Supplier aims to be a go-to source for weight loss

One of the first things Ramzi Hermiz asked for after taking over Shiloh Industries less than two years ago was a slimmer corporate logo.

One of the first things Ramzi Hermiz asked for after taking over Shiloh Industries less than two years ago was a slimmer corporate logo.

"It looked too heavy for what I wanted to do," says Hermiz, who is racing to transform the 64-year-old company from "Shiloh the Metal Stamper" to "Shiloh the Lightweighting Company."

In an era when automakers are scrambling to make vehicles more fuel efficient, Hermiz wants to reposition the suburban Cleveland company -- hardly a household name in the auto industry -- as a provider of vehicle weight reduction solutions and consultation. He is counting on a series of rapid acquisitions to give Shiloh the management and technical expertise to pull it off. (See box, above.)

The timing is right.

In the United States alone, automakers face a federal mandate requiring cars and light trucks to average 54.5 mpg by the 2025 model year. The companies are taking myriad routes to get there, including smaller turbocharged engines and improved aerodynamics. But program after program is pushing for vehicle weight reduction, and lighter metals are key.

Ford Motor Co. grabbed headlines this year when it said its next-generation F-150 pickup will have an aluminum body. A forecast released in June by Ducker Worldwide predicts that North American light-vehicle aluminum consumption next year will be 28 percent higher than in 2012. The study forecasts that every major automaker will have an aluminum body program in place by 2025, and that seven of 10 new North American pickups produced will have aluminum bodies.

Metal-agnostic advice

But capitalizing on the aluminum craze is not what Hermiz is talking about. To differentiate Shiloh as "a lightweighting company," Hermiz wants the supplier to be an objective voice of strategic metal advice.

"Any parts maker can show you how they'll take weight out of your metal part," Hermiz says. "But the steel stamper will want to do it in steel. The aluminum caster will want to do it in aluminum.

"My plan is to be the company that can do it any way the customer wants it. We want to sit with the automaker's vehicle development engineers and say, 'Here's a full menu of choices and analysis for the part -- aluminum, steel, magnesium, whatever. Here's what you gain this way, here's what you gain that way.'"

That may sound like wishful thinking -- a humble metal parts-banger guiding an automaker on its engineering decisions, especially in an age of giant global parts conglomerates.

But Hermiz is on a mission, restructuring Shiloh into an unfamiliar new creature. Through a series of rapid corporate acquisitions and technology investments, Shiloh has moved itself from steel stamping into aluminum casting, magnesium parts and lightweight sound-dampening materials, with new customer programs for the first time in Europe and China.

Its new product, called ShilohCore, is an ultralight stamped acoustic laminate that is used in dash panels and even oil pans.

Hermiz wants to reposition Shiloh as a provider of vehicle weight reduction solutions and consultation.

Steel vs. aluminum

Automakers may think they need more aluminum, but that's where Shiloh the lightweighting supplier comes in.

"There is a comfort level among automakers to simply say, 'We need aluminum,'" Hermiz says. "But there are ways to make less expensive parts out of stamped steel that are actually lighter than the same part cast in aluminum."

Shiloh has created a stamped steel control arm that is lighter than the same control arm in aluminum, as well as a steel shock tower that is lighter than the aluminum version.

"Just because it's aluminum doesn't mean it's lighter," he says. "It will also be important on these projects to know what else is going on in the automaker's factory. How are they planning to attach products together? Will they be riveted? Welded? Glued? Glued and welded?

"Understanding the mating surfaces will help reduce weight. We need to be part of those discussions."

In the push for lighter vehicles, some U.S. steel stampers could be in jeopardy, says Greg Schroeder, assistant director for manufacturing, engineering and technology at the Center for Automotive Research in Ann Arbor, Mich.

He says some stampers have increased r&d spending to keep up with changing technologies. Many have converted from traditional stamping to lighter-weight high-strength stamping, and even to aluminum stamping, even if they are unable to expand into more complex aluminum casting, as Shiloh has done.

"The wise supplier understands that the pace for lightweighting has accelerated, and it's making an effort to get into new technologies," Schroeder says. "The big global suppliers know this. The smaller suppliers and even Tier 2 companies are learning new technologies now."

Board wants growth

What triggered the change at Shiloh says as much about the industry's lightweighting push as it says about Shiloh itself -- and the executive tapped to run it less than two years ago.

Then Shiloh was like many other metal stampers in the U.S. car business -- little known, experiencing flat growth and facing a future of more of the same.

