'It's very scary out there...'

While the Lears buy the Maslands, the Varitys team with the Lucases and the Bosches bulk up on AlliedSignal's brake business, the world understandably can look somewhat frightening to those second- and third-tier suppliers making such mundane products as screws and nuts and gaskets.

After all, there are only so many ways to mold a gasket or forge a nut.

"It's very scary out there," says Joseph E. Young, vice president of sales and marketing for Southland Technologies, a supplier of gaskets and engine seals based in Chesapeake, VA. "In the next 18 months I think the Big Three will decide on their supply base for the 21st century. If you haven't done your homework by now, you're probably out of the game."

Southland's survival strategy could be called "co-opetition." Instead of selling an O-ring for a piston head, and three separate rubber gaskets to seal transmission fluid, President John Dannenhoffer wondered why not bring them together in one piece? Better yet, find a couple of other small-fry suppliers whose products complement Southland's and package ourselves as a provider of powertrain sealing systems, he thought. After all, when you're up against well-heeled foes such as Dana Corp.'s Plumley Div. and Freudenberg-NOK, you need all the help you can get.

So, together, Southland, Chicago Rawhide -- a specialist in crankshaft and valve-stem sealing -- and the McCord Payen division of T&N, which supplies head and exhaust gaskets, have formed a consortium called Performance Sealing Technologies (PST) that is packaging holistic powertrain sealing systems and lowering their costs at the same time. Together their annual sales are about $650 million. Chicago Rawhide and T&N, of course, are big suppliers in their own right.

"We were the David and they were the Goliaths in this deal, but we were all quick to realize that to be truly global manufacturers we either would have to be bought or find compatible partners that we have some voice in picking," says Mr. Dannenhoffer.

The consortium is premised on packaging each partner's products more efficiently.

For example, the group's Multiseal product brings seven gaskets together on a plastic frame shaped like a lower case "b" to accomplish what previously required 10 distinct parts. Their customers used to pay $1.53 for the 10 separate gaskets. They can get the Multiseal for $1.27 and reduce assembly time from 17 seconds to 5 seconds.

Problems per million? The old way: 20,000. The new way: 3.

"Not only do we design everything for them and live on their premises, but we also have control over the mating surfaces we seal," says Mr. Young, the Southland vice president who's coordinating PST's marketing. PST recently landed a major contract for the sealing system on two new Chrysler Corp. truck engines slated for the 1999 and 2000 model years.

Southland also is positioned globally through a joint venture with Megacork, a Portuguese cork producer, that allows for reciprocal sales of each other's products and exchange of technologies. They're currently involved with General Motors Corp.'s Adam Opel AG and Lotus plc on various engine programs in Europe.

"Gaskets aren't very glamorous, but they can be a very emotional issue if there's a problem," Mr. Young says. "You don't pay $25,000 to $40,000 to find a big black oil stain on your garage floor. By the turn of the century, when a consumer pops a hood he'll expect the engine to look like a high-tech stereo."

Meanwhile, Shelton, CN-based Emhart Fastening Teknologies is taking its marketing and engineering prowess on the road, literally. It's called a Mobile Innovation Center (MIC), a 36-ft. (11-m), nine-ton (8.2-t) laboratory packaged into an Airstream motor home. This behemoth is loaded with $250,000 of gadgetry, including a computer-aided design system featuring 3-D modeling and finite element analysis.

Pop rivets, prevailing torque nuts, brass inserts and screws are among Emhart's product line. A division of Black & Decker, the company's annual sales are about $500 million.

"Let's face it, we're not making a very high-profile product," says Martin Schnurr, Emhart's director of business development. "A lot of times fastening is the last technology people deal with."

As automakers shove more engineering and development work down to their Tier 1 suppliers, the people who buy nuts and bolts and gaskets change. Instead of selling directly to automaker purchasing agents, companies like Emhart and Southland now spend more time with the Tier 1 folks.

"It's very easy to walk into GM, Ford or Chrysler and go from office to office in one technical center to show them what rivet or nut they need," says Mr. Schnurr. "These Tier 1 guys are faced with major challenges in terms of fastening, but they don't know much about it, nor should they."

That's what the MIC is all about: Don't come to us, we'll come to you.

"We take our technology to the customer's doorstep. With our CAD system, if you take a plastic fastener and say `These are the forces it will be subject to,' you can predict its performance right on the computer screen," says Mr. Schnurr.

The idea is to design not only the nuts and screws and rivets earlier in the process, but also to provide the welding or torquing technology used to put them on the vehicle. By taking the mobile innovation center to the customer, Emhart demonstrates broader solutions and sells more screws and rivets.

"The more we control the fastening system, the less variables the customer has to worry about," says Mr. Schnurr. "For us, it's somewhat like vertical integration."

Many fasteners have traditionally required dozens, if not hundreds, of holes to be punched throughout a vehicle's body. But holes raise the risk of corrosion. They also add to the complexity of stamping operations.

To overcome that, Emhart has developed a "No-Hole Fastening System," featuring an automated arc-welding process that attaches hundreds of studs and plastic clips through which wiring harnesses, fuel lines and brake lines are routed. The customer cuts the risk of corrosion and gets more consistent fastening quality. Emhart shows that it can deliver more than a low-tech commodity that can be replicated at any small machine shop.

Another result is that the variety of fastening products is growing. By the year 2000, Emhart expects its 5,000 parts, tools and assembly systems will increase by 30%, many of them created inside the mobile innovation center. Indeed, the company now has put a second MIC on the road and is building a new engineering lab at its Chesterfield Township, MI, facility that should be up and running by the end of this year.

So a 9-ton, 36-foot Airstream may not be everyone's definition of nimble, but it is working for this fastener supplier.

"It corners like a Corvette," Mr. Schnurr says. "You just don't want to be in the lane next to us when there's a 40 mph (64 km/h) wind blowing."

Even the little guys need the illusion of feeling big.