DETROIT - Sometimes stress can be a powerful motivator.
That's what CBS Boring & Machine Co. Inc. learned in late 1999 when it faced a big price-cut demand from a major customer, Caterpillar Inc., on a job it couldn't afford to lose.
Management struggled to determine a way to meet the price. It finally came up with a production system based on robotic cells that not only won CBS Boring the Caterpillar job but led to a contract from General Motors that swings into full production next year. Terms of the contract were not disclosed.
CBS Boring, of Fraser, Mich., says the system helped it beat about a dozen larger competitors, foreign and domestic, on the GM job by reducing costs.
Analysts say it's unusual for GM to award a job that big to a company the size of CBS Boring. But more small companies are trying a mix of new technology and new, lean production systems to meet low prices demanded by automakers. "Pricing today goes a long way to getting the automakers to take an added risk," says Craig Fitzgerald, partner and auto analyst at Plante & Moran PLLC, a consulting firm in Southfield, Mich.
The GM contract - machining cylinder heads and engine blocks for the new inline-four and inline-five engines - transforms CBS Boring from a small company servicing lower-volume diesel and heavy equipment components to a medium-sized company in the high-volume car business. The contract was awarded in 2001.
That growth is reflected in company revenues: about $35 million this year, up from about $28 million in 2002. Revenues are expected to reach about $60 million next year, says Executive Vice President Matt Mauchline.