GenRad, of Westford, Mass., Wins Ford Motor Contract
Jul 15, 1997 1:56 PM [Knight-Ridder Business]
Jul. 15 (The Boston Globe/KRTBN)--GenRad Inc. yesterday said it beat out Hewlett-Packard Co. and Siemens
AG as the supplier of automotive diagnostic systems for Ford Motor Co.'s estimated 20,000 Ford,
Lincoln-Mercury, Mazda, Jaguar, and Aston-Martin car dealers worldwide.
The contract is the largest in GenRad's 83-year history.
Although GenRad president James F. Lyons would not divulge the dollar
value of the agreement or the price of each automotive testing system, one
Wall Street analyst said the deal could bring up to $400 million in
revenue to the Westford company over four to five years.
"We believe that total revenues from the overall four- to five-year project will be in the $200 million to $400
million range," said Ronald Opel, of Fechtor Detwiler & Co..
GenRad's diagnostic system, containing an Intel-based personal computer, is used by car dealer service
technicians to analyze 15,000 test points in a car.
"This is a big win and the largest contract ever for GenRad by a wide, wide margin," said a jubilant Lyons, who
added GenRad's system is expected to replace HP diagnostic test equipment at Ford.
Lyons said he expects the Ford contract will boost GenRad's revenues about 15 percent annually over the next
five years, starting in 1998. Last year, the company earned $27.3 million, or $1.09 a share, on sales of $183.6
million.
GenRad said on June 18 that it had won a contract from a "major U.S. automotive original equipment
manufacturer" but did not disclose the company's identity until yesterday. However, it has been widely
rumored that Ford was the unnamed manufacturer.
Under the agreement, GenRad will open a facility this year in Dearborn, Mich., near Ford's headquarters, and
increase engineering and design staff about 50-fold, to about 150 people from three today, said Lyons. The
company will add about 50 people in manufacturing in Massachusetts and about 100 employees in Manchester,
England, where the company's automotive testing operations are based.
GenRad already has a much smaller but similar agreement with Saab Motors, a majority-owned subsidiary of
General Motors Corp. GenRad also is supplying comparable equipment in Europe to Jaguar, a wholly-owned
subsidiary of Ford.
Lyons said GenRad's experience with Jaguar and with Ford's European operations -- where it developed and
tested its breadbox-sized automotive test system -- helped it win the latest Ford contract.
According to Lyons, Ford expects to save millions of dollars in warranty costs by reducing replacements of
spare parts through better diagnosis of problems. The GenRad system can analyze software and hardware
problems more effectively, ryons said, the new system can promote preventive maintenance by determining
whether a part will fail in the next six to nine months.
GenRad, which still derives nearly 80 percent of its business from electronic testers for the electronics and
computer industry, closed yesterday at 23 11/16, down 5/16, on the New York Stock Exchange.
By Ronald Rosenberg
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