CHICAGO-In sports parlance, Tenneco Automotive seems to be at the ``top of its game,'' though its executives might argue there's always room for improvement. Record sales last year. Expansion. Money to spend, with only the burning question: Where to spend it?
President Dick Snell makes no secret of the fact the world's larg-est producer and marketer of ride control products and exhaust systems and components is on the prowl for more acquisitions.
``We're always looking for them,'' he told journalists recently attending the firm's annual trade press conference in the Windy City.
There, top officers from Lincolnshire, Ill.-based Tenneco Automotive (TA) reported on a year of continued growth, and outlined upcoming plans for its Walker Manufacturing Co. exhaust division and Monroe Auto Equipment Co. ride control products division.
Steady gains in the original equipment and aftermarket arenas gave TA its best sales year ever-``We're really going to glory,'' Mr. Snell remarked.
Last year the company had record revenues of $2 billion, compared with $1.8 billion the previous year. Operating income in 1994 was a record $245 million, excluding special charges for plant consolidations and closings, vs. $222 million in 1993.
During the last year, TA opened two new factories:
a Smithville, Tenn., facility for Walker that produces exhaust components only for Japanese ``transplants''; and
Its Precision Modular Assembly Corp. division plant in Sterling Heights, Mich., some 500 yards from a Chrysler Corp. plant, gets an order for rear shock and rear axle modules from the automaker every 52 seconds.
Last month, Monroe opened a new facility in Celaya, Mexico, to produce shock absorbers and struts for automotive assembly plants in Mexico.
With new-car production ``the best it's been since 1986,'' Tenneco's OE business prospered last year, Mr. Snell said.
Also on the domestic side, last year TA acquired Products for Power, an Addison, Ill.-based maker of catalytic converters, and the exhaust operations of Performance Industries, Tempe, Ariz.
Although a concern for the company in 1993, its European business finished strong in 1994, with TA becaming the dominant OE exhaust maker in Europe with the purchase of Germany-based Heinrich Gillet GmbH & Co.
Mr. Snell said TA finds itself in the enviable position of having ``a lot of cash to invest in growth,'' while some of its subsidiaries, like Case Corp., ask: ``Can't you spend a little more money on us?''
So why did TA divest itself of its profitable Tenneco Brake division?
Because, Mr. Snell explained, ``I found myself spending more time on a $50 million company than on our billion-dollar companies!''
The kinds of potential acquisitions TA is looking for are ``niche additions,'' he said, and smaller companies that have ``fallen off in business.''
But the executive said he would not exclude adding another major product line-like a Walker or Monroe-``and we have the money to do it.''
However, one type of operation Tenneco Automotive is not looking to acquire, he added, is a start-up or embryonic company, which could take far too long to groom to be successful.
Tough conditions existed in the ride control products marketplace last year, according to David Peace, Monroe's vice president, sales and marketing. Blame that, in part, on the fact struts are lasting longer.
Monroe brand awareness declined in the last few years, he admitted, because in 1993 the company's promotional spending was at its lowest in years and, in 1991, Monroe lost the business of giant automotive retailer Pep Boys-Manny, Moe and Jack.
Mr. Peace said allegations of overselling in the Sears, Roebuck and Co. auto service fraud ``debacle'' of a few years ago also adversely affected replacement market sales for a time.
To combat those conditions, last year Monroe increased advertising and promotion of its flagship Sensa-Trac shock absorbers and launched the brand worldwide. It also has begun a roll out of that product co-branded by Midas Muffler, and APS and NAPA auto parts stores.
Monroe also has increased to 10,000 nationwide the number of its ``ride expert'' centers-through which consumers call an 800 number for referral to a nearby auto service shop selling Monroe products.
The division's 1995 marketing plan will, Mr. Peace said, ``build on the success of 1994 and take it to the next advertising, promo- tional and marketing level.''
Sensa-Trac's main audiences are trade technicians and consumers, he said. The company will market to them via a two-tier strategy keying on a national brand image consumer campaign and a local ride expert retail campaign to ``get people interested in buying, then tell them where they can buy.''
Those campaigns will be aided by new point-of-sale materials, new print advertisements tailored to individual markets, and a ``high-visibility'' effort offering consumers a long distance phone card with 60 minutes of free calls.
Brand awareness for Monroe's Gas Magnum shock will also be expanded, said Eric Schultz, marketing manager. Because the aftermarket is becoming increasingly fragmented-and consumers more cynical-the division must, he said, transmit the message that it is not just an OE component supplier, but a company that's a worldwide expert in ride control.
TA's Walker division has successfully balanced its focus on OE and aftermarket concerns, and Mike Baunton, Walker president since 1993, sees little reason to alter that approach.
Worldwide, opportunities continue to grow, he said, emphasizing, ``There is no such thing as an export-every market should be considered a `home market.'
``I'm trying to purge our operation of the word `export.'*''
The variety and proliferation of exhaust parts will persist unimpeded, he predicted. In the worldwide aftermarket, retail muffler store expansion will continue and products will become more sophisticated, driven by environmental regulations. Consequently, Walker must expand its markets, manufacturing and technology, he said.
And while exhaust systems are being built to last a lot longer, as are today's vehicles, Mr. Baunton said that added regulatory compliance and exhaust system sophistication ``gives us plenty of confidence the aftermarket will be alive and well for many years.''
According to Jim Rich, Walker vice president, sales and marketing, the division conducted 700 emission clinics last year, reaching more than 36,000 Walker products dealers. That training program will continue in 1995, augmented by new point-of-sale materials, videos and newsletters.
Walker is planning to expand what he called its ``opportunity markets''-catalytic converters, high performance and medium-and heavy-duty truck components-which are outpacing the general exhaust market.
Its Dynomax-brand exhaust products will receive a boost from Walker sponsorship of NHRA drag racing and NASCAR events.
Mr. Rich said Walker's eight-year-old ``Advantage Plus'' dealer support program, which now includes more than 20,000 members, will continue its successful ``dealer days.'' From June 27-29, 400 Walker sales executives and managers will personally visit each customer to get feedback on how the company is doing.
Walker also will expand the Advantage Plus ``direct connect'' service, which screens consumers' 800-line calls and refers them to dealers for action.