GKN in expansion drive

Automotive products division hopes to benefit from the effects of globalisation

By Arlene Foster

GKN intends to expand its automotive products division through acquisition and more outsourcing. The engineering group also expects to increase sales of its core driveline systems on the back of recent production increases announced by UK-based Japanese vehicle manufacturers.

GKN’s Powder Metallurgy and Sankey divisions are potential targets for acquisitions, said Trevor Bonner, managing director of GKN’s automotive and agritechnical products division.

`Given trends to globalisation and a leaner supply chain, we will be looking to develop these businesses beyond their national or regional status,’ said Bonner.

GKN made an unsuccessful approach to fellow engineering group T&N about buying its powder metallurgy operations. World demand for powdered metal components is outstripping rates of vehicle output, said Bonner. `We are seeking to expand this business and will pursue acquisitions as opportunities arise.’

New growth opportunities for the Sankey division, which comprises engineering products, wheels and industrial products, will come in underbody components and vehicle assembly activities, he said. A manufacturing facility on the Continent, and a presence in North America and emerging markets, was needed.

Further contracting out of design and building of components by vehicle manufacturers will spawn more business for GKN’s driveline activities. `We expect new opportunities on the Continent where about 40% of demand is still met in-house,’ said Bonner.

GKN has already taken over production of driveshafts for Fiat in Italy. From 1998, GKN’s factory near Florence, will start to sell to customers beyond Italy.

In the UK, GKN hopes to increase sales to Japanese transplants. `If the new output rises from Toyota and Nissan substitutes imports from Japan of complete vehicles, we could make a 100% gain with these suppliers. With £470m in cash, the first of these expansions could come as early as March when the engineering group reports its results.