Suppliers beef up testing: automakers push for higher quality from Tier 1 types.

Not of many people these days talk about the auto industry and thriving small business in the same breath. From suppliers to dealerships, this is the age when size and money talk.

The ability to do business internationally with billion-dollar lines of credit is the ante in an increasing expensive and complex industrial showdown where fewer and bigger are the words most often heard by suppliers.

But nearly flawless quality and rapid change also are part of the modern automotive equation. And ever so quietly, that has translated into a boom for the largely obscure group of small companies (usually under 50 employees) that are cashing in on the drive by major automakers to make suppliers responsible for testing their own products.

While automakers still do extensive crash and quality testing of their finished products, suppliers at every tier in the ladder in recent years have either expanded their testing facilities or built entirely new modern testing laboratories.

"Business is very good, we're very busy," explains Robert A. Denton, president of Rochester Hills, MI-based Robert A. Denton Inc., a manufacturer of sensors used in crash testing. "It's the same task, the same products, just new customers."

Major suppliers such as Lear Seating Corp., Johnson Controls, Inc., Takata, Inc., TRW and Bendix (AlliedSignal Corp.), all have recently installed their own crash sleds to pre-test modules before they are delivered to automakers and to expand their research and development capabilities.

But safety is only the most dramatic driving force behind expanded testing in the supplier industry.

What's been more pervasive and has generated even larger volumes of business for test equipment designers and manufacturers has been rising standards worldwide for zero-defect, higher-quality products.

"The big driver here is quality and ISO 9000, all the documented practices aimed at creating high quality products," says David Tognarelli, managing director of Dynatup/GRC Instruments Inc. of Santa Barbara, CA. "We're seeing a big push in our sales because of that. There's an extension of QC (quality control) all the way down to the sub-vendors."

Mark Brown, president of Acutek Inc. in suburban Detroit's Waterford Township, says supplying test equipment these days involves customers that once relied almost exclusively on the automakers themselves to set and administer their own standards. Having your own expertise has become he says, an important part of remaining competitive.

As the pressure has increased relentlessly from the automakers for continous improvement in supplier quality, the Tier 1 suppliers have turned up the heat on their vendors, creating what amounts to a chain reaction. Testing equipment manufacturers say sales have jumped worldwide as even Third World companies making the most mundane parts for larger suppliers get hammered to increase their quality testing.

These days, even raw-material suppliers such as plastic resin wholesalers have upgraded their testing of virtually every shipment to major auto suppliers. To remain certified, small plastic injection-molding companies are now doing tests using equipment once found only in auto-manufacturer test labs.

"Nobody in their right mind even uses the term scrap rate anymore," laughs one testing expert, "let alone, acceptable scrap rates."

The drive for testing expertise has even reached into the normally idyllic world of engineering schools worldwide.

Fatigue Dynamics Inc. of Walled Lake, MI, is a tiny three-person company that makes compression and contortion test equipment. Much of it goes to university labs for research and training, although it also supplies auto suppliers.

"Last year we had a huge order from India," says President Milton Weber. "We just shipped a machine to Taiwan."

Everyone, Mr. Weber says, is scrambling to meet the demand for world-class testing.

"We understand from a lot of people we deal with who are on the fringe of the auto industry that there is high interest in machines that will satisfy (rapidly rising standards)," he says.

Testing equipment companies tick off growing customer lists in virtually every country in the world that has ambitions in the global auto market including mainland China. Several testing equipment manufacturers report inroads into U.S. arms of Japanese auto suppliers as those companies target potential business with the Big Three.

As the automaking business has globalized, even countries like Germany, with intense pride in homegrown engineering and testing skills, are looking outside their own borders.

"The unification of Europe has changed their attitude," says one testing executive. "They are starting to go outside."

Keith McCormick, president of Complex Engineering in Rochester Hills, MI, says his company is seeing a rapidly expanding customer list as more and more suppliers of varying sizes upgrade their testing. He says declining demand from the Big Three has been more than offset by growing supplier demand.

GRC's Mr. Tognarelli says positioning a test-equipment company to take advantage of the changes in the auto industry requires patience.

"What usually happens is Ford or General Motors or Saturn will standardize a practice and make their vendors comply with it," he says. "Any product that's received is approved by this particular test method."

GRC makes destructive and non destructive equipment that measures mechanical properties of materials, components and even complete structures.

"It (the changes) have created networks between several companies," Mr. Tognarelli notes. "It has given us referrals because we spent a lot of time working with the major companies. We're getting paid off in the future (through business with suppliers)."

If there's one industry catch-phrase testing equipment suppliers like even better than world-class quality, it's continious improvement. Rising safety and emissions standards and the search for new materials are the sounds of further success.

"As testing gets more sophisticated, our business is growing," says sensor manufacturer Mr. Denton. "When we first got into this the interest was in making crashes survivable. Now we're refining that into making the person come out of the crash whole."

Adds Mr. Tognarelli:

"I think the growth will be ongoing. As long as there are developments in raw materials, specialized designs and a continuing push for standardization, we'll continue on forever."