Lear Corporation is a leading Tier 1 supplier to the global automotive industry.
We supply seating, electrical distribution systems and electronic modules, as
well as related sub-systems, components and software, to virtually every major
automotive manufacturer in the world. We have 240 manufacturing, engineering
and administrative locations in 36 countries and are continuing to grow our
business in all automotive producing regions of the world, both organically
and through complementary acquisitions. Our manufacturing footprint reflects
more than 145 facilities in 22 low cost countries.
We use our product, design and technological expertise, global reach and competitive
manufacturing footprint to achieve the following financial goals and objectives
with the aim to maximize shareholder value:
Continue to deliver profitable growth, balancing risks and returns
Maintain a strong balance sheet with investment grade credit metrics
Consistently return cash to our shareholders
Our business is organized under two reporting segments: Seating and Electrical.
Each of these segments has a varied product range across a number of component
categories:
Seating — Our seating segment consists of the design, development, engineering,
just-in-time assembly and delivery of complete seat systems, as well as the
design, development, engineering and manufacture of all major seat components,
including seat covers and surface materials such as leather and fabric, seat
structures and mechanisms, seat foam and headrests. We also have capabilities
in active sensing and comfort for seats, utilizing electronically controlled
sensor and adjustment systems and internally developed algorithms.
Electrical — Our electrical segment consists of the design, development,
engineering and manufacture of complete electrical distribution systems that
route electrical signals and manage electrical power within a vehicle. Key components
in the electrical distribution system include wiring harnesses, terminals and
connectors, junction boxes and high power components for hybrid and electric
vehicles. We also design, develop, engineer and manufacture sophisticated electronic
control modules that facilitate signal, data and power management within the
vehicle. We have added capabilities in wireless communication modules that process
various signals to, from and within the vehicle, including cellular, WiFi and
GPS.
We serve the worldwide automotive and light truck market in both our seating
and electrical segments. We have automotive content on over 350 vehicle nameplates
worldwide and serve all of the world’s major automotive manufacturers
across our businesses and various component categories in both our seating and
electrical segments. It is common to have both seating and electrical content
on the same and multiple vehicle platforms with a single customer. Our businesses
benefit globally from leveraging common operating standards and disciplines,
including world-class development and manufacturing processes, as well as common
customer support and regional infrastructures. Our core capabilities are shared
across component categories, including high-precision manufacturing and assembly
with short lead times, management of complex supply chains, global engineering
and program management skills and a unique customer-focused culture. Our businesses
utilize proprietary, industry-specific processes and standards, leverage common
low-cost engineering centers and share centralized operating support functions,
such as logistics, supply chain management, quality and health and safety, as
well as all major administrative functions.
We supply all vehicle segments of the automotive light vehicle original equipment
market and in every major automotive producing region in the world. Our sales
are driven by the number of vehicles produced by the automotive manufacturers,
which is ultimately dependent on consumer demand for automotive vehicles, and
our content per vehicle.
Key trends that have been specifically affecting our business include automotive
manufacturers’ utilization of global vehicle platforms, a shift among
many automotive manufacturers away from integrated systems to directed component
sourcing, increasing demand for luxury and performance features and content
and China’s emergence as the single largest major automotive market in
the world with above average long-term growth expectations.
Our strategy is built on addressing these trends and the major imperatives for
success as an automotive supplier: quality, cost and efficiency and innovation
and technology. We have expanded key component and software capabilities through
organic investment and acquisitions to ensure a full complement of the highest
quality solutions for our customers. We have restructured, and continue to align,
our manufacturing and engineering footprint to attain a leading competitive
position globally. We have established or expanded activities in new and growing
markets, especially China, in support of our customers’ growth and global
platform initiatives. These initiatives have helped us achieve our financial
goals overall, as well as a more balanced regional, customer and vehicle segment
diversification in our business.
In addition, three major mega-trends have broadly emerged as major drivers of
change and growth in the automotive industry: connectivity, safety and efficiency.
