Many paths to growth for piston maker - Kolbenschmidt Pierburg of Germany

Diesel Progress North American Edition, June, 1999 by Mike Brezonick

Acquisition of Zollner Pistons highlights Kolbenschmidt Pierburg's strategy in North America; KUS joint venture doubles in size; "the most diverse" piston plant?

There are generally two strategies companies pursue when trying to expand their business in a particular market. One strategy focuses on organic growth, building the business the old-fashioned way, finding some new customers and taking some away from the competition. The other method is through acquisition, which at one swoop, can eliminate a competitor and bring in new business.

When deciding which strategy to pursue for its piston business in North America, Kolbenschmidt Pierburg settled on an interesting choice. Instead of picking one, the company opted to do both.

On the acquisition front, Kolbenschmidt Pierburg, a division of the German conglomerate Rheinmetall, recently acquired the well-known U.S. piston manufacturer Zollner Pistons for an undisclosed sum. Zollner, one of the most venerable names in the piston business, is a key manufacturer of pistons and power cylinder modules in North America and has been a major supplier to Ford, General Motors, Navistar, John Deere and Outboard Marine Corp. The company has production sites in Fort Wayne, Ind., and Ontario, Canada and averaged yearly sales of about $120 million.

Along with the Zollner acquisition, Kolbenschmidt Pierburg has grown through the dramatic expansion of Karl Schmidt Unisia, Inc. (KUS), the joint venture between Kolbenschmidt Pierburg AG of Neckarsulm, Germany, and Unisia Jecs Corp., Kanagawa, Japan.

"This is a very important acquisition and will increase the product range and market diversity of KUS in North America" said Frank Pohlmann, president and CEO of KUS. "And, it will enhance both technical and manufacturing capabilities of the combined operations."

While some of the issues that surround the integration of KUS and Zollner have yet to be worked out, it's clear that the acquisition will allow Kolbenschmidt Pierburg to achieve new levels of component and system design. "It is our foremost intention to continue to strive for customer satisfaction in terms of product engineering capabilities, quality, delivery and price," said Pohlmann. "This effort will not be limited to our core product, pistons, but will include an accelerated effort to integrate other power cylinder components, including rings, wrist pins and connecting rods, which both companies have done successfully in the past."

Somewhat overshadowed by the Zollner acquisition has been the remarkable growth of the KUS venture in Marinette, Wis., which was originally formed in 1990 and is based at the site of what was originally Badger Piston, a 1940s era, privately owned aftermarket supplier. Kolbenschmidt Pierburg owns 68 percent of the operation, while Unisia, a subsidiary of Nissan, maintains the remaining 32 percent.

Since 1995, KUS has spent approximately $40 million and doubled the size of the facility, to a total of 416,000 sq.ft. "We had to do that to keep up with demand," said Pohlmann. "As our business in North America has grown, we knew we would have to expand our capacity.

"We call this the most diverse piston facility in the world," Pohlmann added. "There might be one larger facility in the world that I am aware of, but we do more pistons than all of our German facilities put together."

It would be hard to argue the point on diversity, as the Marinette facility produces a dizzying array of pistons for diesel and gasoline engines. Diesel customers include Cummins, for both mid-range and high-horsepower engines, John Deere and General Motors. Automotive gasoline engine customers include GM, Saturn, Chrysler and Nissan at present, and Ford in the future. On the marine, industrial and recreational side, customers include Harley-Davidson, Mercury Marine and Outboard Marine.

"We manufacture products for OEMs and the aftermarket, which is the heritage of this facility," noted Pohlmann. "What is unique however, is that it is a very complete operation. We do all of our own tooling and molds in-house. We have a complete foundry operation. And we can make pistons of virtually all sizes. Those three things, we believe, make us unique."

KUS maintains extensive foundry operations, covering 142,000 sq.ft., which at present allow for the casting of more than 60,000 pistons per day. All told, there are seven induction furnaces that feed 10 automated casting cells and 20 manual casting cells. The company pours six different alloys, including KS 1295, which is designed for high temperature applications.

KUS also has in-house chip drying and tolling, in-house smelting of scrap or spent pistons, heat treat and annealing capabilities, as well as weld hardening technology, in which a nickel ring is welded into the top land to provide a greater degree of structural strength.

The company can machine more than 55,000 pistons daily, through nine automated piston transfer lines and 24 machining/finishing cells that cover approximately 183,000 sq.ft. Product quality is ensured through the use of six coordinate measuring machines strategically positioned throughout the plant, along with five metrology labs.