Tuesday, October 20, 2015

The State of Automotive Manufacturing in West Michigan

With all its woes, Detroit remains the center of automotive manufacturing, yet Grand Rapids is a far more manufacturing-dependent city overall.  So says a Brookings Institute report that measures how specialized a metro economy is in manufacturing. Although known as The Furniture City, Grand Rapids continues to play a very important part in the automotive parts industry.

While thousands of automotive parts can be found in any one car, including rearview mirrors, seatbelts made from narrow fabrics, and panel instruments, supplying any one part to a heavy-volume global car manufacturer can be a lucrative business. As global trade changes the playing field, market changes are afoot. This is especially true within the Grand Rapids area where new developments reveal both the industry’s continuing expansion, consolidation, and global reach.

For instance, Monroe LLC, a precision plastic molding company owned by the Huizenga Group, recently expanded its operations by relocating to an 85,000 square feet facility within the AeroTech Industrial Park near the Gerald R. Ford Airport.

In March, local welding and assembly company Gill Industries acquired Grand Rapids Spring & Stamping. The transaction “strengthens Gill's position as a full-service supplier of engineered, mechanical assemblies to the automotive, furniture and multi-use vehicle markets."

In May, Grand Rapids-based ADAC Automotive, a manufacturer of exterior and interior door-handles, announced its acquisition of India-based Minda-Valeo Security Systems. The deal is part of a joint venture with Witte Automotive of Germany. The partnership with Minda allows ADAC to “gain access to strategic markets in India and the surrounding regions."

And last month an Italian plastics fabrication company named HRSflow opened a 40,000-square-foot plant in Byron Center. The company specializes in creating spoilers, fenders, and parts for instrument and door panels. They have plans to more than double both employees and plant space in the next few years. Why? “We realized that only with local production facilities could we achieve the short delivery and response times and the overall flexibility that are needed, for example, in the automotive industry,” said Maurizio Bazzo, the company's founder.

Even Tesla got into the act. The electric-vehicle manufacturer acquired its supplier of stamped parts, Grand Rapids-based Riviera Tool. The acquisition is a first for Tesla, a company that now has its footprint in the Big Three’s backyard. The plant is now “working overtime to secure sufficient production capacity” for Tesla.

At present, the vast majority of automotive suppliers are either looking to either expand or move into a new facility. This desire to expand capacity is being driven by growing production volume within North America, and many automotive suppliers expect to see a growing number of  new vehicle launches in the next three years. Competitive positioning and global trade continues to drive robust production capacity within the local automotive parts industry.