Now ranked 11th and boasting annual revenues of $7.5 billion, the new company expects to achieve those goals through additional acquisitions and by maintaining a compounded 10% annual growth rate.
Most of that growth will come from the synergism of product lines and markets developed by Meritor Automotive and Arvin Industries as independent entities.
"Our new organization now has the capability to develop complete undercarriage and drivetrain systems technologies to serve both the light and heavy commercial vehicle industries," said Larry Yost, ArvinMeritor chairman and CEO.
"We are also well-positioned to benefit from immediate opportunities that include considerable sales, operating and cost synergies that, as separate companies, would not have been possible."
Moreover, with no debt accruing as result of the merger, all savings achieved by combining operations will go "straight to the bottom line," Yost said. Pretax cost savings are roughly estimated at $50 million in fiscal 2001, and $100 million by fiscal 2003.
Bill Hunt, former Arvin CEO and now vice chairman and president of ArvinMeritor, said that the complimentary products lines of the previous companies move ArvinMeritor closer to becoming a full undercarriage and drivetrain systems integrator and corner module provider. The new company will be able to:
* Design and engineer ride control and motion control products as integrated systems, assembled and sequenced for customers regardless of their geographic location;
* Enter the market for heavy-duty vehicle exhaust systems with products designed to meet future stringent emission regulations for Class 7 and 8 trucks;
* Mass-market a new titanium exhaust system, which will be available first on the 2001 Corvette. The system is corrosion-immune and 40% lighter than the stainless steel unit it replaces;
* Cross-sell to the heavy commercial vehicle market Arvin's well-established exhaust, ride control and filter products, including Maremont mufflers, Gabriel shock absorbers and Purolator filters.
The process of integrating the two companies is already well under way.
Nineteen teams of ArvinMeritor managers, representing all major business disciplines, have been meeting regularly since April A senior integration team meets monthly with Yost and Hunt to report on overall progress.
Yost noted that Arvin and Meritor have very similar cultures and compatible values. Moreover, Arvin's strong presence in the light commercial vehicle market makes the new company less dependent on the heavy vehicle market. With the merger, that dependency will drop from 28% to 17%.
Despite the opportunities presented by combining the two companies, Yost said he is realistic about the challenges ahead. Of chief concern is the softening of the heavy truck market and the light vehicles aftermarket.
'This year, Class 8 sales will probably drop to 272,000 units, compared to 292,000 last year," he said. "And we are projecting the 2001 volume to be 15 to 20 percent lower than that.
"On the bright side, however, we don't see any softening in the North American light vehicle sector. It should actually edge up slightly this year," he said.
The new company will keep its headquarters in Troy, Mich. (Arvin had been headquartered in Columbus, Ind.) It now has 36,500 employees and operates 120 manufacturing facilities in 25 countries. As of July 10, it began trading on the New York Stock Exchange under the ticker symbol ARM.