BorgWarner Inc. and other parts suppliers in the U.S. are experiencing a surge in growth. In the last three years, BorgWarner was the best-performing auto supplier in North America. From 2010 to 2012, BorgWarner’s shares more than doubled. The turbocharger producer was able to outperform companies that are much more fashionable.
From the start of 2010, its stock returned four times higher than Google Inc. New CEO James Verrier gets a huge head start but he also faces the challenge of living up to his predecessor. Bloomberg surveyed several analysts. While 12 rate it to be a buy, 12 put it as a hold. No one is selling.
In an interview, Matt Stover, an analyst with Guggenheim Securities in Boston, said that he has a much more difficult job since he’s getting a business that’s doing exceedingly well and with this comes very high expectations.
The increase in BorgWarner's market value to $8.75 billion as of Thursday is included in a rally across the U.S. supplier industry. Since the start of 2010, the Bloomberg Industries North American Auto Parts index more than doubled to a 52-week closing high of 408.21 on Thursday.
The Original Equipment Supplier Association, a trade group, said that U.S. employment in the sector, which rose to as high as 845,900 in June 2000, fell to its lowest in July 2009 to 386,300 but it recovered to 487,300 in January.
From its web site, we learned that BorgWarner was founded in 1928 by a group of entrepreneurs that included the inventor of the first manual transmission. It produces transmission parts but its main product now is turbochargers. Its rivals include Continental AG, Robert Bosch GmbH and Cummins Inc. In April 2010, it was trading at a 64 percent discount to the auto parts index.