Editor's note: Sakthi was misspelled in an earlier headline on this story.
Sakthi Automotive Group USA Inc. is in the nascent stages of a massive expansion project on the Southwest Detroit waterfront -- one that could bring an investment of more than $60 million.
But to steadily hire the workers it needs to ramp up castings production, it is betting big on a nontraditional sort of workforce: convicted felons.
The subsidiary of India conglomerate Sakthi Group is hiring some of metro Detroit's recently paroled convicted felons. Sakthi's expansion plans include the hiring of nearly 400 workers over the next two years. Sakthi is projecting revenue of $58 million in 2015, up to $150 million in 2016 and $450 million by 2020.
As part of that growth, Sakthi committed to hire two recently paroled Michiganders per month over the next two years, said CEO Lalit Verma. That's at least 48 ex-offenders.
Sakthi hired four parolees earlier this month, and they were outperforming their peers, so it returned to hire four more last week, Verma said.
"We're seeing they (hired parolees) are more motivated and productive because they know this is their second chance," Verma said. "I've met with each of them personally and have told them they need to go the extra mile to show the community they are worth this chance."
The parolees are hired under the same conditions as regular employees, Verma said, including pay and benefits. The parolees have been hired as CNC operators, assembly machine operators and general laborers.
The workers make $11 per hour to $13.50 per hour to start, Verma said.
U.S. Labor Secretary Thomas Perez toured Sakthi's Detroit plant last month and met with Gov. Rick Snyder about the state's parolee jobs training programs, which were signed into law last December.
That law required the Michigan Department of Corrections to provide parolees with certificates of employability, detailing which educational programs they completed, conduct history and work record.
The law also established legal protections for employers who hire ex-offenders.
The corrections department spends, on average, $30 million annually on re-entry services for parolees, which include a mandatory GED program if they did receive a high school diploma as well as training services, said Chris Gautz, the department's public information officer.
"As a department, we have been designing programs that encourage the input of specific employers who have specific needs for skills their future employees need to have," Gautz said.
"We also work with local and regional partners to identify emerging sectors so that we can position our parolees for jobs in those fields by training them for those types of jobs while they are incarcerated."
(Editor's note: Gautz previously worked as Crain's Lansing correspondent.)
The corrections program offers classes in business education, auto tech, building trades, custodial maintenance, food tech, horticulture, optical, welding and machine tooling.
Julie Fream, president of the Original Equipment Suppliers Association, said the organization isn't aware of other suppliers making a formal commitment to hire parolees, but does see this as part of the growing social progressiveness of the industry.
"This is part of the changing demographics of our business community," Fream said. "As more millennials -- which see social commitment as instrumental in choosing a company -- come into the workforce, we're going to see this more and more."
Sakthi's desire to hire ex-offenders stems from its rapid growth in Southeast Michigan, as well as supporting the community, Verma said.
The auto supplier received a $1.5 million grant in 2012 to establish the Detroit location, a former ArvinMeritor plant. The state will make the final payout for that grant in June, the Michigan Economic Development Corp. said.
Sakthi entered the North American market in 2012 after acquiring the former ArvinMeritor plant in Detroit. The supplier acquired the plant for $7.6 million, according to real estate information database CoStar Group.
The Michigan Strategic Fund awarded Sakthi with a $1.5 million grant toward the plant.
Now, Sakthi is doubling down in Detroit with the planned $31.9 million expansion.
The project, supported by a $3.5 million performance-based grant from the MSF, is expected to create 350 new jobs, the MEDC said last week.
Sakthi is expanding to produce its aluminum castings, which it will supply to North American and transplant tier-one suppliers and automakers. Sakthi plans to shift 90 percent of its aluminum castings work, which is currently done oversees, to its Detroit plant.
The city of Detroit is also planning to recommend a Renaissance Zone tax exemption for the expansion, as well as a property tax abatement.
Sakthi is also planning to redevelop an abandoned former high school through a newly created joint venture.
Verma said the plans are not solidified, but the project will include retrofitting the school to include office space, an educational aspect tied to the community and warehousing space.
Verma said $10 million will be spent on the redevelopment, but that figure could shoot up to $30 million if Sakthi sees opportunity for warehousing products tied to the construction of the New International Trade Crossing Bridge near its site.
Preparation work for the $2.1 billion publicly owned bridge project, funded by the Canadian government, has already begun.
"We see so much opportunity in Detroit," Verma said. "We have good support, are finding good people and are finding the success to help rewrite this city's history."