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Linamar expands all-wheel-drive business

From Automotive News| May 06 , 2007

DETROIT -- A former Ford Motor Co. plant will be the basis of Linamar Corp.'s planned expansion of its all-wheel-drive control systems business.

The Mexican plant that Linamar wants to acquire is part of Ford's Automotive Components Holdings business, which the automaker bought in 2005 from Visteon Corp., the supplier Ford spun off in the 1990s.

On Thursday, May 3, Linamar CEO Linda Hasenfratz told Automotive News that the deal to buy the power transfer unit-making plant will extend Linamar's range and strengthen its hand in offering fully engineered systems.

"It also and gives us more of a design and manufacturing package we are looking for," she said.

Power transfer units provide the driving force to the secondary driving axles from the primary driveline. They are a key part of awd systems.

Terms were not disclosed, and the deal will not close for several months. But the acquisition could add $45 million in sales to Linamar's annual business, based on the plant's capacity to build 50,000 units a year for the Guelph, Ontario, company.

Hasenfratz says production could expand to 225,000 units annually, which would be worth roughly $68 million annually.

She says the increased market penetration of awd into crossover and other vehicles bodes well for power transfer units. "We see this as a growth market here and in Europe and see great potential."

The plant slated for purchase is in Nuevo Laredo, Mexico. Linamar would inherit a Mexican union with the deal, Hasenfratz says.

She said Linamar's primary competitors are GKN Driveline and Magna International Inc. The addition of the power transfer unit also would put it in competition with BorgWarner Inc., she says

Linamar operates 36 manufacturing locations in eight countries. It also supplies cylinder heads, camshafts, crankcases and connecting rods.

Linamar ranked No. 37 on the Automotive News list of the top 150 suppliers to North America with North American original-equipment automotive parts sales of $1.40 billion in 2006.

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