US government supports sale of US industry to foreign aggressors

[kscarbel2]

Your employees in Washington support the sale of U.S. company TRW to Germany’s ZF, on the condition that they sell TRW’s North American and European commercial truck linkage and suspension business to Japan’s THK Co. Ltd.

You make the call.

American-owned industry?...............Hmm, do we still have any?

-----------------------------------------------------------------------------------------------

FTC Approves Sale, ZF-TRW Merger Moves Ahead

Transport Topics / August 1, 2015

The United States Federal Trade Commission (FTC) approved an application from ZF Friedrichshafen AG and TRW Automotive Holdings Corp. to sell TRW’s North American and European linkage and suspension business for heavy and light vehicles to the Tokyo-based global machine component manufacturer THK Co. Ltd.

The FTC said it required the divestiture as part of its June 2015 final order that settled charges that combining two of the world’s largest automotive parts manufacturers — a merger valued at $12.4 billion — would likely harm competition in the North American market for heavy vehicle tie rods.

In May, the commission said ZF and TRW are two of only three North American suppliers of those tie rods.

A tie rod is a rigid connector that links a vehicle’s wheels with the steering control mechanism. Because the tie rods are heavy, it's not economical to ship them over long distances, and as a result customers in North America predominantly buy from suppliers that have production facilities in the United States, Canada and Mexico and do not consider suppliers outside of North America as viable options.

The complaint alleged that the merger would eliminate direct competition between ZF and TRW and that reducing the number of competitors from three to two would increase the likelihood of coordinated interaction between a combined ZF/TRW and its only other competitor for the tie rods in North America.

The parties’ divestiture of assets, the FTC added, also addresses competition concerns raised by the European Commission. The linkage and suspension business to be divested includes five manufacturing plants in Michigan, Canada, the Czech Republic and Germany and a research and development lab in Germany.

The FTC vote to approve the divestiture was 4-1, with Commissioner Joshua Wright voting no.

Wright wrote, in part, in his dissent, “The market for heavy vehicle tie rods is not particularly vulnerable to coordination. First, while the product might be fairly homogeneous, there are significant switching costs, including the time and cost involved with validation testing of the new supplier’s tie rods.”

Wright said Urresko SA, a Mexican parts manufacturer, is a relatively recent entrant in the tie-rod market and has become the largest supplier in the market.