March 30 (Bloomberg) -- Six months after gambling on his hunch that the auto-parts industry is ripe for consolidation, U.S. billionaire investor Wilbur Ross says his acquisition spree has only just begun.

``We are still in the early stages here,'' the 68-year-old Ross, who plans to use his International Auto Components Group to create three global auto-parts makers, said in a telephone interview from Tokyo. ``Almost every day, there is another supplier filing for bankruptcy. We are continuing to make acquisitions.''

Ross announced yesterday he will acquire the European operations of Lear Corp.'s automotive interiors and plastics business by June 30. Ross plans to merge those operations with the European plants he bought from bankrupt auto-parts maker Collins & Aikman Corp. The company will be a $1 billion global provider of automotive interior plastics, such as door trim. He plans to build its share to 20 percent of a $75 billion industry, Ross said.

And that's just the start.

Ross also wants to form a company that supplies safety products, such as airbags. A third will make metal components for the automotive industry. He plans initial public offerings for each of the three companies by the end of 2007.

Ross's bullishness on the auto-parts industry is in contrast to the four large bankruptcy filings since February 2005 by Delphi Corp., the largest U.S. auto-parts provider, Dana Corp. of Toledo, Ohio, Tower Automotive Inc. of Novi, Michigan, and Collins & Aikman Corp. of Troy, Michigan. That doesn't include at least a half-dozen other bankruptcy filings made by smaller companies such as Meridian Automotive Systems Inc., Dearborn, Michigan, over the past 36 months.

`Fresh Perspective'

``The industry's old economics aren't working, and Wilbur brings a fresh perspective to the problem,'' said John Novak, an automotive analyst with Morningstar Inc. in Chicago. ``He's buying many of these assets on the cheap. Everyone is expecting big structural changes.''

The automotive-parts industry went through a diversification binge about 15 years ago, creating large companies that were providing numerous services and parts, Ross said.

``Now that is being unwound,'' Ross said. ``What you see happening at Lear is what you will see at the end of all of this, larger companies that are more narrowly focused. I think it is proper.''

Ross has also said he is interested in buying pieces of Delphi Corp. of Troy, Michigan and Visteon Corp. of Van Buren, Michigan. Both Lear, based in Southfield, Michigan, and Collins & Aikman are reviewing whether they will also turn over or sell their U.S. operations to Ross.

Ross Success

Ross was dubbed ``The King of Bankruptcy'' by Fortune Magazine in 1998 for his role in buyouts in industries other investors have shunned. He founded his own firm in 2000 after working for more than two decades at investment bank Rothschild Inc. in New York, where he was a senior managing director specializing in bankruptcy advice.

Ross formed WL Ross & Co. and paid $250 million for the distressed investments of his former employer. ``He's been involved in distressed businesses for 34 years,'' said Robin Phelan, a Dallas bankruptcy attorney who has worked with Ross for more than 20 years. ``The guy is absolutely brilliant.''

His biggest investments have been in the steel, textiles and coal industries. They have followed a similar pattern that he now appears to be implementing with auto parts. With his steel and textile ventures, he bought companies in bankruptcy, slashed costs, sometimes with the help of unions, combined the companies to achieve economies of scale, and sought international investments to diversify manufacturing and sales.

`Ripe for Wilbur'

``Auto parts are ripe for Wilbur Ross,'' said Peter Morici, an economist at the University of Maryland at College Park. ``Because they are ripe for a renegotiation of their union contracts. Auto workers are going to have to accept somewhat lower wages, cuts in benefits and changes to work rules if they are going to compete.''

Ross spent about $2 billion buying steelmakers including the assets of LTV Corp. of Cleveland, Ohio, Bethlehem Steel Corp. of Bethlehem, Pennsylvania, and Weirton Steel Corp. of Weirton, West Virginia, starting in April 2002, a time when the U.S. steel industry had gone through 35 bankruptcies over five years. Ross's investments benefited from a surge in steel prices, as well as his ability to reduce costs by negotiating new contracts with labor unions, and offloading pension liabilities to the U.S. government.

Ross combined his U.S. steel assets to create International Steel Group Inc. of Richfield, Ohio, which he took public Dec. 12, 2003, raising $462 million in an initial offering. A year later, in October 2004, he agreed to sell the company to Indian- born billionaire Laksmi Mittal for $4.5 billion.

`Innovative Approach'

``One of the main things he brought to the International Steel situation was an innovative approach to interacting with unions,'' said Jacob Doft, chief executive officer of Highline Capital Management in New York, which owned 378,900 International Steel shares as of September 2004. ``In doing so, he changed the industry for the better. Of course you have to give the unions half the credit. But if he can come up with the same thing in this situation, then he's got a good shot.''

Ross repeated the process in the textile industry with his purchase of two bankrupt companies, Burlington Industries Inc. and Cone Mills Corp., both based in Greensboro, North Carolina, in March 2004. He combined them to create International Textile Group Inc. He added international assets to the group, and cut spending, including reductions in pension benefits.

`Consolidates'

``He has some pretty specific techniques,'' said Judith Altman, who was senior vice president of global operations and chief investment officer at Burlington until Ross's purchase of the company. ``He consolidates, he reduces, he whittles the business down to something that can turn a profit and can be packaged and marketed.''

Ross has been less successful in coal. In a May 3, 2005, interview with Bloomberg News, Ross predicted continued growth in demand for the mineral because it's the cheapest source of fuel for generating electricity. ``It's about half as expensive as natural gas,'' Ross said.

He assembled International Coal Group Inc. during 2005 from the mines of two bankrupt companies, Anker Coal Group Inc. of Morgantown, West Virginia, and Coalquest Development LLC, Ashland, Kentucky, for $275 million in stock. The company sold shares in an IPO on Dec. 5 that raised about $250 million. Ross's coal-industry plans were dealt a setback a month later when 12 coal miners were killed Jan. 4 at International Coal's Sago mine in Tallmansville, West Virginia.

Safety and Metals

Ross, who started his acquisition spree in September by buying a 25 percent stake in Oxford Automotive Aps, a French auto-parts maker, announced March 13 that he will combine the company with the Warwick, United Kingdom-based Wagon PLC, which builds roof racks and seat rails. The deal needs shareholder approval, which he expects to get in April. The new company, which will keep the Wagon name, will serve as the foundation for his metals parts supplier.

Ross is also looking for other acquisition candidates to merge with Safety Components International Inc., which he bought for $51.2 million on Sept. 26. The Greenville, South Carolina company supplies automotive airbag fabric.

To contact the reporters on this story: Jeff Bennett in Southfield, Michigan, at jbennett17@bloomberg.net; Rob Urban in New York robprag@bloomberg.net

Last Updated: March 30, 2006 00:06 EST