DETROIT - Modern Engineering Inc., once the dominant engineering services and staffing company in Detroit, has clawed its way back to profitability after falling on hard times in the mid-1990s.
Between 1995 and 1998, the company went through several leadership changes and lost money.
Parent company CDI Corp. thought about selling the entire division after a third-quarter loss of $8.9 million in 1995. Instead, Modern Engineering decided to sell its operations unrelated to staffing and engineering services and replace its management team. In effect, the company eliminated half its business and regenerated itself from its roots.
The painful process paid off last year when the company posted revenue of $110.7 million and a profit margin of more than 4 percent.
CFO Steve Ault said he expects the profit margin to increase and is optimistic revenue will grow by at least 5 percent this year.
CDI Corp. CEO Mitch Wienick said: 'We're in the midst of that turnaround. I wouldn't say we're done yet.'
General Motors is Modern Engineering's largest customer. Other customers include Ford Motor Co., DaimlerChrysler, Vis-teon Automotive Systems, Delphi Automotive Systems Corp. and Lear Corp.
Eighty percent of Modern Engineering's revenue comes from technical staffing, while 20 percent comes from engineering services such as computer-aided design, designing plans for assembly lines and producing detailed maps of the surfaces of cars.
Modern Engineering grew to more than 3,200 employees and $237 million in revenue by 1995. In addition to staffing and design services, the company also made clay automobile prototypes, operated a stamping factory and made assembly-line tools.
'We created this big monster, and then the (original equipment manufacturers) made a decision - they decided to give all their manufacturing to the Tier 1 suppliers,' said Park Payne, executive vice president and general manager.
The company was left with stamping and tool-making plants running far below capacity. At the same time, automakers started bringing more design engineering projects under their own roofs.
The company reacted slowly. In 1996, Modern Engineering had more than 34 buildings and 1 million square feet of space in seven countries. In September 1997, it sold its Stamping Engineering & Prototype plants to Western Atlas Inc., in California.
Today, Modern Engineering operates seven offices and occupies less than 150,000 square feet. The company moved its headquarters from Warren, Mich., to Troy, Mich., in 1998 and assembled a new management team, revamped its recruiting procedures and started a program to process resumes in 24 hours or less.
Modern Engineering's evolution is most evident at two buildings built in 1987 in Warren. In its heyday, the company employed more than 500 at the 169,000-square-foot campus, now owned by St. John Health System.
Two hundred engineers and designers still work there, but the company plans to move to a new building in Madison Heights, Mich., this spring.
Competitors know Modern Engineering sold divisions in 1997 but say the company has been quiet since then.
'I don't hear a whole lot about them,' said Ron Willbanks, vice president of Troy Design Inc. 'Back in the early 1990s, they were like the favorite son for GM. I've heard they are trying to make a low-key comeback.'
Troy Design also was affected by industry shifts in the 1990s. Less than 10 years ago, Willbanks said, 73 percent of Troy Design's revenue came from projects the company managed at its own shops. Then the revenue equation flipped, and by 1999 only 10 percent of Troy Design's $60 million in revenue came from internal projects.
Ron DeBrabant, director of CAD/CAM integration and design processes for GM, has watched Modern Engineering evolve.
'The company has had the ability to refocus itself and still meet the needs of the company (GM) in other areas,' DeBrabrant said.
In July 1998, Payne, then-President George Kubicke and a CDI consultant crafted an eight-member management team. Ku-bicke, president from 1997 to 1999, is now senior vice president of new business development.
Payne joined Modern Engineer-ing in 1986 as manager of customer operations. He left in 1994 to direct CDI's North Central Division and was brought back in 1998 as operations manager.
Six leadership changes in less than eight years and the dramatic shift in corporate strategy made improving employee morale a major challenge for Payne.
'Trying to convince the staff this was the right thing was difficult,' he said.
One solution: quarterly meetings with the entire staff to discuss performance and the company's plans.
Payne said the goals for this year include increasing revenue in traditional staffing and computer-aided design, continuing to upgrade computer-aided design systems, refining recruiting programs and keeping an eye open for acquisitions.