ADAC Automotive, a Tier 1 manufacturer of vehicle entry systems, door handles, trim and mirrors, is beefing up its R&D and product technology in response to shifts in the auto industry. The company just wrapped up its move into a new 56,000-square-foot corporate headquarters in Cascade Township and an expanded R&D facility at a cost of roughly $23.5 million. Gene Hawkins, vice president of engineering at ADAC, spoke with MiBiz about how the company is looking at R&D and where it sees the future of plastics in the automotive industry.
How is ADAC reacting to the trend of automakers pushing technology development down into the supply chain?
We are taking responsibility for the technologies that we need to create. We’re thinking about what it means to get in and out of a car and then figuring out what we need to do and then taking it to the OEM. We’re not waiting. We’re trying to figure out what they need and then bring that to them.
What role does plastics manufacturing play as ADAC focuses more on technology and automotive electronics?
We have to keep getting better on how we’re doing the plastics. We’re not just forgetting about the plastic now that we’re starting to get more and more into electronics. We consider molded plastic parts to be one of the core strengths of our company, and so we build off that. We also have paint and assembly as strengths and then we are adding electronics. That’s a lot of where it grows.
It would be more difficult for us to apply the electronics that we make if they weren’t embedded in these plastic pieces that are on the interior and exterior of the car. To us, it all goes together. We need to have the plastics, we need to have the paint and assembly and we need to have electronics, and then we can do everything that our customers want.
How has the use of plastics changed in the industry?
In the products where we are, it’s pretty much the same as it was before, but the advances made in the strength of plastics are definitely allowing it to be used in places where it wasn’t before. Intake manifolds used to all be metallic and they’re all plastic. That was a while ago, but it’s more and more that you can replace aluminum with a higher-strength plastic if it’s engineered properly and the loads are light enough.
Carbon fiber made a splash in recent years. Is that a threat to plastic suppliers or is it not to scale yet?
I don’t think that it’s a threat, but we did become aware of a startup company that is using the waste from a carbon fiber manufacturer and they’re grinding up the waste and putting it in with the plastic and then getting better material properties that way. I think that is fascinating and I want to investigate further.
From a process standpoint, what has ADAC been doing to reduce waste and cost?
We have been investigating molding process technologies that would improve our cycle time and improve our quality. That does eliminate waste since any cycle time and quality improvement definitely helps with waste — so we’re working actively on that right now.
Last year, ADAC announced plans to invest $23.5 million to build a new corporate headquarters and an expanded R&D facility. How does that investment align with your future growth plans?
Those two things are happening right now. We moved into the new innovation center in the spring and we just got everybody moved into the new headquarters building, which is right next door, last week. That is really working out well. It required some investment, but we expect it to pay back by a better working environment and having everybody close to each other now.
Are you using the investment in R&D as a catalyst for growth?
That has changed a lot. Three years ago, what we were doing was trying to figure out how to in-source some parts that we were buying from other companies, and that was basically the extent of the effort. Now it’s completely changed to we’re developing technologies, identifying the right technologies that are needed for the future of vehicle access and then developing those. It’s a strong effort right now.
What does further CapEx look like for ADAC heading into next year, given that automotive production is forecast to continue to decline?
In our case, the auto forecast definitely affects revenues, but our CapEx is more driven by new programs. The customers tend to have six-year product life cycles unless they delay launches, which they might do if there is enough of a slowdown. Right now, we’re seeing lots of activity and all of our customers developing new products. If we have to increase capacity to accommodate that, we will definitely be buying more capital equipment.