Federal-Mogul Chairman and CEO Cites Innovation, Product Differentiation And 'Co-opetition' as Keys to Global Aftermarket Growth

DEARBORN, Mich., May 8, 2003 -- Manufacturers' unwavering efforts to maintain a "sustainable competitive advantage" based on innovative, highly differentiated products and powerful new business relationships will play pivotal roles in accelerating the growth of the international automotive aftermarket, Federal-Mogul Chairman and Chief Executive Officer Frank E. Macher told an audience of industry executives today during the 2003 Global Automotive Aftermarket Symposium.

Macher pointed to the automotive service industry's century-long history -- and Federal-Mogul's own success in revitalizing and improving some of the industry's best-known brands -- as a roadmap to enhanced success in the face of today's competitive challenges.

"The same spirit of innovation will enable all of us to develop clearly differentiated products that command premium prices and will help us attract and retain the business of a new generation of vehicle owners," Macher said. "I can tell you with certainty that Federal-Mogul will succeed on the merits of products that deliver exclusive, demonstrable performance and durability advantages -- because we understand that offering 'just another replacement part' is a strategy doomed to failure."

Macher addressed six primary barriers to industry growth: pricing pressure; the increased quality and service life of modern automotive parts; growing market complexity; the threat of commoditization of vehicle components; parts counterfeiting; and manufacturers' willingness and ability to identify and serve emerging global markets.

"None of these challenges is insurmountable," he said, "but I can assure you we won't overcome them by sitting still. Bob Dylan wrote, 'If you're not busy being born, you're busy dying.' That describes the philosophy that will enable leading aftermarket manufacturers, distributors, jobbers, retailers and service providers to enhance their growth and profitability."

At the core of this philosophy, according to Macher, are institutional commitments to innovation and product differentiation, strong brands, and a strategy of "co-opetition" -- unconventional yet mutually beneficial business partnerships.

"We know this approach works because we've seen it work at our own company," he said.

Macher cited several recent Federal-Mogul successes -- including the Wagner(R) ThermoQuiet(TM) brake pad, one of the few replacement-parts technologies to win the Automotive News PACE Award for Product Innovation -- as signs of the company's rebirth. "We have filled our product pipeline with truly differentiated technologies serving the on-the-job demands of today's engine builders, undercar specialists, underhood technicians and do-it- yourselfer," he said.

These products, he added, are offered under brands trusted by automotive technicians and do-it-yourselfers worldwide. "Professionals trust our industry's best brands because these brands -- and the performance they represent -- have satisfied millions of consumers for the better part of a century. It's our opportunity, and our collective responsibility, to capitalize on this power to grow the automotive aftermarket," he said.

Growth in today's global aftermarket also requires a willingness to forge non-traditional business relationships, according to Macher, noting that Federal-Mogul has a variety of joint ventures and other strategic alliances targeting new markets, technologies and products. "I'm confident we will see many amazing new business partnerships emerge over the coming decade as manufacturers, distributors and other aftermarket organizations exploit synergies to enhance their success," he said. "It's happening in virtually every technology-intensive industry, and it will become common in ours, as well."

Macher, who joined Federal-Mogul in January 2001 as CEO and was appointed chairman of the company's board of directors later the same year, has nearly 40 years of automotive industry experience. This includes experience at global automotive suppliers and 30 years at Ford Motor Company, where he held a variety of progressively responsible positions in management, manufacturing, engineering and quality. Established in 1996, the Global Automotive Aftermarket Symposium brings together leading aftermarket executives and analysts through seminars and presentations covering competitive issues facing today's manufacturers, warehouse distributors, jobbers, retail organizations, parts rebuilders and service providers.

Federal-Mogul is a global supplier of automotive components, systems and sub-systems serving original equipment manufacturers and the aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal- Mogul is focused on the globalization of its teams, products and processes to bring greater opportunities for its customers and employees, and value to its constituents. Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899 and today employs 47,000 people in 25 countries. For more information on Federal-Mogul, visit the company's web site at http://www.federal-mogul.com/ .