Being in the auto-parts business lately hasn't been easy. A few companies, such as Autoliv
Still, I think the business is in better shape than some investors may think, and some of the ongoing restructuring efforts should have lasting benefits. The company continues to shed non-core businesses, as seen in the recent sales of a light-vehicle aftermarket motion-control business and its stake in a joint venture with Mitsubishi Steel. What's more, though ArvinMeritor does still have a hefty debt load, a refinancing has made the maturities of the debt more palatable.
I think some other changes can pay lasting dividends for ArvinMeritor, too. The company is increasingly sourcing more from China and India, and that not only offers long-term cost and labor advantages, but it also positions the company to work more closely with local companies in these high-potential markets. Moreover, it is looking to become the leading or No. 2 supplier in its remaining businesses and to continue dealing with a wide range of customers. Detroit's Big Three make up roughly 20% of sales.
That said, the next year or two could still be difficult. Many heavy-truck customers have been buying ahead of new environmental regulations, and it is widely assumed that 2007 will be a bad year for Volvo
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).