Lear doesn't take a back seat to anyone when it comes to manufacturing automotive seats. The company's Seating business, by far its most lucrative segment, is a leader in the global market for manufacturing car seat systems and their components. The company's Electrical Power Management Systems (EPMS) segment produces automotive electronics, including the manufacture of wire harnesses, junction boxes, terminals and connectors, and body control modules. It operates from some 200 facilities in 35 countries. Its largest customers include BMW, Ford, and General Motors, Fiat, and Volkswagen. Lear gets about 80% of its sales outside the US.
Lear's operations are split between Seating (about 80% of sales) and EPMS (about 20%). The company stays on the cutting-edge of technology as part of its one-upmanship over competitors. Lear makes its seating systems from the ground up, from the structural design to the assembly and all the parts in between.
Products and brands include ProTec head restraints; leather (Aventino brand) and fabrics, some of which fall under its ECO brand; interior materials like Lear's SoyFoam Seating; adjusters; and mechanisms. Lear produces a modular design seating system so they can be used over multiple segments, thus minimizing investment costs. The company's seating systems are supported by its Lear-made electronics that power the adjusters and mechanisms, but also other features like power heating, ventilation, and massage.
Upon emerging from bankruptcy in late 2009, Lear has gradually made some positive momentum on its balance sheet. From 2010 to 2011, the company's revenues jumped by 18%, from almost $12 billion to more than $14 billion. Its profits also climbed 23% from $438 million to $530 million. These increases were mostly the result of increased global production and demand for its products and its attainment of new business. Going forward, it plans to grow its core businesses by focusing on increasing its component capabilities in emerging markets. Lear filed for Chapter 11 bankruptcy in mid-2009 and quickly emerged in the fall of 2009.
After the recession, Lear and other companies in the automobile industry were caught up in the trickle-down woes of OEMs like GM and Ford, and to a lesser extent Chrysler. Lear is driven by consumer and fleet demand for automobiles; in order to cope, it closed factories, reduced headcount, eliminated all non-essential spending, and scaled back on new investments. In 2010 and 2011, Lear recorded more than $130 million in charges related to its restructuring actions, and at the end of 2011, Lear still owed almost $700 million in long-term debt.
Where Lear stays ahead of the game with its EPMS segment is by keeping an eye on the future of the automotive industry. The company cranks up the amperage on its competitors by manufacturing electrical distribution systems, not just for traditional powertrain vehicles but for hybrid and electric vehicles, as well. It designs products that require less wiring and are therefore cheaper to make and are lighter in weight. Lear also follows the trends of customers who are showing an increased desire for additional functioning features in vehicles. Industry research indicates that electronic components account for about 35% of a car's total value. The company has exited non-core product lines, such as switches and tire pressure monitoring systems, opting instead to focus on an automobile's electrical distribution system, with wired, as well as wireless systems.
Mergers & Acquisitions
To boost its fabrics offerings, Lear bought North Carolina-based Guilford Mills, which makes fabrics for almost all major auto manufacturers and high-technology fabrics for such markets as water filtration and window covering, for about $257 million in 2012.