Rockwell International tooling up to make parts for a 'world car'
Robert Anderson has no doubt that a small "world car" will be built. But to Mr. Anderson, chairman and chief executive of Rockwell International, the big question is, "Which manufacturers will be alive and well enough to build it?"
The Detroit automakers are in the doldrums, but that only encourages Rockwell's plans. His company is gearing up to help supply producers of the world car that Mr. Anderson predicts will "fit the needs of the 21st century."
Part of the strategy is to solidify Rockwell's role as a leading supplier of components to auto and truck manufacturers outside Detroit. He sees a vastly changed world auto industry and he expects Rockwell to be ready for it.
"For one thing, there will be fewer automotive manufacturers worldwide," he predicts."These are tough times for carmakers, and the weaker ones will find they must merge or be forced out of business."
Surviving companies, however, will produce a car that will be smaller, lighter, and more economical, with a greater interchangeability of parts. "For the sake of the American economy, US automakers had better be sure they're prepared to win a large share of this new market," Mr. Anderson cautions. It's time Detroit learns "it's got to think more worldwide than it has in the past," he says.
What he calls the "first generation" of a world car will be introduced by American auto producers with their 1981 models later this year.
In his view, the world car will end the practice of developing individual autos for varius parts of the world. The idea of manufacturing large cars for the US market and small cars for overseas markets is ready to be scrapped, he contends.
Mr. Anderson believes the current and continuing energy shortage will dictate development of the world car, and he expects major auto companies to see things that way, too. "That means components will be made in whatever part of the world can make them most efficiently. The parts will be interchangeable and will be assembled in different countries, but for one basic car," he says. He looks for a similar concept in building heavy-duty trucks.
"We'd like to be a part of that. If we make parts for cars and trucks in the US, we want to make parts for the world vehicles in Europe, the Far East, or wherever they're needed," says the head of the dominant US producer of axles. "That's why we're continuing to devote more and more resources to greater expansion of our automotive business internationally."
Already under way to help meet that goal is what Mr. Anderson terms an "aggressive" five-year, $500 million capital expansion program is Rockwell's automotive business. The plan will bolster its role as a worldwide supplier to the heavy-duty vehicle market and, he declares, "enhance our position in the passenger and light-truck market."
On another front, management of Rockwell remembers well the lessons of the 1974-75 recession and its effect on the big, multi-industry company. "Since then we've built and strengthened our company so that we are well hedged against another 1974-75 occurring at Rockwell," Mr. Anderson notes.
The fiscal year ended last September was the strongest in Rockwell's history, but Mr. Anderson sees 1980 as the year in which "we will test our building process. We're also in a great position to demonstrate just how good our planning has been. We're confident we've done our homework well."
He talks of the company's "balanced diversification" through its four businesses -- automotive, aerospace, electronics, and general industries groups -- as its greatest strength and what sets it apart from many other large corporations.
Then there's Rockwell's financial strength, which positions the company to take advantage of attractive acquisition opportunities or other investments. At the end of fiscal 1979, Rockwell had $564 million in debt but also held $634 million in cash or cash equivalents.
Mr. Anderson sees no need for outside financing, "At least for the next several years." The company recently arranged $600 million of revolving credit with a group of 20 US banks at terms "very attractive to Rockwell."
"We're not a billion dollars in debt or at the mercy of short-term interest as we were in 1975," he stresses. "We've taken actions in advance of a recession, something we didn't do as well in 1975. And we had a backlog [in orders] of $7.8 billion at the end of last December, which was twice our backlog going into 1975."