Shiloh's previous CEO, Theodore Zampetis, focused on strengthening the company's balance sheet, holding down debt and putting Shiloh on better financial footing during a decade when many metal suppliers struggled to survive.

When Zampetis announced his plan to retire at the end of 2012, Shiloh's board recruited Hermiz, 49, from Federal-Mogul Corp., where he had spent nearly his entire career. Over 24 years, Hermiz had advanced from a young gasket engineer at Fel-Pro Inc. in Chicago, to management at Federal-Mogul after it acquired Fel-Pro in 1998, to senior vice president of vehicle safety and protection by the time Shiloh came knocking.

The board was open with Hermiz: Zampetis had built a financially resilient company, but the board was itching for growth in one way or another. Sales had been flat for four years. Its stock price was stuck in the range of $10 to $11 a share. It operated 14 metal processing plants in Ohio, Georgia, Michigan, Kentucky, Tennessee and Mexico. The company made $13.5 million in profits that year on sales of $586 million producing stampings, engineered welded blanks and modular assemblies for the automotive and heavy-truck industries. Half of its revenue came from just two customers -- General Motors and Chrysler.

"It was a good company with an excellent reputation in the business," Hermiz says. "It just needed to move forward."

Acquisition strategy

Hermiz met the board with a proposal: Use the financial strength Zampetis had achieved to acquire a more diverse technology base. Spend some money. Buy a position in different metals. Turn Shiloh into a multimetal supplier and take it beyond North America.

In conversations with friends in the auto industry, Hermiz had heard the same story: Companies from piston makers to windshield wiper suppliers were looking for lightweighting solutions -- lighter materials, smaller electric motors that weighed less and less complex metal modules.

Hermiz proposed to the Shiloh board embracing the trend wholesale -- not just reducing the weight of its metal parts, but redefining the company as a solutions supplier.

He moved quickly.

Less than 90 days after the board announced Hermiz's appointment, Shiloh quietly acquired the aluminum casting company Albany-Chicago Co. of Pleasant Prairie, Wis., for $56.8 million. Albany-Chicago had developed a process for what is called thin-walled aluminum parts that retain their structural strength with less mass.

That deal immediately put Shiloh onto vehicle programs at BMW, GM, Daimler, Chrysler and Tesla, and had it supplying aluminum parts to commercial truck makers and other suppliers. It also brought aluminum-industry management expertise into Shiloh for the first time.

Less than eight months later, Hermiz spent another $54.4 million to buy Detroit's Contech Castings, the aluminum parts unit of financially troubled Revstone Industries. That deal added high-pressure aluminum die casting technology, with plants in Michigan, Tennessee and Indiana handling additional programs with Ford and GM.

In May of this year, Hermiz pulled out the checkbook a third time to buy into the magnesium market.

Shiloh spent $56.6 million to buy Finnveden Metal Structures of Sweden, a supplier of lightweight magnesium components to European automakers. Finnveden had recently begun reorganizing its business by moving its foundry operations from Sweden to less-expensive sites in Poland.

The acquisition puts Shiloh into the European market with European global vehicle programs, with customers that include Daimler, Ford of Europe, Volvo, Nissan, Jaguar and Land Rover. It also brings magnesium management expertise into the company for the first time.

Finnveden's president, Johan Westman, now a part of Shiloh's management team, said last year that moving its production operations to Poland was crucial to making magnesium parts more cost efficient.

"With the focus on weight reduction in the automotive industry, we see continued major opportunities ahead in magnesium components," Westman said. "By streamlining the foundry operation we will reduce complexity and strengthen our competitiveness within magnesium die casting in Europe."

Revenue, profits grow

All of this is phase one, as Hermiz describes it, putting Shiloh into growth mode.

As a result of the moves, in less than two years, Shiloh has grown from less than $600 million in annual revenue to an estimated $780 million. It has grown from 1,400 employees to 2,000. Its stock price has nearly doubled to the $18 to $20 range, and net profits are running at twice the 2012 level. Honda has become a customer, and next year, Shiloh will enter China on a set of new vehicle programs.

The next phase of Hermiz's plan will be developing the new role he envisions, as lightweighting adviser.

"We now have the diversity and expertise to help lightweight a chassis, a transmission or a powertrain," he says.

"Before I joined the company, it was already doing weight reduction work, just as everyone else was. But we weren't marketing that. We weren't making that our business.

"I plan to do that now."

You can reach Lindsay Chappell at



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