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Commercial Vehicle Group moves to diversify, consolidate

Keywords: Tags  Commercial Vehicle Group, trucks, vehicle body panels, steel, aluminum, Chad Utrup, Caterpillar, construction equipment Corinna Petry


CHICAGO — Commercial Vehicle Group Inc. aims to secure half of its revenue from outside North America within five years as part of an effort to diversify its geography and end markets.

The New Albany, Ohio-based manufacturer of cab structures, sleeper boxes, body panels and structural components for heavy trucks and mobile equipment from steel and aluminum, is adapting to highly cyclical demand by winning new contracts while consolidating facilities.

"We want to make sure no single end market (represents) more than 35 percent of revenues," chief financial officer Chad M. Utrup told investors June 4 during J.P. Morgan Chase & Co.’s eighth annual Diversified Industries Conference. Today, half of the company’s revenue comes from truck builders and nearly one-quarter from construction equipment, he added.

Commercial Vehicle Group has a fairly well-balanced customer portfolio, but nine customers consume a significant piece of the pie, Utrup said.

The company in April won a new contract to supply seating to Peoria, Ill.-based Caterpillar Inc.’s Building Construction Products division, which it will fulfill at its Vonore, Tenn., plant starting in the third quarter.

That contract "is really a testament to what we have been focusing on: the investment and development of (new) products," Utrup said. He noted that the company is diversifying by successfully pursuing medium-duty truck applications in North America, bus business in India and after-market products. Acquisitions will also be part of the company’s growth strategy, he said.

However, the company will permanently close its wire harness assembly facility in DeKalb, Ill., during the third quarter and transfer that work to two Iowa plants, located in Edgewood and Monona.

The decision to consolidate to four wire harness production plants from five reflects changing industry trends, Utrop said. "The Class 8 (truck) market is fine, but not great," he said. "They’re not back to replacement levels, so there is some room for uptick."

Global construction equipment demand is down as well, "so we’ve got capacity available today and we’ll continue to look at where it makes sense for us to consolidate and improve that," he added.

Commercial Vehicle Group expects North American equipment builds in 2013 to be "almost (a) mirror opposite" of 2012, Utrup said.

"During the first half of 2012, both truck and construction was really strong—call it an overbuild, if you will," he said. That was followed by a second-half decline in new orders and shipments. "We’ve felt 2013 was going to be an opposite of that, with a moderate to down first half, after which things will start to pick up again."


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