Adient exec says plan to move HQ to Detroit was a mistake


Juerss: “We’re now transitioning to a focus on the day-to-day business … not just the finer things in life.”

TRAVERSE CITY, Mich. — Adient plc’s more than $ 36 million investment to move its headquarters to Detroit was a mistake.

Chief Technology Officer Detlef Juerss said the company’s investment priorities since spinning off from Milwaukee-based Johnson Controls Inc. in October 2016 have been misguided and that under new interim CEO Fritz Henderson the company is refocusing on operations and performance.

“We’ve been a little distracted,” Juerss said Monday here at the CAR Management Briefing Seminars. “We’re now transitioning to a focus on the day-to-day business … not just the finer things in life.”

The focus on new automotive business on the West Coast, including the $ 360 million acquisition of Futuris Group in 2017, pulled the supplier too far from its traditional automakers as it tried to win contracts from automakers such as Tesla and Faraday Future.

And the relocation was ill-advised as Adient gained its footing as a new supplier, he said.

Adient scrapped its plan to spend nearly $ 100 million on relocating its main office from Plymouth to the Marquette Building at 243 W. Congress St. in Detroit in June, days after the retirement of Bruce McDonald, its then-chairman and CEO. Adient acquired the building in 2016 for $ 16.9 million and paid about $ 19.23 million combined for a parking deck and surface parking lot near the building. The company acquired the building from Mexican businessman Carlos Slim Helu, who bought the Marquette Building for $ 5.8 million in 2014.

“Detroit was not the right timing,” Juerss said. “We should have spent that money somewhere else.”

That investment should have gone to plant operations, upgrading its aging infrastructure and equipment, he said, noting the company had invested in domestic manufacturing in some time.

Juerss also confirmed the company will invest in a new plant in the U.S. in the coming years, though he declined to reveal the level of investment and location. Adient will invest in upgrading plants through increased automation and equipment, he said.

“Fritz is taking a 180-degree change in many aspects of our business,” Juerss said. “Our strategy now is on our traditional customers and delivering flawless launches while investing in automation.”

Since spinning off from JCI, Adient has struggled to maintain consistent profitability, reporting a $ 1.5 billion loss in 2016 before recovering to a net income of $ 877 million last year.

In 2018, its balance sheet has been dragged down by its money-losing seat structures and mechanisms division with its $ 3.3 billion in debt. In the second fiscal quarter of 2018, Adient reported a net loss of $ 168 million on revenue of $ 4.6 billion but recovered in the third quarter with a $ 54 million profit.

Problems before spinoff

Juerss said the problems with Adient started before the spinoff, including major problems with the integration of German seat mechanisms supplier C. Rob. Hammerstein Group, which JCI acquired in 2011.

Juerss said he believes investing in operations will stabilize its balance sheet and create more value for its customers while also not sacrificing jobs.

“Because we believe in regional manufacturing the jobs will stay in the region, even with automation,” Juerss said. “They’ll just be different jobs.”

Aside from new investments, Adient plans to announce several new partnerships to expand its scope, Juerss said, including with a “big” announcement with a consumer electronics company.

In January, Adient and Boeing partnered to create a new joint venture, Adient Aerospace, to manufacture seating products for airlines and aircraft leasing companies.

“We see the tiered structure of automotive diluting a little bit in this race to create the right alliances,” Juerss said. “These partnerships provide a clear direction for growth in areas we haven’t always performed in.”

Adient ranks No. 11 on the Automotive News list of the top 100 global suppliers, with worldwide sales to automakers of $ 16.2 billion in 2017.

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