TRAVERSE CITY, MI – Metaldyne Corp. avoided the wave of bankruptcies that has swept over automotive suppliers through some upfront self analysis, a top executive says.
Metaldyne studied “carefully” its business cost structure and looked at “what we were selling our products for in the marketplace,” Thomas Amato, executive vice president of commercial operations, says.
Suppliers that waited too long to see the writing on the wall or had burdensome labor contracts are the ones that fell into bankruptcy, Amato tells Ward’s at the Management Briefing Seminars here.
“Some companies at the time were healthier than Metaldyne (and) had the luxury of time to wait,” he says. “(But) some of those companies were the ones that ended up in trouble later in (2004), because the window had closed (and) they couldn’t react quick enough.”
In some cases, suppliers such as Delphi Corp. went down because of out-of-control labor costs, Amato says.
The vast majority of bankruptcies among auto suppliers signals a sea change in the industry. To be successful, Amato says Metaldyne has outlined a strategy going forward.
“You have to pick and choose what products you want to manufacture and what customers you want to invest with,” he says, adding investing in new technologies and techniques also is essential.
“Certainly our customers value technology. They want us to invest in technology, and we’re bringing to market products that have some type of innovation or technology,” Amato says.
Going forward, he predicts the supply sector will be smaller, with only the strong and adaptable surviving.
Consolidation also will work to thin supplier ranks. Within the next two to three years, Amato predicts, this industry transformation will be evident.
“I would have predicted a year ago it would have happened quicker, but I think now it will start to happen over time and may be a longer process,” he says. “The supply industry does need consolidation.”
