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
companys 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
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
companys 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. "Theyre not back to
replacement levels, so there is some room for uptick."
Global construction equipment
demand is down as well, "so weve got capacity available
today and well 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 strongcall it an
overbuild, if you will," he said. That was followed by a
second-half decline in new orders and shipments. "Weve
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