ALBION — As automotive production and the industry’s supply chain grows in Mexico, one mid-Michigan manufacturer of custom casters and wheels decided to engage in a foreign market for the first time in the company’s history.
The problem: Albion-based Caster Concepts Inc. — which primarily serves the automotive industry, as well as companies in the aerospace, appliance and modular home sectors — had no prior experience with accessing or attracting customers in foreign markets.
To compensate for its lack of expertise, the company turned to the Michigan Economic Development Corp. (MEDC) and accompanied the organization on a trade mission to the Mexico in the fall of 2015.
“We couldn’t be doing what we are doing without partnering with MEDC from a small company standpoint,” said Bill Dobbins, president and CEO of Caster Concepts. “I wouldn’t even know where to start.”
Despite the uncertainty, company executives signed contracts with several key automakers and suppliers, including Chrysler, General Motors, Mazda and American Axle. Caster Concepts was also able to make initial inroads with local distributors in Mexico, Dobbins said.
Light vehicle production in Mexico reached 3.4 million units in 2015 and is expected to grow to 4.9 million units by 2022 as automakers move more production to the low-cost country, according to recent data from IHS Automotive.
Going forward, Caster Concepts plans to further its relationship with distributors and other companies in Mexico to provide a higher level of customized service for its automotive customers.
“If we have a significant presence with Kia there for a specific caster, then how do we put stock of their product in close proximity to them so if they ramp up, they can have easy access to new parts,” Dobbins said of the questions his company continues to weigh.
Caster Concepts has given up some margin on shipping costs for customers in Mexico, but Dobbins said the organization does not have any plans to open a manufacturing facility in the country at this time.
“It’s a significant learning curve for us,” he said. “On the other hand, that’s just what we have to do to be competitive and continue to grow our business.”
Caster Concepts reached annual sales of close to $20 million in 2015 and expects to achieve double-digit growth in 2016 as a result of increased activity in Mexico, Dobbins said. The company employs 100 workers at its facility in Albion and has plans to hire an as-yet-undetermined number of employees this year.
Caster Concepts manufacturers wheels and casters rated to carry loads from 700 pounds to 70,000 pounds. That range of products makes the company susceptible to competition both from cheap imports that specialize in lower-capacity casters and more sophisticated domestic producers that focus on higher-rated products, Dobbins said.
To remain competitive with both sides of the spectrum, Caster Concepts relies on a joint strategy that includes high product throughput, minimized inventories, and a focus on customized made-to-order products.
“We want to be able to deliver our product as fast as someone who has warehouses full of product,” Dobbins said.
Despite only 40 percent of its casters and wheels being standard, off-the-shelf products, the company still operates primarily as a made-to-order business to keep inventories low.
To do so, Caster Concepts has vertically integrated nearly every stage of its operations and maintains subsidiary companies that specialize in fabrication, conveyor systems, machining and other aspects of the company’s supply chain.
“We want to own the supply chain as much as we can,” Dobbins said. “We don’t own foundries or plating operations, but almost everything else we control rather than outsource. That’s the way we drive our make-to-order business, reduce lead times and manage our quality.”
Each of the company’s subsidiaries also maintains its own customer base, he added.
In addition, the company puts significant effort into working with its customers to develop custom wheels and casters, Dobbins said. Caster Concepts’ engineering team works with the customer to model and design each caster and wheel, down to the type of bearings and races needed based on each customer’s weight requirements.
That focus on customers and customized products gives Caster Concepts an edge over competitors that import generic casters and wheels, Dobbins said.
“We think we have a significant value-add for the customer in that situation and from a strategic position,” Dobbins said. “Once they decide they’re going to outfit their process with a caster that’s half an inch higher or wider or an angle change that’s off the standard, then these guys who have things from China don’t have exactly what’s been specced into that.”