Industry risk report auto manufacturing
INDUSTRY RISK REPORT AUTO MANUFACTURING
There’s more to making a car than conveyor belts and assembly lines,
just ask people like Ford Motor Company’s Laurie Champion. Find out
what risk managers in the auto manufacturing industry are doing to
drive up production levels and stay up to speed with fluctuating
markets.
Company Name Location
Arvinmeritor Inc. Troy, Mich
Dana Corp. Toledo, Ohio
Delphi Corp. Troy, Mich.
Ford Motor Co. Dearborn, Mich
General Motors Corp. Detroit, Mich.
Johnson Controls Inc. Milwaukee, Wis.
Lear Corp. Southfield, Mich.
Paccar Bellevue, Wash.
The Goodyear Tire and Rubber Akron, Ohio
Co.
Visteon Corp. Dearborn, Mich.
Company Name CRO
Arvinmeritor Inc. David Lacey, Director, Risk
and Insurance
Dana Corp. Dennis Bennice, President,
Dana Risk Management
Services, Inc.
Delphi Corp. Pamela Geller, Treasurer
Ford Motor Co. Laurie Champion, Director,
Global Risk Management
General Motors Corp. R. Paul Maddock, General
Director, Risk Management
Johnson Controls Inc. John Vargo, Director,
Corporate Risk Management
Lear Corp. Barbara Boroughf,
Worldwide Director, Health,
Safety and Workers’ Comp
Paccar Rebecca McQuade, Director
of Risk Management
The Goodyear Tire and Rubber Damon Audia, Assistant
Co. Treasurer, Capital Markets
Visteon Corp. Peter Look, VP and Treasurer
Company Name CFO
Arvinmeritor Inc. Rakesh Sachdev (acting
CFO)
Dana Corp. Robert C. Richter
Delphi Corp. John D. Sheehan
Ford Motor Co. Donat R. Leclair
General Motors Corp. John M. Devine
Johnson Controls Inc. Stephen A. Roell
Lear Corp. David C. Wajsgras
Paccar None
The Goodyear Tire and Rubber Richard J. Kramer
Co.
Visteon Corp. James F. Palmer
2004 Total No. of
Company Name Revnue Employees
Arvinmeritor Inc. $7.7 billion 32,000
Dana Corp. $7.9 billion 59,000
Delphi Corp. $28.0 billio 190,000
Ford Motor Co. $164.1 billion 327,531
General Motors Corp. $185.5 billion 326,000
Johnson Controls Inc. $22.6 billion 118,000
Lear Corp. $15.7 billion 111,000
Paccar $8.1 billion 16,100
The Goodyear Tire and Rubber $15.1 billion 86,000
Co.
Visteon Corp. $17.6 billion 72,000
Primary
Company Name Broker Captives
Arvinmeritor Inc. Withheld No
Dana Corp. Withheld No
Delphi Corp. Marsh Delphi Ltd.
(Ireland)
Ford Motor Co. Willis, Marsh FCE Reinsu-
rance Co. Ltd.
(Ireland);
Transcon In-
surance Ltd.
(Bermuda)
General Motors Corp. Mars Cap Re of
Vermont Inc.
(Vermont)
Johnson Controls Inc. Withheld No
Lear Corp. Withheld No
Paccar Aon Paccar In-
surance Co.
Ltd. (Bermuda)
The Goodyear Tire and Rubber Quest Wingfoot In-
Co. surance Co.
Ltd. (Bermuda)
Visteon Corp. Withheld No
Company Name: Risk Exposure:
Arvinmeritor Inc. Risks related to foreign currency fluctu-
ations; international political and eco-
nomic situations; disruptions to trading
markets, both domestic and abroad; labor
disruptions; the demand for commercial
specialty and light vehicles; successful
integration of acquired or merged compa-
nies; credit ratings and the company’s
debt; pending litigation related to as-
bestos and the environment.
Dana Corp. Economic conditions in national and inter-
national markets; adverse market effects
of terrorism or hostilities; strength of
other currencies in relation to the U.S.
dollar; ability of Dana’s customers and
suppliers to achieve their projected sales
and production levels; increases in pro-
duction and materials costs (especially
steel).
