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Stacy94PGT · 10-10-2003, 02:51

Chief says contract shows Collins & Aikman is healthy despite recent financial losses

By Bill Vlasic / The Detroit News

DETROIT -- In a move that should reassure investors about its long-term prospects, Collins & Aikman Corp. will announce today that it has won a major new contract to supply interior systems for the upcoming Ford Futura sedan.

The deal with Ford Motor Co. comes as Collins & Aikman faces an internal review of its future business with DaimlerChrysler AG's Chrysler Group.

Published reports last week that said Collins & Aikman's contracts with Chrysler were in jeopardy caused the parts supplier's stock to drop more than 30 percent.

However, Collins & Aikman Chief Executive David Stockman said Thursday that the agreement with Ford shows the company is healthy despite recent financial losses.

"This contract with Ford is the biggest in the history of C&A," Stockman said in an interview. "We have had a huge vote of confidence here."

Stockman, a former Michigan congressman and budget director in the Reagan administration, said the Futura deal is a "multibillion-dollar award" that confirms Collins & Aikman's leadership position among automotive interior suppliers.

"It fully validates our business model and underscores that we are a company with a solid and bright future," he said.

Ford spokesman Paul Wood confirmed that Collins & Aikman has been awarded a "significant portion of the interior systems for the Futura." He declined to disclose the size of the contract.

The mid-size Futura is the centerpiece of Ford's re-emphasis on passenger cars, and will be built at the automaker's Hermosillo assembly plant in Mexico starting in 2005.

Ford has said that it plans to build 135,000 Futuras annually at the plant. Ford plans other variants off the Futura's Mazda-based platform that could represent 800,000 units of production a year.

On the Futura, Collins & Aikman will be responsible for design, engineering and purchasing of interior components including instrument panels, door panels, center floor consoles, carpeting and trunk systems, Stockman said.

Stockman's private equity fund, Heartland Industrial Partners, is Collins & Aikman's largest shareholder. He took over as CEO in August, and instituted staff cuts to stem losses that totaled $100 million in 2001 and 2002.

The parts maker is expected to lose $35 million this year on revenues of about $4 billion, according to auto analyst Richard Hilgert of Oppenheimer Securities.

Hilgert said Collins & Aikman's outstanding debt of $1.2 billion is a bigger concern to investors than its performance in the hotly-competitive interior parts business.

"This company provides a high level of quality, service and technology in the industry," Hilgert said. "This (Ford) contract shows how one of their biggest customers views them."

Chrysler accounts for $850 million, or 30 percent, of Collins & Aikman's annual business, followed by General Motors Corp., Ford and Toyota Motor Co.p.

Chrysler spokesman David Barnas declined to comment on the automaker's relationship with Collins & Aikman.

A source close to Chrysler said that its future business with Collins & Aikman is under internal review, but no decision has been made on rebidding the work.

Stockman had "absolutely no comment" on his company's relationship with Chrysler.

"I can say we are in the midst of a very extensive assignment with Chrysler and launching a huge amount of product," he said.

Collins & Aikman has interior contracts on several important new Chrysler products, including the Dodge Durango sport utility vehicle and the Chrysler 300C full-size sedan.