12 minute read

Hayes Lemmerz International, Inc. Business Information, Profile, and History

38481 Huron River Drive
Romulus, Michigan 48174

History of Hayes Lemmerz International, Inc.

The largest manufacturer of automobile wheels in the world, Hayes Lemmerz International, Inc. makes steel and aluminum wheels, brake parts, tractor trailer wheels, and other automotive components. Hayes Lemmerz supplied nearly every major automobile manufacturer in the world through 36 production facilities in North America, Europe, and Asia and through joint venture operations in South Africa, Turkey, Venezuela, India, Brazil, Thailand, Mexico, and Canada. During the 1990s the company's growth was derived from an expanding market for aluminum wheels, which were supplanting steel wheels as the preferred choice of automobile manufacturers, and from several major acquisitions. In 1996, when the company operated as Hayes Wheels International Inc., it purchased Motor Wheel Corp. The following year it acquired Lemmerz Holding GmbH, a German wheel producer, and was renamed Hayes Lemmerz. In late 1998 the company purchased CMI International Inc., which produced components that worked in conjunction with wheels and brakes.


Hayes Lemmerz's earliest predecessor originated from the Hayes side of the business, a company called Hayes Wheel, founded by Clarence Hayes in 1908. The following year John Kelsey and John Herbert started their own automobile wheel manufacturing company, the K.H. Wheel Company, which produced wooden-spoked wheels for Henry Ford's Model T and other early automobile models. In 1927 the two companies merged to form the Kelsey-Hayes Wheel Corporation, which was reorganized in 1933 and renamed the Kelsey-Hayes Wheel Company. Meanwhile, the Lemmerz side of the business had been in business for more than a decade. Founded in 1919, when the Lemmerz family began producing their first automotive wheels in Konigswinter, Germany, the enterprise remained at its original location until merging with the direct descendant of Kelsey-Hayes Wheel Company, Hayes Wheels International Inc., in 1997.

While Lemmerz carved a place for itself as one of the leading manufacturers of wheels for the European market, the Kelsey-Hayes Wheel Company developed into one of the United States' largest suppliers of wheels, eventually controlling a substantial percentage of the domestic market. The company also did pioneering work in other areas of the automotive components industry, particularly in the development of brakes. During the early 1960s Kelsey-Hayes completed developmental work on rear-wheel anti-skid systems and in 1968 began supplying such systems to Ford Motor Co. This aspect of the company's business often was overlooked because of Kelsey-Hayes's dominance as a wheel producer and also because for many years the company operated under the auspices of a larger parent company. For Kelsey-Hayes, however, operating as a subsidiary company had more profound drawbacks than limiting its exposure to the business press. The company suffered considerably during its time as a subsidiary, incurring damage not necessarily from its own mistakes but primarily from the problems of an embattled parent company. The effect of these "secondhand" problems that trickled down to Kelsey-Hayes eventually led to the company's independence and the merger with the German Lemmerz operations. The backdrop for these two signal events--independence and the Lemmerz merger--occurred during the 1980s.

Business in the 1980s and 1992 Spin-Off

During the mid-1980s Kelsey-Hayes operated as a subsidiary of Fruehauf Corp., with other businesses that included a trailer manufacturing company and shipbuilding operations. At the time Kelsey-Hayes's annual sales hovered in the $1 billion range, supported by manufacturing facilities throughout North America. The company's product lines included wheels, disc brakes, drum brakes, brake valves, front hub assemblies, electromechanical sensors, automotive engine components, iron castings, and precision aluminum die castings. Aside from its prominence as a wheel producer (the company had manufactured more than one billion wheels by this point in its history), Kelsey-Hayes also ranked as the world's leading manufacturer of rear-wheel antilock braking systems (ABS), producing 1.3 million systems a year for all of the full-sized pickup trucks manufactured by Ford and General Motors Corp. The company had begun serving the aerospace industry, developing a business comprising five separate divisions, and it operated a Heavy Duty Systems business group, which included two companies, Gunnite and Fabco, that produced brake systems for heavy trucks, trailers, and off-road vehicles. Owing to the diversity and the magnitude of Kelsey-Hayes's operations, the company stood as Fruehauf's primary subsidiary when a corporate raider named Asher Edelman launched a hostile takeover of Fruehauf in the late 1980s. Fruehauf's management entrenched itself and fought a bitter, five-month-long battle against Edelman, eventually staving off the takeover specialist, but at considerable expense. In the aftermath of the hostile takeover, Fruehauf was forced to sell many of its profitable subsidiary operations, including a considerable portion of Kelsey-Hayes's diversified strength. Kelsey-Hayes was forced to sacrifice its aerospace-related business and its Heavy Duty Systems business segment, causing its work force to be trimmed from 9,000 to 6,000. The divestitures stripped the company of 30 percent of its annual sales.

