Metaldyne CEO Tim Leuliette: "We have all the major automakers as customers now."
"The big impact is in 2006 in Europe," he said in an interview at the Frankfurt auto show in September. Metaldyne adds contracts next year with Ford Motor Co., PSA/Peugeot-Citroen SA and others. "We have all the major automakers as customers now," Leuliette said.
Metaldyne was formed when Heartland Industrial Partners LP purchased MascoTech Inc. and Simpson Industries Inc. in 2000 and Global Metal Technologies Inc. in 2001. Metaldyne makes chassis, engine and driveline products, but it has enhanced its capabilities by adding related businesses, producing powder metal and connecting rods, vibration controls, forgings and hydraulic controls.
Leuliette's ambition has been to turn a North American operation into a global supplier, broaden services and the customer base, and add more high-margin Tier 1 contracts.
He said Metaldyne has built a bigger presence in Europe and Asia to meet customer demands.
In Europe, Metaldyne has plants in the United Kingdom, Germany, France, Italy, Spain and the Czech Republic. When it opens an engine-parts plant in Spain in 2007, it will have six of its seven product lines active in Europe. Similarly, by 2006, all lines except forgings will be active in Asia, with plants in Korea, China and India and a sales office in Japan.
Metaldyne expects to boost revenue to a projected $2.1 billion. Last year, global original-equipment automotive parts sales was $1.97 billion.
In 2006, Metaldyne will start making front-corner modules in Barcelona, Spain, to supply a new, unnamed European customer.
Shifting to being a global supplier from a regional manufacturer is a key to survival, Leuliette said.
"If you are a regional supplier, say, Bavaria-only or a U.S. hinge maker, your world is scary," he said. "People are looking for global capabilities."
If a customer wants a part from a specific region for currency-exchange rate or local-content reasons, Leuliette said, Metaldyne wants to offer choices.
To make the choice of production location easier for its automaker customers, Metaldyne tries to minimize the labor content of the parts it makes. For some capital-intensive parts, Leuliette said, labor costs can be as low as 4 percent of total manufacturing costs.
Nonlabor factors also can affect sourcing-location decisions. For a German customer, the total stock of produced parts may be less than 10 days' worth, including parts in transit and safety stock, Leuliette said. China's labor rates may be lower, but if there is 45 days' worth of production in transit or safety reserve, then inventory costs are 4½ times higher, and the risk of wasted production for faulty or design-change parts is much greater. The cost of shipping also is a factor. If parts are bulky or easily damaged, long-distance shipping may not work.