Delphi Corp. The company’s ability to achieve the labor
benefits expected after the separation
from GM; the company’s ability to generate
sufficient excess cash flow to meet incre-
ased pension funding obligations; poten-
tial increases in warranty costs; currency
exchange fluctuations in the markets in
which the company operates; downturns in
the vehicle production rate in North
America.
Ford Motor Co. Price competition resulting from currency
fluctuations and industry overcapacity;
work stoppages and other interruptions of
supply at Ford or any key suppliers; the
discovery of defects in vehicles resulting
in delays of new models and recall cam-
paigns; unusual or significant litigation
or government investigations into alleged
defects in vehicles; a further credit
rating downgrade; the increased cost of
fuel.
General Motors Corp. Changes in economic conditions, currency
exchange rates and political instability;
labor strikes or work stoppages; shortages
of or price increases for fuel; changes in
laws, regulations or tax rates; the ability
of the company to achieve reductions of
cost and employement levels.
Johnson Controls Inc. Industry vehicle production levels; U.S.
dollar exchange rates; the company’s long-
term debt; the company’s ability to succe-
ssfully complete and integrate various
mergers and acquisitions.
Lear Corp. Fluctuations in the production of vehicles
for which the company is a supplier; labor
disputes involving Lear or significant
customers; costs associated with facility
closures; raw material costs and availa-
bility; adverse changes in economic or
political instability in jurisdictions in
which the company operates.
Paccar A significant decline in industry sales;
competitive pressures; reduced market
share; reduced availability or higher
prices for fuel; currency or commodity
price fluctuations; supplier interrup-
tions; increased warranty costs or
litigation; legislative or government
regulations.
The Goodyear Tire Completion of implementation of a plan for
and Rubber Co. improved internal controls within the
company; pending litigation regarding the
company’s reinstatement that could have an
adverse affect on future transactions;
significant global competition, especially
from low-cost manufacturers; higher raw
material and energy costs that will adver-
sely affect the company’s expenditures in
the future.
Visteon Corp. Visteon’s dependence on Ford Motor Co.; the
company’s obligation to satisfy its pension
and post-retirement plans; changes in ve-
hicle production volume in markets where
we operate; restrictions in labor contracts
with unions; changes to the markets in
which Visteon operates and obtains materials
and supplies; product liability, warranties
and safety claims.
Company Name: Risk Strategies:
Arvinmeritor Inc. The company enters into interest rate swap
agreements to hedge interest rate risks in
the market. The company also uses other
financial derivatives such as foreign
currency forward contracts to hedge foreign
currency and other market risks.
Dana Corp. The company uses foreign exchange contracts
to hedge currency fluctuation risks; the
company also uses interest rate swap
agreements as hedges.
Delphi Corp. Delphi enters into various forward cont-
racts, options and swaps with several
counterparties to manage its exposure to
fluctuations in foreign currency, interest
rates and certain commodity prices; the
Ford Motor Co. The company maintains programs providing
for post-retirement benefits and life
insurance for its employees.
General Motors Corp. The company uses a risk management control
system to monitor foreign exchange, inte-
rest rate, commodity and equity price
risks and related hedge positions. The
company also engages in foreign exchange
forward contracts and interest rate swaps
to hedge market risks.
Johnson Controls Inc. The company accrues for potential enviro-
nmental losses consistent with generally
accepted accounting principles; it also
holds reserves of approximately $62 million
for environmental losses and costs. The
company also uses financial derivatives to
reduce market risk associated with fluc-
tuating interest rates and foreign curr-
ency levels.
Lear Corp. Lear uses foreign exchange contracts to
mitigate foreign currency risk (especially
that associated with the Mexican peso). The
company also uses a combination of fixed
and variable rate debt and interest rate
swap contracts to manage exposure to
interest rate movements. Approximately 20
percent of the company’s workforce is
covered by the company’s benefits post-
retirement plan.
Paccar Derivative financial agreements are used
as hedges to manage exposures to fluctua-
tions in interest rates and foreign
currency exchange rates.
The Goodyear Tire The company maintains insurance coverage
and Rubber Co. and excess liability insurance for expo-
sures related to asbestos, as well as
maintaining workers compensation and
benefits programs.
Visteon Corp. The company sponsors various pension,
health care and life insurance plans for
its employees.
COPYRIGHT 2005 Axon Group
COPYRIGHT 2005 Gale Group
