Is Strattec a Sign of America's Automotive Future?

It would be great to have a crystal ball right now. I’d most like to get a view of what the North American auto industry will look like in just 12 months. Will GM, Chrysler and major Tier Ones survive as standalone entities?  My guess is yes, but with a dramatically reconstituted asset base.One sign of potential changes comes from an SEC filing Feb. 5 from a company called Strattec Security Corp. Strattec and two partners bought a $6.7 million piece of Delphi’s auto partmaking  business. Delphi, the former GM unit, announced that its Power Products was “non-core” last October. The business develops and manufactures power lift gates, power deck lids, power sliding doors, and power cinching latches and strikers. Delphi is desperately trying to raise cash to emerge from bankruptcy. Proceeds from the power products sale is a tiny piece of the puzzle, but shows how a new automotive supply industry may be emerging-albeit very slowly-in the USA.

Strattec was formed only in 1995 in Milwaukee, WI, as a spinoff from Briggs & Stratton, which first began developing auto components 100 years ago. The spinoff of the technology into Strattec created more opportunity for the business to raise capital and develop alliances. Strattec is taking over the North American Power Products business from Delphi while partners are acquiring foreign assets.

Here’s what’s interesting: Strattec is affected by the downturn in US car sales and has reduced work force and frozen executive salaries. But it’s still investing in the business. A company with strong technology and management is taking offer the assets of a troubled company, and probably re-investing at the right time. That could be the future of the North American auto supply business.

As an interesting side note, Strattec also disclosed in the 10-Q SEC filing that it is moving a large volume ignition lock housing program originally planned for China to its North American operations in Milwaukee and Juarez, Mexico.  That move could boost North American sales by more than $12 million over the next two years.