Spending 12 months in bankruptcy was humbling, emotionally draining and bad for employee morale at Key Plastics LLC. But when the supplier emerged from bankruptcy on April 26, 2001, the company had a new lease on life — as well as a new owner and new management.
Carlyle Management Group, a private equity fund, acquired Key Plastics and rescued it from bankruptcy, infusing the supplier with badly needed cash. But Key got much more than money: The new management team arrived with a bottom-line discipline and a focus on customer satisfaction that had been sorely lacking.
“We came in with a focus on paying down debt, and we had to improve quality,” says Daniel Ajamian, who arrived as president in spring 2001 with no auto industry experience.
“Poor quality costs us a lot of money,” Ajamian says at the dedication of Key's new headquarters in Farmington Hills, MI. “What we spend on poor quality could fund all the things we need to fix.”
In the past two years, Ajamian says Key has made remarkable strides in improving quality. A few years ago, Key was shipping up to 500 defective parts per million to its biggest customer, General Motors Corp. Today, that PPM rate with GM is down to single digits. “We're not as good as we need to be, but we're improving,” he says.
Key's new 30,000-sq.-ft. (2,787-sq.-m) headquarters houses 135 engineers, managers and salespeople. The company's chief products are door handles, underhood bottles and interior trim components. It has 50% of GM's North American door handle business.
Sales last year exceeded $525 million, and Key Chairman B. Edward Ewing says the company plans to reach $1 billion in sales by the end of this year and $1.5 billion in sales by the end of 2004.
The company should be careful, however, about growing too quickly, as it was a string of nine acquisitions in the 1990s that put Key Plastics into bankruptcy.