These mega-trends have become widely accepted and also are attracting new, non-traditional
entrants to the automotive industry that are leveraging technology, vehicle
electrification and consumer relationships to exploit growth opportunities in
the industry. Regulation is also a major influence with these mega-trends, as
government mandates (e.g., for vehicles to meet or be equipped with minimum
fuel economy and emissions standards or certain safety-related components) are
driving vehicle design and technology plans. We believe that the following mega-trends
are likely to be at the forefront of our industry for the foreseeable future
with each of these trends converging long-term toward a vision of fully-autonomous
driving:
Connectivity — Customer and consumer demand to have constant communication
and information exchange. This trend began with consumer demand to extend and
integrate their mobile connectivity into the vehicle by connecting mobile devices
with vehicle infotainment systems. Connectivity requirements will continue to
grow as we believe that vehicles will increasingly have direct communication
with cellular networks, satellites and other vehicles in the grid to enable
more advanced safety and fuel efficiency functionality. Vehicles are effectively
becoming smart devices on wheels as the automobile is increasingly becoming
a platform connected to various types of communication networks. We expect these
trends to continue, making the vehicle a constantly connected device, receiving
and transmitting data through a variety of signals, which communicate directly
with the on-board vehicle network.
Safety — Customer and consumer demand for safety features and systems
that protect vehicle occupants when a crash occurs, and also, with an increasing
prevalence, for advanced driver assistance systems that proactively respond
to driving situations to reduce the likelihood or severity of a crash.
Efficiency — Customer and consumer demand for more energy efficient vehicles
that meet increasingly strict fuel economy and emission standards and reduce
the environmental impact of automobiles. This requires further use of electronically
controlled powertrains and related components to improve fuel efficiency, adoption
of alternative energy powertrains, such as hybrid, electric and other powertrain
technologies that facilitate high power electrification of the vehicle, and
use of lighter weight materials throughout the car.
We are well positioned for growth capitalizing on these mega-trends as we supply
high value systems and components that drive critical functionality and core
elements of the vehicle’s architecture and design. The systems and components
that we design, develop and manufacture facilitate connectivity of various vehicle
systems, impact a vehicle’s safety and crashworthiness and support more
fuel efficient alternative powertrains. Many of our systems and components also
directly impact the consumer, providing us with the opportunity to offer our
automotive customers technology, solutions and designs that will differentiate
their vehicles in the consumer marketplace.
We are well positioned to directly participate in the connectivity mega-trend
as we design, develop and supply systems and components that connect the various
electrical and electronic systems within the vehicle into integrated on-board
power and data communication networks. We further have the technology and expertise
to wirelessly and securely connect these on-board vehicle networks and systems
with external networks over various standards and protocols. This expertise
allows us to offer our automotive customers electronic modules, such as connected
gateway modules, that offer functionality such as over-the-air software updates
or cellular communication of vehicle performance data to the automotive manufacturers,
their dealers or the vehicle owners. Further, our expertise in dedicated short
range communications (“DSRC”) technology allows us to provide modules
and software that facilitate direct, high speed communication between vehicles
and roadside infrastructures.
Furthermore, a seat is an active part of the vehicle safety system. As a result
of our innovative product design and technology capabilities, we are able to
provide seats with enhanced safety features, such as the active head restraint
and seat structures that withstand collision impact well in excess of what is
demanded by regulatory agencies. We have developed products and materials to
reduce cost and enhance seat design and packaging flexibility, including our
mini recliners and micro adjust tracks. Another way in which we are well-positioned
to benefit from this mega-trend related growth is our belief that the seat system
will become increasingly more sophisticated, dynamic and connected to both the
occupants and the vehicle. The seat is the logical focal point for monitoring
the driver and passenger and for facilitating feedback between the vehicle and
the occupants. Most recently, the addition of DSRC and other V2X capabilities
positions us to provide high speed communication between vehicles, even in extreme
weather conditions, potentially reducing crashes through real time advisories
alerting drivers to imminent hazards in the roadway ahead, including other vehicles
on a potential path for collision.
Continued growth in more fuel efficient, complex and electronically controlled
powertrains is helping to drive growth in the vehicles electrical distribution
system. The emergence and continued development of alternative energy powertrains,
including electric, hybrid electric and other technologies, is driving growth
in high power electrical systems and components. Hybrid and electric vehicles
incorporate both high power and low power components. As a result, they offer
a significant incremental content opportunity for us. These trends all support
continued growth in electrical and electronic content on the vehicle, as well
as associated software. This content growth will require far more complex vehicle
electrical architectures. Our significant experience designing and manufacturing
highly integrated and standardized architectures that optimize size, performance
and quality leaves us well positioned to take advantage of the growth in electrical
content and the increasingly complex architectures.