David Sedgwick
AUTOMOTIVE NEWS
Published: November 10, 2014 2:11 pm ET
Updated: November 10, 2014 2:15 pm ET
Image By: Automotive News
Andra Rush
DETROIT — It’s hiring time at Detroit Manufacturing Systems.
On Saturday, Nov. 8, the minority-owned supplier of interior components was scheduled to hold the second of two job fairs to hire 200 assembly workers.
These are heady times for owner Andra Rush, who launched Detroit Manufacturing in 2012 as a 55-45 joint venture with Faurecia SA, a major global supplier based in France.
Rush, an entrepreneur who is descended from the Mohawk tribe in Ontario, got her start in the auto industry when she used her personal credit cards to finance her own trucking company.
It’s safe to say that personal credit cards would not provide sufficient capital for Detroit Manufacturing, which has $700 million worth of component contracts for the F-150, Mustang, Focus and other Ford models.
Which is where her joint-venture partner comes in. Canny minority suppliers, who typically lack the global size and cutting edge r&d for competitive technology, are forming partnerships with Tier 1 companies to handle major production contracts.
And some — such as Rush or Millennium Steel Service — have formed multiple partnerships with major companies.
“Everybody needs money for R&D, working capital and talent,” said Louis Green, president of the Michigan Minority Supplier Development Council. Green, who counts approximately 700 automotive suppliers in his organization, says joint ventures “are the clear path that people see right now.”
Rush’s joint venture with Faurecia gave her access to injection molds from a Ford factory in Saline, Mich., which she transferred to her facility in Detroit.
That factory handles final assembly of instrument panels -- and in some cases the entire cockpit -- for the Ford Mustang, Focus, Expedition, Explorer and Taurus and Lincoln Navigator. The company is ramping up to assemble instrument panels for the redesigned Ford F-150.
“It’s a pretty sophisticated assembly,” said Mike Heneka, president of Faurecia’s North American unit. “There have been some struggles setting up manufacturing systems, but I think it’s worked out quite well.”
Access to Ford’s injection molds limited the tooling costs, and Faurecia installed its own manufacturing system, based on the Toyota Production System, and assigned some senior executives.
Rush, in turn, had previous experience assembling instrument panels via Dakkota Integrated Systems, a joint venture with major supplier Magna International Inc.
In effect, the auto industry has developed a buddy system of sorts to work with minority suppliers. In part, that’s because the industry is littered with minority-owned firms — such as Bing Group and Plastech Engineered Products Inc. — that were closed or sold after falling on hard times.
Pressure from OEMs
The Tier 1 suppliers are willing to play the role of big brother in part because their customers, the automakers, are telling them to do so.
Moreover, Japanese automakers such as Toyota Motor Corp. and Nissan Motor Corp. have announced minority purchasing targets similar to those set by the Detroit 3. And they are soliciting input from minority groups such as Jesse Jackson’s Rainbow PUSH Coalition.
Rebecca Vest, Nissan’s North American purchasing chief, joined other senior purchasing executives from General Motors, Ford, Chrysler Group and Toyota at Jackson’s automotive conference Oct. 13 in Detroit.
Vest told attendees that Nissan has targeted 5 percent of its North American purchasing budget for minorities -- up from 2.5 percent now -- and that she has set a higher priority for the program.
“We have targets, we measure them, and we are moving along,” Vest said. “We are not where Ford or General Motors is, but we’re improving every day.”
Surviving recessions
Attendees at the PUSH conference seemed confident that the automakers are making an effort. But the auto industry’s boom-or-bust cycles, which Green dubs “economic Darwinism,” have wiped out many suppliers that were thinly capitalized.
During the recent recession, the Michigan minority supplier council lost nearly half of its automotive membership. That’s why the survivors are eager to find partners, Green said.
“The folks growing now are the really smart operators,” said Green. “It’s hard to get enough growth organically, so they are doing joint ventures.”
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