, the company expects sales to jump to $1.8 billion in 2010 and $2.5 billion in 2013, the documents show.
Electric power steering is Nexteer's fastest-growing product, the documents show. The technology is more sophisticated than hydraulic power steering and, because of its lower weight, results in better fuel economy.
Chinese customer
Yubei is a Nexteer supplier and customer in China. The Chinese company posted sales of more than $125 million last year.
Though relatively small today, Yubei has hydraulic power steering technologywith wide applications in emerging markets. Yubei is part of China Aviation Industry Corp., a state-owned consortium with aviation and automotive interests.
Nexteer has 15 plants worldwide and 6,200 employees, including 2,900 at its headquarters and technical center in Saginaw, Mich.
Likemost North American suppliers, Nexteer suffered during the first three quarters of 2009, the documents show. But the company returned to profitability and positive cash flow in the fourth quarter, the Nexteer source said.
Through September, the company had negative cash flow of $175 million, the internal documents show. About $116 million of the negative flow was for operations and $59 million for restructuring.
You can reach David Barkholz at dbarkh...@crain.com
