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


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


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


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


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


Visteon Corp. $17.6 billion 72,000


Company Name Broker Captives

Arvinmeritor Inc. Withheld No

Dana Corp. Withheld No

Delphi Corp. Marsh Delphi Ltd.


Ford Motor Co. Willis, Marsh FCE Reinsu-

rance Co. Ltd.


Transcon In-

surance Ltd.


General Motors Corp. Mars Cap Re of

Vermont Inc.


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


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


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


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


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.

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