Despite the blow the divestitures represented, Kelsey-Hayes's management remained positive about the company's future, confident that the undiminished strength of their automotive business could fuel a return to the company's former size. Robert G. Siefert, president and chief operating officer of Kelsey-Hayes, talked of expanding the company's automotive business, particularly in the growing market for ABS and cast aluminum wheels. Although the company found itself operating under a parent company strapped for cash, plans were developed for a new plant to be constructed in 1989 in Michigan that would nearly triple Kelsey-Hayes's ABS production capacity. "We've had assurances at our latest meeting with the banks that we can get more capital money," Siefert explained. "We haven't diverted any efforts or retracted anything in engineering or research and development ... we're going to open that new antilock plant," he vowed.

It was not long, however, until Kelsey-Hayes's future course underwent a significant change in direction. Fruehauf Corp. sold Kelsey-Hayes in 1989 to a Canadian company named Massey-Ferguson Ltd. for $161 million in cash and $436 million worth of notes. Massey-Ferguson was reincorporated in the United States in July 1991, moved to Buffalo, and renamed Varity Corp. Within Varity's corporate structure, Kelsey Hayes operated alongside U.K.-based Perkins Engines, a leading maker of diesel engines and the Massey-Ferguson line of agricultural equipment. Of all of Varity's businesses, however, Kelsey-Hayes was the jewel, accounting for half of its parent company's sales and two-thirds of total profits. Despite Kelsey-Hayes's strength, reflected in the $1.35 billion in sales the company collected in 1991, Varity was in grave trouble shortly after acquiring the wheel and brake producer from Fruehauf. Financial losses quickly mounted, leading to a staggering $178 million loss reported in early 1992. Amid Varity's financial woes, rumors surfaced that Varity was looking to sell Kelsey-Hayes to ease its financial worries, but Varity officials declined to comment on the matter. In October 1992 Varity's chairman attempted to end the speculation by unequivocally denying the possibility of a sale. "Kelsey-Hayes is an outstanding business with long-term potential that we intend to hold onto for the long-term," he remarked.

Despite assurances to the contrary, the ties connecting Varity and Kelsey-Hayes began to unravel one month after the chairman's statement. In November 1992 Varity sold 50.2 percent of the subsidiary to the public in an initial public offering (IPO). The IPO constituted Kelsey-Hayes's Hayes Wheels International Inc. business, which accounted for roughly 40 percent of the U.S. wheel market. Varity retained 46 percent of Hayes Wheels' shares and used the proceeds to pare down more than $860 million in debt, leaving a whittled down version of the former Kelsey-Hayes to compete in the automotive wheel market. Buffeted again by the troubles of its parent company, the new, publicly traded company moved forward without much of the diversity of operations that had characterized it previously. Hayes Wheels' business, in the wake of the 1992 spin-off, was focused tightly on wheel production instead, the company's mainstay line since the early 20th century. Expansion of this business occupied the company's energies during the early 1990s, including the construction of a $20 million aluminum wheel casting plant in Gainesville, Georgia in 1993. Construction of the new plant began shortly after Hayes Wheels began exporting cast aluminum wheels to Nissan, the first shipments of a $12-million-a-year contract announced in 1990. In addition to providing greater capacity for North American customers, the Gainesville facility also strengthened Hayes Wheels' access to overseas markets, which became increasingly important as the company secured foreign business similar to the Nissan deal. At roughly the same time Hayes Wheels began exporting wheels to Nissan, it signed another $12-million-a-year contract to supply fabricated aluminum wheels to German manufacturer BMW AG.

By the mid-1990s Hayes Wheels had greatly increased on its long-held domestic capabilities by expanding its presence globally. Despite the adverse environment in which the company had been operating for the previous decade, Hayes Wheels ranked as one of the world's preeminent wheel producers, with its most promising growth coming from the expanding global market for aluminum wheels. Increasingly during the 1990s, automobile manufacturers were choosing more expensive aluminum wheels over steel wheels, and in this growing market Hayes Wheels stood strongly positioned, having achieved meaningful strides in the highly fragmented European market. Varity noted as much, and in mid-1995 the company attempted to obtain complete ownership in Hayes Wheels. The bid, however, was rebuffed by Hayes Wheels management, who believed the price was too low. Following the scotched Varity deal, Hayes Wheels began looking for its own acquisition targets, touching off a series of acquisitions that lifted the company to the top of its industry by the end of the 1990s.

Late 1990s Acquisitions

In March 1996 Hayes Wheels agreed to merge with another southeast Michigan-based auto supplier, Motor Wheel Corp., in a transaction valued at $1.1 billion. Under the terms of the agreement, the Hayes name was retained, with the Motor Wheel name used for a new subsidiary. Headquarters for the combined companies were established at Hayes Wheels' central offices in Romulus, Michigan. The merger created one of the largest wheel and brake producers in the world, an employer of 4,800 workers in eight U.S. plants with foreign operations in Italy, Spain, Japan, Mexico, Venezuela, Brazil, Thailand, and the Czech Republic. For Hayes Wheels, ranked as the largest supplier of aluminum wheels in Europe before the deal, the merger gave the company the opportunity to supply complete wheel-and-brake systems to car manufacturers worldwide thanks to Motor Wheel's production facilities for light-vehicle brakes and medium- and heavy-duty wheels. Shortly after the merger was completed, a consortium of investors led by New York-based Joseph Littlejohn & Levy acquired 43 percent of the new company.

