"We've got a couple of headwinds right now and they';re actually some of our biggest strengths," Gentex Corp. Fred Bauer told some 200 shareholders gathered at the Pinnacle Center.
Gentex Corp. Chairman Fred Bauer HUDSONVILLE, MI -- Gentex Corp. Chairman and CEO Fred Bauer remained upbeat about the challenges his company is facing as he chaired the Zeeland company’s annual shareholders meeting on Thursday, May 16.
Gentex, which makes automatic dimming rear-view mirrors for cars, is facing several “headwinds,” Bauer told shareholders during a meeting in which they elected former U.S. Rep. Pete Hoekstra to the company’s board of directors.
“We’ve got a couple of headwinds right now and they’re actually some of our biggest strengths,” Bauer told some 200 shareholders gathered at the Pinnacle Center in Hudsonville.
One headwind, according to Bauer, is the federal government, which has on four occasions delayed implementation of the Kids Transportation Safety Act, a 2008 law that mandates all new cars have rear-facing cameras to prevent backup accidents.
While Gentex was an early adopter with a camera system that included a display in the rear-view mirror, the lack of a federal mandate has hurt sales and allowed competitors to catch up with competing technologies.
When President George W, Bush signed the law, “we were the only people who could meet the criteria for performance and brightness,” Bauer said.
The popularity of liquid crystal displays for radios and other controls in the center console has shifted four customers away from Gentex mirror displays because the console displays are already installed in the vehicles, Bauer said.
Senior Vice President Mark Newton said they have not been informed of any other defections by its rear-camera customers.
“It’s still a very positive product for us,” he said.
Bauer said he’s hopeful customers will move back to Gentex’s mirror display because the center consoles can be hard for drivers to see in the sunlight. He suggested the console displays could become the target of lawsuits by accident victims.
Another drag on business has been lagging auto markets in Europe and Asian-Pacific markets, where Gentex sells 60 percent of its automatic dimming rear-view mirrors and advanced driving aids.
Although total sales grew in 2012 thanks to resurgent U.S. auto sales, foreign sales continued to lag. Bauer said he hopes those markets will bounce back in 2013. “Long-term, being international is going to be great,” Bauer said.
Gentex, which last month reported a 7 percent decline in first quarter sales and predicted a sales slump of up to 5 percent in its second quarter, was able to keep its profits steady through cost-cutting and other efficiencies.
Bauer said those efficiencies will benefit the company over the long term when foreign sales pick up again.
Investors have reacted to the improved profits by pushing the company’s stock to a 52-week high price of $25.08 during Thursday’s trading. Gentex’s stock closed at $24.73 a share on Thursday, down 25 cents, or 1 percent.
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