DETROIT - Whether it was producing cars or merging the giant Daimler-Benz AG and Chrysler Corp., Tom Stallkamp's main concern was finding ways to speed up the process.
But as the new CEO and vice chairman of MSX International, speed is the least of his concerns.
'Here, I think the customer base is moving us along fast enough,' Stallkamp said. 'Here, it's managing the growth in the most expeditious way.'
MSX International, based in Auburn Hills, Mich., has grown from $228 million in revenue in 1996 to a company with a wide variety of business services and an estimated $1.3 billion in 1999 revenue.
Stallkamp, 53, spent 26 years in the automotive industry and was known for his ability to foster good relations with Chrysler suppliers. As president of the merged DaimlerChrysler, he was in charge of integrating the German and U.S. automakers. But he left amid an executive-level power struggle in September.
Now, his challenge is to expand a company with a high debt level that operates in industries with thin profit margins and fierce competition.
MSX employs more than 12,000 professional staff and contract personnel in more than 60 offices and plants, mostly in the United States and Europe.
Chrysler makes cars, a product people understand. But MSX is a diverse company with three main business lines: engineering services, business and technology services and staffing services.
Work at the Auburn Hills corporate headquarters ranges from building Web pages to designing the interior door panel and trim accents for Chrysler's PT Cruiser.
6 ACQUISITIONS IN 1999
The company is expanding rapidly through acquisitions and internal growth, but it is considered highly leveraged with $230 million in publicly traded debt.
MSX spent $55 million on six acquisitions in 1999. The acquisitions ranged from spending $10 million for 75 percent of Satiz S.p.A., a publishing company formerly owned by Fiat S.p.A., to Rice Cohen International, an executive search firm based in Yardley, Pa.
On average, the company acquires one-and-a-half companies every quarter, and plans to continue that pace this year, CFO Fred Minturn said.
Stallkamp sees MSX's greatest potential for growth in the professional, technical and information staffing services sector, which constituted 40 percent of 1999 sales.
MSX was incorporated in late 1996 in a partnership between Citicorp Venture Capital Ltd., MascoTech Inc. and some members of management. The company was created from the Technical Services Group of MascoTech Inc. and the net assets of APX International. MSX completed both acquisitions in 1997 and purchased Geometric Results Inc., a subsidiary of Ford Motor Co. that year.
From the outset, the company's corporate bonds were considered high risk. But Moody's Investors Service has upgraded MSX from a lowly Caa1 in 1997 to a stable, but still risky, B1 in April. Moody's defines debt with a B rating as generally lacking the characteristics needed to be considered a sound investment.
FROM LOSS TO PROFIT
In 1997, MSX achieved revenue of $564 million but had a net loss of $3 million. Much of the company's operating income goes to paying off debt.
But last year, the company reported net income of $8.9 million for the first three quarters.
Increased revenue and stable administrative expenses are driving company profits higher, Minturn said.
'The growth has come about half and half between acquisitions of business and internal growth,' Minturn said.
Minturn disagrees with the highly leveraged characterization of the company. He says MSX's ability to pay off debt is illustrated by operating income that is three times as high as interest payments.
Christina Padgett, vice president and senior analyst of leveraged finance for Moody's Investors Service, said the company's acquisitions continue to add debt.
'I think they know what they are doing; I just think it's expensive,' Padgett said.
She gives MSX high marks for expanding its management team and retaining experienced executives.
'They've done a good job of improving operations since the original acquisitions,' she said.
Ford is MSX's biggest client, and Ford relies heavily on the automotive industry. A Ford spokesman said MSX is in good standing with its contract but declined to provide more information.
Stallkamp said he was looking for a company with a global presence and a high potential for growth.
'The total auto market in North America is not going to grow,' he said. 'In our business, I don't even know if you can calculate the growth.'
MSX can grow by expanding into other industries and by working to provide additional services to existing clients, Stallkamp said.
For example, if MSX assists an auto supplier with an engineering product or design, Stallkamp wants to provide that company with information technology and professional staffing services and also wants to handle its data storage needs.
He also believes MSX can expand its engineering services division into health care, aerospace and agriculture, and he wants to keep the staffing division focused on expanding into high-margin sectors such as information technology.
MSX also maintains long-term hopes of going public, and Stallkamp is an ideal candidate to take MSX there, analysts say.
'Clearly, Stallkamp as CEO is the type of name you want when you look at doing an IPO,' said Raj Kothari, director of GMA Capital L.L.C., an automotive investment-banking firm.
But Stallkamp said achieving growth as a privately held company is his sole focus. As long as the company stays private, it can continue to grow through acquisitions and not be punished on Wall Street.
Stallkamp also is having some professional fun these days by dabbling with a dot-com firm. He was appointed to the board of PickupTruck.com on Jan. 10.
Stallkamp said he wants to immerse himself in the new economy and saw the online community for pickup truck enthusiasts as a way to learn.
But MSX is different. Stallkamp expressed shock at the suggestion that MSX is a way station for him to build his reputation by expanding a company and then taking it public.
'I've never planned beyond my current job,' he said. 'Whatever I've done, I've done by worrying about the job I currently have. I'm a much more simple person than what most people think.'