Chariman and chief executive officer, Visteon Corporation
Born: March 22, 1938, in Bristol, Connecticut.
Education: Fairfield University, BS, 1960; Georgetown University, LLB, 1963.
Family: Son of Peter Pestillo and Ruth Hayes; married Betty Ann Barraclough, 1959; children: three.
Career: General Electric Company, 1968–1974, various industrial-relations positions, including manager of union-relations planning; B.F. Goodrich Company, 1974–1980, vice president of corporate and employee relations; Ford Motor Company, 1980–1985, vice president of labor relations; 1985–1986, vice president of employee relations; 1986–1990, vice president of employee and external affairs; 1990–1993, vice president of corporate relations and diversified businesses; 1993–1999, executive vice president of corporate relations, then chief of staff; Visteon Corporation, 2000–, chairman and CEO.
Address: Visteon Corporation, 17000 Rotunda Drive, Dearborn, Michigan 48120; http://www.visteon.com.
■ The automotive-parts executive and lawyer Peter J. Pestillo became the first CEO and chairman of the Dearborn, Michigan–based Visteon when it was spun off from Ford Motor Company at the end of June 2000. The new company was created in an effort headed by Pestillo to make Visteon a leading independent automotive-systems supplier. The spin-off came less than three years after Ford management first organized the automotive-systems integrator in September 1997. Pestillo was named to be Visteon's chairman and CEO in November 1999 and officially assumed the positions on January 1, 2000. Through Visteon's first year of independent operations Pestillo oversaw near-constant restructuring, as he faced growing pressure from Ford to cut costs.
Visteon Corporation was the world's second-largest fullservice automobile-parts manufacturer and supplier, behind General Motors Corporation's spin-off of the Troy, Michigan–based Delphi Automotive Systems Corporation. Visteon had a global operations and delivery system comprising 182 total facilities, including manufacturing, assembly, technical, service, engineering, and aftermarket facilities, located in 25 countries on six continents. Among these facilities were 104 manufacturing locations, 14 regional assembly facilities, 25 customer-service centers, and 39 technical, engineering, aftermarket, and general offices. Although Visteon made and sold products in many foreign countries, sales in the United States accounted for more than 70 percent of total sales as of 2004.
Visteon had nearly 81,000 employees working in three business segments: dynamics and energy conversion; comfort, communication, and safety; and glass. The company's workforce made and marketed a wide range of automotive products, including air conditioners, automotive glass, climate-control systems, instrument panels, power-train control systems, steering wheels, and suspension systems.
Before joining Ford and Visteon, from 1968 to 1974 Pestillo held several industrial-relations positions, including manager of union-relations planning, with General Electric Company in New York City. From 1974 to 1980 Pestillo was vice president of employee relations for B.F. Goodrich in Akron, Ohio, during which time he distinguished himself as a talented labor negotiator.
In 1980 Pestillo joined Ford Motor Company in Dearborn, Michigan, as vice president of labor relations. He was later named vice president of employee relations in 1985 and then vice president of employee and external affairs in 1986. In 1990 Pestillo became vice president of corporate relations and diversified businesses, where he assumed responsibilities for managing and later divesting the company of its aerospace, steel, and tractor operations. Pestillo was selected on January 1, 1993, to become Ford's executive vice president of corporate relations. He was promoted later to vice chairman of the board of directors and chief of staff—both of which positions were created especially for him. As vice chairman and chief of staff Pestillo had responsibilities for managing the Ford departments of governmental affairs, human resources, the office of the general counsel, and public affairs as well as for overseeing Visteon, Hertz Corporation (the car-rental business that was later spun off in 1997), and Ford Motor Land Development Corporation, a leading provider of comprehensive, integrated real-estate services.
In November 1999 Ford management publicly announced that Pestillo would become chairman and CEO of the soon-tobe-spun-off Visteon Corporation. He assumed the position on January 1, 2000—about half a year before Visteon became fully independent. As noted on the company Web site, when Pestillo took charge of the new company, he declared, "Visteon has global reach, strong electronic expertise, systems capabilities, and technologies that help our customers differentiate their brands. We'll build on these strengths to become the global leader among integrated systems suppliers. Our goal is to be fast, flexible and flawless."
Before assuming control of Visteon, Pestillo played a key role in separating the company from its longtime parent employer Ford. During this time Ford management desired to reduce its asset base, while Visteon sought independence in order to more effectively sell to automobile manufacturers other than Ford. In addition Pestillo negotiated a promise from Ford management that Ford would match any competitors' bids over the next three years in exchange for overall price reductions of 5 percent for all Visteon products. Pestillo also received a commitment from Ford management to appoint four or five members to Visteon's board of directors. Ford personnel agreed to permit union representatives from the United Automobile Workers (UAW) to be placed on the Visteon board.
Pestillo aggressively led the fledgling Visteon—which had 1999 sales of $19.36 billion and earnings of $735 million—into the very price-sensitive automobile-parts industry. In 2000, Visteon's first year, revenues stood at $19.5 billion, up about 1 percent from the company's performance as part of Ford in 1999, with earnings of $270 million. Although the earnings figure was significantly below that of 1999, the difference was more than accounted for by the effects of the one time 5 percent price realignment that followed Visteon's separation from Ford.
