Tom Stallkamp, CEO of the contract engineering firm MSX International in Auburn Hills, Mich., sees a profitable future in getting other industries to pay for that expertise.
One of Stallkamp’s goals is to increase MSX’s nonautomotive business from about 20 percent of revenues to 50 percent within the next few years. Last year, MSX had $1 billion in sales.
Industries in which MSX’s expertise in service and project management is proving transferable include aerospace, agricultural equipment, appliances, telecommunications and medical products.
Those industries are beginning to go through the changes the auto industry has seen in the last decade, including the move toward outsourcing services such as staffing, product design, document storage, quality analysis and warranty management.
“We’re looking at other businesses that involve complex manufactured products, where potential customers appreciate the fact that the automotive business has become sophisticated at determining its core competencies and (is) ahead of the game in working with companies like ours,” Stallkamp says. “We’re also mainly interested in markets close to automotive and close to home geographically, where we can leverage our experience.”
Focus on relationshipsMSX has targeted markets in which “we could develop strong and deep relationships,” Stallkamp says. It has focused on sectors where “there wasn’t a lot of competition, where the work either is not being done now, or it’s being done in-house and we have to convince them to let us do it,” he says.
While there are many smaller companies offering some of the same services to those industries, Stallkamp says, “Most are very narrow, and our advantage is the breadth of our services.”
Relationship building is the legacy Stallkamp forged as the architect of the Extended Enterprise program with suppliers as Chrysler’s head of procurement. The Extended Enterprise set targets for Chrysler’s suppliers to cut costs, but rewarded them with a share of the savings and guarantees of contracts for future programs for maintaining quality on current contracts.
Stallkamp came to MSX in January 2000 after being ousted as DaimlerChrysler’s president. MSX was formed in 1996 from the combination of Masco-
Tech’s technical services group and APX International.
The company acquired a series of smaller, specialized staffing and technology application companies as part of the diversification strategy. That effort was financed by Citicorp, which owns 80 percent of MSX.
Standardized serviceMSX also standardized its services. “We’ve had good access to customers but were doing client-specific services. We did what they wanted and the way they wanted it done,” Stallkamp says. “So the point is not to do it their way but to look across industries and do it a standardized way and lower our costs and their costs.”
The company has grouped its services in three areas:
1. Quality relationship management, such as specifying and fixing warranty-claim trouble spots.
2. Collaborative engineering management, such as heading up complex engineering projects involving several suppliers.
3. Supply chain management, or making sure that everything gets where it’s supposed to go on time.
“Companies realize that what they need to do is product development and ongoing gathering of customer information,” says Jonathan Maples, MSX executive vice president of human capital management and business services. “They recognize the urgency but don’t always know how to accomplish what they need to do. Our biggest need is to get in front of companies and have a dialog and then be able to show them our capabilities. Sometimes there is internal resistance within the companies.”
MSX worked with a heavy-truck manufacturer to figure out a customer-satisfaction problem. After three weeks of sifting through warranty claims and conducting research, MSX concluded the problem was at the dealer level and recommended a certification program that would hold the truckmaker’s several hundred dealers to certain standards.
Stallkamp acknowledges that expanding MSX beyond automotive has its risks. Telecom-
munications equipment seemed like a good growth market, but the implosion in that business earlier this year has discouraged efforts to develop new business. Aircraft manufacturing seemed like another good target, but the economic aftershocks in that industry in the wake of the Sept. 11 terrorist attacks has given MSX pause as well.
Stallkamp sees opportunity. He says, “It’s possible that in difficult times, industries will have to change faster. It’s a good chance to fix how an industry operates.”