TRUCK TRACKS

Meritor visits Europe, stays on top

Trucks Article December 28, 2000
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If the officials who oversaw the automotive parts business three years ago at Rockwell International Corp


If the officials who oversaw the automotive parts business three years ago at Rockwell International Corp. returned to visit, they wouldn’t recognize a lot of operations going on at what is now Meritor Automotive.


That’s what an in-depth conversation with Prakash R. Mulchandani, president of Meritor’s heavy vehicle systems business, revealed.


It’s not that the established strengths of the company have faded. The company is still the leader in making anti-lock brakes for big trucks and trailers on which it pioneered development in the ’70s. For more than a decade, Meritor’s business in this market has been carried out in a joint venture with Wabco of Germany.


New business activities are the eye-catchers. In step with the general swing to increased international activity by U. S. companies, Meritor purchased an axle plant from Volvo in Sweden in 1999. That was the same year in which Meritor entered a transmission producing joint venture with the German gear box maker ZF.


"Things are changing dramatically around the world," said Mulchandani. "We find overseas vehicle makers are ready to adopt the American system of having component producers make sophisticated parts for their vehicles, rather than continue to make them for themselves.


"Opportunities to produce advanced components in markets far from your home base abound."


Any student of business cannot help but admire Meritor’s financial results.


In the second quarter of its current fiscal year, earnings amounted to 91 cents per share, up 26% from earnings of 72 cents per share in the same quarter of the previous year. The current report is the 10th consecutive quarter of double-digit earnings growth. Total sales in the second quarter were $1.2 billion, an increase of $33 million.


Sales of the company’s Heavy Vehicle Systems business totalled $776 million in the second quarter, an increase of $24 million or 3% from sales in ’99.


A decline in North American truck and trailer markets was predicted in the second half of the current fiscal year by Meritor management.


Acquisitions are continuing to reshape the face of Meritor. During 1999, the company acquired Lucas Varity brakes with its hydraulic expertise and Euclid Industries with its varied line of parts for medium and heavy trucks.


"These acquisitions and related moves not only gave us the industry’s longest line of brake parts, but also the most complete selection of related products," observed Mulchandani. Among advanced Meritor offerings are air disc brakes, which Mulchandani noted were offered more for sale in Europe than in the U.S.


Meritor hasn’t strayed from its established market for advanced truck and trailer parts. A trailer air suspension was its first new product announced after the 1997 spin-off. Earlier this year, the firm announced two advances in that air suspension system: a reduction in required maintenance and a cutback in component weight. Both were viewed as popular moves.


Mulchandani expressed confidence in the thought that air suspensions will continue to enjoy their recent upsurge in popularity. Meritor already has additional trailer air suspensions under development, he said.


Another new Meritor offering are unitized wheel ends for drive axles.


A merger with Arvin Industries in early 2000 should broaden the help Meritor can give truck customers with ride control and exhaust problems.


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