Pestillo faced many uncertainties in his first year as CEO. When Visteon was spun off, he was burdened with many underperforming businesses to turn around. Visteon was forced to rely on Ford to a much greater extent than Delphi relied on its own parent company—nearly 90 percent of Visteon's 2000 sales went to Ford, while 80 percent of Delphi's first-year sales went to GM. Although Visteon had strong experience with products involving heating, ventilation, and air conditioning, the company had not amassed as much technical knowledge as Delphi in other areas, hurting Pestillo's ability to keep Visteon competing at Delphi's level. Also the Visteon separation was pushed much faster than the separation of Delphi from GM had been, which led to concerns for Pestillo from a planning and organizational standpoint.
A few months after Visteon was spun off, the automobile industry along with the rest of the U.S. economy fell into recession. With an uncertain future, Visteon's workforce grewworried about the effect that the spin-off would have on profit sharing checks, pensions, and employee-discount plans. Pestillo had to contend with some of the most expensive labor contracts in Visteon's industrial sector; one-fourth of the company's employees were represented by the UAW. As part of Visteon's separation plan 22,000 UAW members who worked at Ford parts plants were reassigned to Visteon—Ford paid the workers, with Visteon reimbursing the automobile manufacturer.
Because the separation from Ford had been so amicable, Pestillo was able to retain all of Visteon's existing supply contracts with its parent company. Pestillo intended to use Ford's technologies and systems strategies in order to expand Visteon into a global giant while also reducing Visteon's reliance on Ford to 85 percent in its first year of operations and further to 80 percent by 2002.
Pestillo was in fact able to reduce Visteon's reliance on Ford to 79 percent by the end of fiscal 2003 in securing contracts with other automobile manufacturers, especially those overseas. He wanted to show the world that Visteon would be a credible player in the automobile-parts industry and would not just be "little Ford"—which many people had called Visteon after its initial separation. Pestillo was especially concerned about Visteon's presence in Europe, where it held less than a 10 percent market share as of the mid-2000s. Pestillo primarily pursued acquisitions and joint ventures in order to achieve his expansion goals.
Pestillo directed his new management team to expand the parameters and traditional roles of the automotive supplier as well as to strengthen and redefine the relationships between Visteon and its customers. As such Pestillo realized that the company needed to enlarge its customer base, cut costs, and remove unprofitable parts of the product line in order to distinguish itself in the marketplace. Pestillo sold Visteon's noncore seating business in Chesterfield, Michigan, without which Pestillo felt Visteon would be able to better focus its resources on growth-oriented businesses.
After losing about $1.7 billion between 2001 and 2003—including $1.2 billion in 2003 alone—Pestillo expected Visteon to earn $65 to $130 million in 2004, the year in which he hoped Visteon would break out of its fledgling mediocrity. As of 2004 Pestillo believed that Visteon had evolved from a simple processor of orders for Ford into a fully independent corporation; it was no longer a supplier but was a "systems integrator." Pestillo built relationships with other suppliers—some of which were competitors—in order to make use of expertise that would have been otherwise unavailable. For instance, Pestillo used digital-radio technology from Texas Instruments in order to extend Visteon into the field of microelectronics.
Pestillo also applied the systems-integrator tag when speaking of the company's assembly process. In some cases Visteon was a tier-one supplier, meaning that it assembled entire sections of cars. In other cases it was a tier-two supplier, providing only parts. Pestillo preferred that the company be a tier-one supplier but was willing to accommodate all of his customers' needs.
Pestillo reported in 2003 that Visteon had made drastic expansions throughout its product lines. The company ventured into the production of automotive cockpits, which comprised everything in the dashboard from instrument gauges to the glove box, along with air-conditioning systems, axles, audio and entertainment systems, drive shafts, headlights, and interior-door trim. According to Pestillo, what most helped Visteon enlarge its market share and raise sales during 2002 and 2003 was the company's ability to innovate. Some of Visteon's unique products included rear-seat DVD players, voiceactivation technology for hands-free cell-phone use, and plastic fuel tanks. A high-end audio system that Visteon helped develop was supplied to several of DaimlerChrysler's Chrysler Group vehicles. These products and others helped Visteon continually attract new customers.
Pestillo moved forward aggressively in solving the problems that he had inherited when Visteon was spun off. Although many other problems remained, Pestillo seemed to be well equipped to deal with them and to continue to transform Visteon into a successful independent company.
Pestillo was the director of the American Arbitration Association. He was also a member of the advisory board of the United Foundation in Detroit, Michigan; the labor-relations committee of the U.S. Chamber of Commerce; the Washington, D.C. Bar, having passed the exam in 1964; the Labor Policy Association; the Business Roundtable; and the National Association of Manufacturers. Pestillo served on the boards of directors of Rouge Industries, the Michigan Manufacturers Association, and Sentry Insurance.
"Executives: Peter J. Pestillo," Visteon, http://www.visteon.com/newsroom/executives/pestillo.shtml .
—William Arthur Atkins