Before the end of 1996 news of another major acquisition surfaced, a transaction that gave Hayes Wheels a new name for the 21st century and solidified its presence in Europe. Hayes Wheel agreed to acquire 77 percent of Lemmerz Holding GmbH, the privately owned Lemmerz family operation in Konigswinter, Germany that ranked as Europe's leading wheel manufacturer. The merger of the two companies created the largest wheel manufacturer in the world, with combined annual sales of $1.5 billion and operations that served virtually every major automobile manufacturer on the globe. For Hayes Wheels, the acquisition of Lemmerz solved the problem of European expansion in a relatively inexpensive manner. Without the addition of Lemmerz's European production facilities, Hayes Wheels would have had to incur the cost of building its own plants, but by acquiring the German wheel producer Hayes Wheels was able to expand existing facilities at a far lesser expense. After the deal was completed, the Lemmerz family, headed by Horst Kukwa-Lemmerz, controlled 16 percent of the new company, which was renamed Hayes Lemmerz International, Inc. on November 12, 1997. Hayes Wheels' chairman, Ranko Cucuz, was selected as chairman and chief executive officer of the new Hayes Lemmerz and Kukwa-Lemmerz was named vice-chairman. The two companies were not united for long before another major acquisition was announced. In November 1998 Hayes Lemmerz signed a definitive agreement to acquire CMI International, Inc., a full-service supplier of wheel-end, suspension, structural, and powertrain automotive components. With the addition of Southfield, Michigan-based CMI, Hayes Lemmerz gained the ability to provide entire "corner" modules of vehicles, which comprised wheels, suspension, knuckles, calipers, rotors, and other parts.

After the CMI deal was completed in late November 1998, Hayes Lemmerz was roughly three times larger than it had been three years earlier. The acquisitions of Motor Wheel, Lemmerz, and CMI lifted annual sales over the $2.5 billion mark, extended and entrenched its presence overseas, and enabled the company to supply a greater percentage of an individual vehicle's content to automobile manufacturers. By the end of the 1990s Hayes Lemmerz supplied $800 in content for each vehicle manufactured by its long list of customers. As Hayes Lemmerz prepared for the future, swelled in stature after the late 1990s acquisitions, there was strong evidence that the company's bold moves would pay dividends in the years to come. Net income increased 81 percent during the company's third quarter of fiscal 1998, reaching a record high of $19.7 million, while sales increased 20 percent. Holding sway as the undisputed leader in its industry, Hayes Lemmerz appeared to be strongly positioned for robust financial growth in the future.

Principal Subsidiaries: Hayes Lemmerz International-California, Inc.; Hayes Lemmerz International-Michigan, Inc.; Hayes Lemmerz International-Indiana, Inc.; Hayes Lemmerz International-Georgia, Inc.; Hayes Lemmerz International-Texas, Inc.; Hayes Lemmerz International-Ohio, Inc.; Hayes Lemmerz International-Mexico, Inc.; Hayes Lemmerz, S.p.A. (Italy); HLI (Europe), Ltd.; Hayes Lemmerz de Espana, S.A. (Spain); Hayes Lemmerz Japan Limited; HL Ohio Sub, Inc.; Motor Wheel de Mexico, S.A. de C.V. (75%); Hayes Lemmerz Autokola, a.s. (Czech Republic) Aluminum Wheel Technology, Inc. (98%); HL Holdings BV (Netherlands); HL Holding Germany GmbH; Hayes Lemmerz Hungary Consulting Limited Liability Company (Hungary); Newco Nr. 17 Vermogensverwaltungs GmbH (Germany); Newco Nr. 18 Vermogensverwaltungs GmbH (Germany); Hayes Lemmerz Holding GmbH (Germany; 99.9%); Hayes Lemmerz Werke GmbH (Germany); Hayes Lemmerz Werke Wohnungsbaugesellschaft mbH (Germany); Metaalgieterij Giesen B.V. (Netherlands; 91%); Hayes Lemmerz Manresa SPRL (Spain); Hayes Lemmerz System Services N.V. (Belgium; 99.7%); Hayes Lemmerz Belgie N.V. (Belgium; 99.9%); Hayes Lemmerz Comercio e Participacoes SRL (Brazil; 99.9%); Lemmerz Canada, Inc.; Hayes Lemmerz-Inci Jant Sanayi A.S. (Turkey).

Principal Divisions: Automotive Brakes; Commercial Highway & Aftermarket; North American Fabricated Wheels; European Aluminum Wheels; European Fabricated Wheels; MGG (Metaalgieterij Giesen).

Additional topics

Company HistoryMotor Vehicle Components

This web site and associated pages are not associated with, endorsed by, or sponsored by Hayes Lemmerz International, Inc. and has no official or unofficial affiliation with Hayes Lemmerz International, Inc..