DETROIT — Since taking the CEO job at Adient in October 2018, Doug DelGrosso has been operating as a kind of field surgeon — cutting away situations of the past that left the seating giant with billions in losses, applying a tourniquet to its bleeding business units and ultimately asking the company’s employees to endure through the pain.

“We’ve been pretty upfront about what needs to be done,” a stoic DelGrosso said from his corner office in suburban Detroit in November, shortly after sharing some bad news with his headquarters staff. “I thanked them for taking the burden on.”

“The burden” is what DelGrosso has declared as a “Back to Basics” drive. He believes Adient — the world’s biggest seat supplier, with 2018 revenue of $17.4 billion — has been distracted by costly ideas not core to its business. He intends to scale back from those mission distractions and focus on what made Adient powerful: auto seats.

That path, he said, will bring Adient back to breakeven in 2020.

But there will be short-term pain at the company.

Corporate employees will end the year on unpaid vacation. In a company town hall meeting last month, DelGrosso announced that 1,300 nonplant salaried employees would not work or receive pay for the weeks of Thanksgiving, Nov. 25-29, or New Year’s, Dec. 30-Jan. 3.

“With so much uncertainty, I decided to take decisive action,” DelGrosso said. “I think people get it. They probably don’t like it, but it was the right thing to do. We’re continuing on the path we’re on.”

It has been rough going for Adient since it was spun off from Johnson Controls Inc. in October 2016. It recorded more than $3 billion in losses over the past two fiscal years, with troubles from what the company called mismanaged launches and a botched attempt to move its headquarters to downtown Detroit that resulted in an $11 million loss before renovations were ever completed.

The board recruited DelGrosso after he turned around another troubled supplier, Chassix, a producer of metal powertrain, chassis and subframe parts.

On paper, Adient is lagging behind its two key North American competitors, Lear and Magna International. Lear and Magna enjoy operating profit margins higher than 11 percent, compared with Adient’s at just more than 5 percent. Both Lear and Magna have delivered impressive growth by investing away from seating. But DelGrosso maintains that Adient will stay the course as a seating supplier.

That strategy may play out well for Adient, says Colin Giles, a research analyst focused on supply chain and technology for IHS Markit.

“Investing in the right products and technologies is crucial, particularly as the technological adoption and development trend in the auto industry is accelerating rapidly,” Giles said. “While it is important to keep an eye on the future, companies must not lose focus on the present.”

DelGrosso says that means right-sizing Adient’s seat structures and mechanisms division. The goal is to pare that division’s $3 billion in revenue by $400 million by letting bad contracts run their course and getting out of the business of supplying parts to competitors.

“We’re reducing revenue on selling across the broader range,” DelGrosso said. “We were selling not only to customers but to competitors, and it created challenges and diminished our returns on that scale. We’re allowing for an organic roll-off.”

Much of what DelGrosso is implementing is just that — allowing questionable operations to expire. Many of the company’s problems can be attributed to lusting after acquisitions and diversification, he said.

“A lot of that activity moved us away from the formula of Adient,” DelGrosso said. Former executives wanted to expand into new products — for example, through an aerospace joint venture with Boeing.

“That diluted a lot of resources, took us away from our core business,” he said. “We diluted ourselves to a point where we weren’t executing on launches and were not commercially focused.”

On Oct. 18, Adient reduced its stake in the joint venture with Boeing from 50.01 percent to just 19.9 percent.

DelGrosso also inherited a company burdened with debt — another focus of his turnaround effort. Adient took on $3.5 billion in debt at its birth to fund a $3 billion dividend payout to JCI, leaving the new supplier with a debt load roughly twice its earnings before interest, tax, depreciation and amortization.

Adient recognized the move as a risk from the get-go, reporting in a regulatory filing at launch that significant leverage put the company at a competitive disadvantage and could limit its ability to perform. Adient also faced $1.5 billion in impairment charges related to the spinoff.

As part of its market-share growth strategy when it was still operating as JCI, the company acquired two German seating suppliers — Keiper, and its specialty seat business Recaro, as well as C. Rob. Hammerstein Group. Digesting those acquisitions became a problem for its seat structures and metals and mechanisms division. The company spent years integrating the two acquisitions while bleeding cash.

As a result, Adient closed out its first full year of existence in 2016 with a $1.5 billion loss. JCI separated financial reporting of Adient ahead of its October 2016 spinoff.

DelGrosso climbed out of a heavy debt scenario in his mission at Chassix. That company had been fused together by investment interests in 2013. But the resulting debt proved insurmountable, and Chassix filed for Chapter 11 bankruptcy in March 2015 with $556.7 million in total debt and $34.3 million in assets after missing bond payments. It reorganized and emerged in July of that year.

DelGrosso arrived at Chassix at the end of 2015 and led the company on a $50 million expansion in Europe and a $30 million acquisition of the automotive casting business of Austrian conglomerate Benteler International.

Now at Adient, DelGrosso is again attempting to get above the debt. In May, Adient secured a deal to refinance its debt to the tune of $750 million, pushing its debt maturing out until 2024.

Wall Street has viewed both DelGrosso and his first year of steps positively, and the company’s stock is up more than 23 percent so far this year.

In an analyst note last month, David Whiston, autos stock analyst for Morningstar Inc., commented that Adient is making progress.

“With what we see as the right team in place to fix Adient’s woes, more time to reduce debt and option value from nonautomotive markets — such as business-class airplane seats and perhaps higher-dollar automotive seating content from autonomous vehicles — we think Adient is a compelling opportunity for investors willing to ride out the volatility of a turnaround story,” Whitson said. “The stock isn’t for everyone, though, because the turnaround is likely to take a long time.”

DelGrosso sees similarities between the situation at Adient and the crisis that the smaller Chassix lived through.

“Both are the result of poor execution and an aggressive growth strategy,” he said. “We had a few tough launches, but only a minority of plants in the U.S. and Europe were troubled. I saw this as an opportunity to reflect on how we were operating the businesses. I decided to push accountability and responsibility back to the regions. Leaders in those regions now have the autonomy to operate efficiently.”

Since his arrival, DelGrosso has terminated several executives, including Byron Foster, the executive vice president responsible for overseeing the seats and mechanisms business, and Brian Grady, vice president of the commercial business.

DelGrosso wanted more decision-making and problem-solving at the local level. The company was too centrally focused, he said, and bloated with centralized upper management.

DelGrosso is facing up to the missteps and believes Adient can return to a breakeven level.

“In a stable environment, that’s not theoretical; that’s a reasonable target,” he said. “This is a really good company. We’re rebuilding its credibility. We’re executing things as fast as we can without creating more problems. We’re a very capable company, and I think that’s becoming apparent.”

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