Editor’s note: After more than 13 years of writing the Auto Focus column for MiBiz, Melissa Anderson plans to retire as a columnist, effective immediately, as she winds down her storied career in automotive analysis and research. In the short term, she and her husband plan to travel in the Southern Hemisphere. “I have enjoyed writing the column and it has been a good long run,” Anderson said. Anderson’s business intelligence on the automotive industry will be missed. “Melissa was our ideal business columnist because she was able to talk with a lot of knowledge about trends in the global automotive industry while also providing a lot of local context, examples and data,” said MiBiz Publisher Brian Edwards. MiBiz will continue its search for a new automotive/manufacturing columnist throughout the coming months.
The automotive industry has been very good for West Michigan, in spite of the challenges that it has dished up for component suppliers over the last several decades.
Some of those challenges have visibly reshaped the landscape, while the impact of others is reflected in internal metrics on financial performance, customer mix, and the like. Participants in the industry who are moving toward retirement might be inclined to reflect nostalgically on what has been survived as we prepare to leave the next challenges to others.
One visible difference is that the OEM presence in West Michigan is greatly diminished since the start of our careers. GM’s 36th Street Stamping plant closed in 2009, not because of performance but because of its location, as capacity needed to be trimmed and newer strategies called for OEM metal fabrication plants to be built close to assembly plants.
GM’s engine component operations were spun out and then taken back when Delphi Corp. went through Chapter 11 bankruptcy reorganization and closed the relatively new Coopersville plant. Its work was absorbed into the GM Wyoming plant, the only local OEM manufacturing site today.
Having an OEM presence in the region is not crucial, but the loss was extremely dislocating for GM employees. For local fuel injector component suppliers like Autocam, OEM shifts may well have felt like a challenging game of Crack the Whip.
Some of the big companies in component manufacturing in the 1980s also are gone, having been acquired during the boom years of the mid to late 1990s when the strategy of “bigger is better” ruled the day. For example, Prince Corp. was acquired by Johnson Controls in 1996, the ITT Automotive seating component plant in Walker went to Lear in 1997, and Lescoa was bought by Meridian Automotive Systems in 1999.
Lear subsequently closed the Walker plant in 2005, Meridian went through Chapter 11 bankruptcy reorganization in 2005 and Chapter 7 bankruptcy liquidation in 2009. The innovative and once highly profitable interiors business of Prince remains on the scene in a less recognizable form, under names such as Motus LLC and Yanfeng Automotive.
It is more comforting to take note of what is familiar: The sizable cadre of West Michigan companies that changed with the times as needed, managed their way through the Great Recession, and continue to find the sweet spot between industry requirements and their own goals.
One example is Shape Corp., whose executives observed Honda and Toyota assembly plants coming to the Midwest in the 1980s and started lugging their roll-formed beams on sales trips to Japan, winning their first contract with a Japanese automaker in 1993. Diversifying from a Big Three-dominated customer base to one that reflected the changes in U.S. market share was a high-priority task for Shape and other local suppliers with strong growth goals.
The increasing globalization of the industry brought more competition home to the U.S. automakers. In the 1990s, they sought to reduce their costs in ways that colored the industry to this day, including intense pressure on suppliers to lower their prices and assume more responsibility. Summit Polymers in Portage is one of a number of companies in our region that responded by embracing the principles of lean production, famously articulated in The Machine That Changed the World. The 1990 book described Toyota methodologies for driving out waste and maximizing efficiency.
Other West Michigan suppliers that have successfully emerged on this side of the last several decades include GHSP, Gentex, Trans-Matic, Pridgeon & Clay, Cascade Engineering, Lacks Enterprises, ADAC, Ridgeview Industries, Grand Rapids Controls, Challenge Manufacturing, and more.
Leaders could be excused for feeling fatigued by the demands of automotive industry dynamics. Some years ago, a company owner explained his decision to sell the business by saying, “It just wasn’t fun anymore.” If not actually fun, there is still satisfaction to be gained and money to be made (though maybe not as much) from good execution of component design and production.
Looking ahead, some challenges will persist, e.g. getting the best value for the lowest price, meeting regulatory requirements that evolve with the political climate, and handling the cyclicality of vehicle sales.
New and different challenges are also on the horizon. The rise of the “connected car” will bring to the industry new players — Silicon Valley-based firms in particular — and have a host of technological implications, sooner or later. Come what may, we are confident that West Michigan suppliers will continue to find ways to prosper in the auto industry.