Federal-Mogul Corp. is reshaping its business, and along the way, the landscape of the automotive sealing sector. Just over a year ago Federal-Mogul's sealing division was its forgotten child. Under the direction of Dennis Gormley, Federal-Mogul tried to establish itself as an international retail auto parts chain, at the expense of the manufacturing end. The effort failed and Gormley left. Enter Dick Snell, a chairman and CEO intent on reviving the seal business.
Snell cleaned house by moving to sell the 132 retail operations and 30 international wholesale units. Then he shored up the seal business, which had grown over the years but wasn't keeping pace with more-aggressive rivals like Freudenberg-NOK G.P. and Chicago Rawhide Manufacturing Co.
Now, via two swift, important acquisitions, Federal-Mogul has transformed itself into a top player in the sealing field.
When the purchases of T&N P.L.C. and Fel-Pro Inc. are completed, Federal-Mogul will become a $1 billion plus sealing company, with strong positions throughout the world. That's a far cry from a company that a short while ago looked like it would abandon its manufacturing business.
The challenge now for Federal-Mogul will be to integrate the new businesses into a cohesive unit. T&N and Fel-Pro don't overlap geographically, so that shouldn't be overly difficult.
For other sealing firms, Federal-Mogul's actions represent a considerable competitive threat, one that could cause further changes in the field.
Reshaping a business is a difficult and oftentimes dangerous move. Federal-Mogul found that out in its ill-fated aftermarket retail venture. This time around, the company is strengthening one of the things it does best—manufacturing seals and gaskets.
Smart money says Federal-Mogul will succeed.