ROYAL OAK, MI – Inability to compete with component producers in low-wage regions of the world can spell trouble for many U.S. auto suppliers.
But Michael Chetcuti thinks differently. He is CEO of Quality Metalcraft Inc., a small privately held prototype and metal fabrication specialist based in Livonia, MI, with about 400 employees.
Chetcuti says QMC’s strategy is to remain focused intently on low-volume parts manufacturing for the U.S. market – the type of work that is difficult for plants in China and other low-wage regions to handle cost-effectively for export to the U.S.
QMC’s four plants in Livonia can fabricate anything from small brackets to complete body-in-white assemblies, in runs of a few hundred a year to several thousand a month.
“We’re agile enough to handle smaller jobs the Tier 1s won’t touch,” the company says on its website.
And part of the growth strategy for QMC is to tap into the lucrative aftermarket parts sector through an evolving relationship with American Expedition Vehicles.
Founded in 1997 in Missoula, MT, by entrepreneur Dave Harriton, AEV has become well known for selling Jeep accessories, such as winches, skidplates, wheels, lights and bumpers, as well as full conversion kits.
AEV managed to wedge a production 5.7L Hemi V-8 under the hood of a Jeep Wrangler and popularized the idea of a long-wheelbase Jeep several years before the brand made such a vehicle available in showrooms. AEV is to Jeep what AMG is to Mercedes-Benz, Chetcuti says.
There is money to be made on these parts, and they need not be manufactured in high volume. AEV, for instance, sells a winch front bumper combination for the Jeep JK Wrangler for a retail price of $1,249.
Chetcuti and Dave Yegge, operations manager for AEV, will discuss their joint approach to the specialty aftermarket sector in a presentation Aug. 7 at the Management Briefing Seminars automotive conference in Traverse City.
The session, titled “Designing for Customization,” is presented by the Center for Automotive Research and the Specialty Equipment Market Assn. QMC and AEV have been active with SEMA for many years.
Chetcuti and business partner Michael Collins formed a management company called Streetcar USA, which acquired AEV one year ago.
Streetcar USA also manages QMC and is seeking other specialty parts companies to fold under its umbrella. The management company is converting an old building in this Detroit suburb into its new headquarters, and it will house some staff from both QMC and AEV, Chetcuti says.
AEV comes up with concepts for aftermarket products, and QMC carries out the manufacturing. Fenders, corner guards, hoods, rocker rails and skidplates are among the aftermarket components QMC produces for Jeeps.
QMC tried years ago to create its own aftermarket brand but found ultimately it needed to pair up with an established brand, such as AEV, Chetcuti says.
“Every Tier 1 supplier has pumped money into the aftermarket and has come up short,” he says. “And then they try again to get back into it. The problem is thinking you’ve got a better mousetrap.”
A lifelong metro Detroiter, Chetcuti says there is no better place than his hometown for finding affordable manufacturing capacity, good labor and talented engineers.
“When the volumes are low, we think Detroit is ideal,” says Chetcuti, who has considered manufacturing partnerships overseas. “The economics for manufacturing parts for the aftermarket in Detroit are just about perfect.”
Production overseas in a low-cost country is not cost effective in low volumes, Chetcuti says. In addition, the slow logistical process can prevent a great idea from coming to market quickly, satisfying fickle consumers.
“By the time you figure out a low-cost country strategy at a volume of 500,000 units a year, the market is gone,” he says. “You can get the product back in your warehouse and find the market no longer exists.”
QMC has its eye on more than just aftermarket parts. The company spent much of 2006 producing prototype bodies-in-white in preparation for this year’s launch ofGroup’s all-new RT-platform minivans.
QMC coordinated sequencing for some 3,600 welds on the body, Chetcuti says.