Meritor Removes McClure; Names Evans Chairman, CEO

This story appears in the May 13 print edition of Transport Topics.

Charles “Chip” McClure Jr. was removed last week as chairman and CEO of truck components maker Meritor Inc., and the board of directors selected Ivor “Ike” Evans to succeed him.

The sudden announcement from Troy, Mich.-based Meritor was made May 3, three days after it reported a second consecutive quarterly net loss.

McClure, 59, was with the company for nearly nine years.

Evans, 70, has been a Meritor board member since 2005. The May 3 statement said that while Evans is the permanent chairman, he will handle CEO duties on an interim basis.

In a note to investors, David Leiker, a Robert W. Baird analyst, said the timing of Meritor’s decision was a surprise.

“McClure guided Meritor through the financial crisis, major restructuring and avoided bankruptcy, a path followed by many peers; ironically, Meritor might be better positioned if it did the same,” he said.

Leiker added that although “change might reinvigorate Meritor . . . it doesn’t change the challenges” of difficult global truck markets.

Meritor board member Rhonda Brooks is chairing the search for a new CEO, a company spokeswoman said.

“We want to thank Chip McClure for his years of service to the company and wish him well in his future endeavors,” said David Devonshire, the board’s presiding director.

Career highlights for Evans include chief operating officer of Union Pacific Railroad from 1998 to 2004 and vice chairman of Union Pacific Corp. in 2004-2005. He also has worked for Emerson Electric Co., Blackstone Corp. and General Motors Corp.

Evans is a board member of Roadrunner Transportation Systems, Textron Inc., Cooper Industries and Spirit AeroSystems, in addition to Meritor.

On April 30, Meritor said that, for the six months ended March 30, the company lost $25 million, or 25 cents a share, on global revenue of $1.8 billion, with most of that coming in the quarter ended Dec. 31. Losses in the March 31 quarter were lighter.

Meritor was profitable, though, for the two most recent fiscal years.

Spokeswoman Krista Sohm said the board made the decision that it was “time to move forward” with new leadership. “We have the utmost respect for Chip McClure and are very appreciative of his services,” she said.

The board will consider internal and external candidates for the new CEO. The highest-ranking in-house officer other than Evans is Jeffrey Craig, president of the commercial truck and industrial division since January, before which he was chief financial officer.

Pedro Ferro is president of Meritor’s other major division, aftermarket and trailer.

McClure “has been an extraordinarily important part of the industry,” said Timothy Kraus, president of the Heavy Duty Manufacturers Association. McClure helped lobby Congress — especially the Michigan delegation — on matters affecting manufacturing, Kraus said.

“He swung a lot of weight in Washington,” Kraus added.

McClure took over what was then called ArvinMeritor in August 2004, succeeding Larry Yost, who retired. He had been CEO of Federal-Mogul Corp., and before that, he ran Detroit Diesel Corp.

McClure changed ArvinMeritor from an automotive and truck supplier, primarily focused on North America, to a global commercial vehicle supplier. He was going to spin off the automotive division as Arvin Industries, a separate public company, but the stock market collapse that accompanied the 2008-2009 recession put an end to that plan, leaving Meritor to sell the light-vehicle business in a piecemeal fashion.

He said at the time that the truck business usually has a better profit margin than the more competitive auto sector and that going global would give the company some insulation from a purely North American business cycle.

The company also built up its remanufacturing business to sell more aftermarket parts.

McClure was an enthusiastic supporter of Brazil’s effort to become a manufacturing power, and Meritor invested there in 2002. A large part of that came to an end April 29, when the company said it would sell its 50% interest in a joint venture making vehicle suspensions to its partner, Randon S.A. Implementos e Participações, for $195 million in a deal expected to close by year’s end.

He introduced a Performance-Plus Program to streamline production and improve efficiency and groomed two potential successors, both of whom left before McClure did.

One of them was Carsten Reinhardt, who came to Meritor in 2006 from DDC to become chief operating officer. He left in 2011 and now runs the Voith Turbo division of Voith Group, a German manufacturer.

Timothy Bowes succeeded Reinhardt, but in January he left his position as president of the commercial truck and industrial division to become CEO of Transtar Industries Inc. Bowes was succeeded by Craig.

In addition to the axles, brakes and drivelines it makes for commercial vehicles, Meritor also works with Wabco Holdings Inc. in their Meritor Wabco joint venture to make electronic vehicle-stability systems.

For the 12 months ended Sept. 30 — Meritor’s most recent fiscal year — the company had sales of $4.42 billion. Among its competitors, Dana Holding Corp. had 2012 sales of $7.22 billion, and the truck division of Eaton Corp. brought in $2.31 billion.