Despite facing challenges such as input cost pressures and large, powerful customers, seat makers in the aerospace and automobile industries such, as Johnson Controls (JCI 1.43%), Lear Corporation (LEA -0.68%), B/E Aerospace (BEAV), have managed to survive and even thrive. Johnson Controls and Lear are among the world's three top producers of complete seating systems; while B/E Aerospace is the largest manufacturer of cabin interior products globally.
The key lies in the fact that they have moved beyond being mere product salesmen to become providers of tailored customer solutions. They have intense knowledge of their customers' purchasing habits and assist customers with their most pressing needs in areas such as product differentiation and cost efficiency.
As every car model and flight experience becomes increasingly identical, transport services providers are turning to innovative seating products to differentiate their offerings from that of their peers.
Lear is the pioneer of various seating product innovations that adds to end-customer satisfaction. Lear's Micro Adjust Track system allows consumers to have greater flexibility in adjusting their seats for increased comfort; while its TeXstyle Defense protection system offers protection against stains so that auto makers can offer a wider variety of colors and styles for car interiors.
Along the same line of thought, Johnson Controls and B/E Aerospace have licensed a technology called Liveback from furniture manufacturer Steelcase in a bid to make their products more unique and appealing to end-customers. Liveback provides separate support for the user's upper and lower back based on spine movements and body posture, so that people of different body shapes and sizes can enjoy the same level of personalized comfort with seats from Johnson Controls and B/E Aerospace.
Both airlines and individual car buyers have fuel economy at the top of their minds, when they are choosing between different aircraft and auto models. Reducing seat weight is becoming a key source of fuel savings.
Lear's seats are much lighter than that of its peers, given its unique structures. Its seat adjustment mechanisms and recliners are 25% and 35% respectively lighter than older models. Furthermore, Lear has also achieved a breakthrough in foam seat designs with its Dynamic Environmental Comfort System, which are as much as half the weight of other designs in the market.
Similarly, B/E Aerospace's Pinnacle seats are the lightest aircraft seats in the market. By using both lightweight composites and a unique design boasting a 25% reduction in required parts, Pinnacle seats are estimated to be 15% lighter than competing products.
The best endorsement comes directly from the customers themselves. According to aviation news service Runway Girl Network, Delta Air Lines has awarded B/E Aerospace a contract in January 2014, to install Pinnacle economy class seat on 225 of its narrow-body aircraft. Earlier in September last year, B/E Aerospace announced that its Pinnacle seats will be installed on 70 JetBlue Airbus A320 aircraft and approximately 30 new Airbus A321s joining the JetBlue fleet over the next couple of years.
Expanding to be a one-stop shop
A few decades ago, the norm in the auto industry was that manufacturers assembled seats in-house by sourcing parts from a host of suppliers. As automakers moved toward an asset-light model with reduced fixed-cost investments, they started to outsource the design and assembly of complete seating systems.
Through acquisitions of auto suppliers such as Prince Automotive and Becker in 1996 and 1998, respectively, Johnson Control expanded its product portfolio significantly to become an integrated supplier of automotive seating and interior products.
Today, Johnson Controls is the undisputed leader in auto seating components, covering the entire gamut from complete seats to structures and a range of components such as foam and mechanisms. In all these product segments, Johnson Controls accounts for at least a fifth of the market share. A large part of its success can be attributed to the fact that Johnson Controls enjoys strong cross-selling benefits from offering a complete range of seating and interior products.
Similarly, B/E Aerospace isn't solely a manufacturer of seats. It beat Zodiac Aerospace, the global leader in aircraft lavatories, to the $800 million lavatory systems deal for Boeing's 737 next-generation family of airplanes in January 2012. This is a great feat, if you consider the fact that Zodiac is a formidable competitor which supplies three-quarters of the world's aircraft lavatories. While B/E Aerospace's proprietary Spacewall technology that allows the addition of up to six incremental passenger seats per plane is a big factor in its success, its ability to cross-sell a broad range of aircraft interior products (unlike Zodiac) is critical as well.
Foolish final thoughts
Seats are often perceived as commoditized products with little value-add for end-customers. However, all three seat makers took advantage of their role as suppliers to gain greater insight into their customers' needs, thereby widening their service offerings to address unmet needs.
As a result, their seats have saved money for their customers and made the final products more attractive to end-buyers. Furthermore, they are now one-stop shops for seats and interiors. Therefore, auto and airline manufacturers don't need to waste time and effort in dealing with a myriad of suppliers.