It's the old economy. But it's the younger generation that's making it new again. And to those who embrace diversity, innovation, and a well-defined niche go the spoils.
Manufacturing is emerging from the doldrums in Michigan. Companies that survived the collapse of the auto industry are beginning to show signs of life. But it's not your father's business any more.
Ed Walker, 42, bought and rebranded his father's Walker Industries, as
W-Industries, complete with a striking red and black color scheme, and moved its headquarters to Detroit by the time much of the manufacturing sector had moved out of the city. In 2006, W-Industries diversified into the defense and aerospace industries, allowing the company to thrive as other manufacturers closely tied to the auto industry suffered in its collapse.
Michael Chetcuti, 46, CEO of
Quality Metalcraft (QMC), an auto parts company in Livonia founded by his father, Alexander Chetcuti, made the most of the company's manufacturing capacity and 275 employees by diversifying into aerospace, alternative energy, architecture, and military work, while continuing to focus on low volume auto parts production. The most striking move, however, was the company's acquisition of
American Expedition Vehicles (AEV) in 2005. Based in Missoula, Montana, AEV specializes in customizing Jeep vehicles for the off-road market.
Jeff Edgington, 33, was a real estate agent until he joined his wife's family business,
Decker Gear in Port Huron Twp. Most people his age would not be looking at manufacturing as having much of a future. But Edgington, plant manager at Decker Gear, immediately developed a fascination for the manufacturing process. Together with his wife and her brother, they plan to buy the company from founder Richard Decker next year.
This new generation of manufacturing leaders is taking companies developed in the automotive culture into new directions, with largely diversified customer bases but defined niche product lines. Something permeates the culture of Southeast Michigan – a fascination for designing and producing things, reflected in the passion of these young executives. They have made considerable investment in facilities and equipment at a time when many doubted the future of manufacturing in region.
Walker was destined for Wall Street. He had a degree in business, with a specialty in finance. To pay for graduate school, he worked for Walker Industries."I was brought up being hands-on," he says. "My father was a carpenter. I enjoyed building something and seeing that it get shipped out the door; seeing it start as a raw material and seeing it as a finished component. I got the itch for manufacturing….I'd see things come into the facility; I figured we could be building it ourselves, why are we doing (just) one piece of it?" In an odd turn of events, he abandoned what he thought would be a dynamic career in the finance industry for an uncertain future in manufacturing.
Chetcuti, who has a passion for cars, particularly off-road vehicles, has been with QMC since starting as a general laborer at age 19. He never thought of leaving the company or leaving Southeast Michigan. "I grew up here. 90 percent of my friends were still here. It wasn't like everyone scattered."
He had his doubts during the years that QMC diversified its product mix, but Chetcuti takes a social Darwinian view of things: "The strong will survive, and will be even stronger. That's the key to the whole thing. … Everyone that's doing well is diversifying in their own way. I don't think many people have grabbed on to the aftermarket the way we have."
While QMC is still in the automotive business, its acquisition of AEV positions the company in a very narrow niche – customized Jeep Wranglers, one of the favorites of off-road drivers. "People will pay $31,000 for a Jeep Wrangler and outfit it with $31,000 worth of customized parts," says Chetcuti, who owns three off-road vehicles and five classic cars. He's finishing restoration of a 1966 Lincoln Speedster concept hotrod for this year's
Woodward Dream Cruise.
AEV maintains a facility in Missoula for design and engineering, but parts are manufactured in Southeast Michigan. The business has grown significantly since the acquisition, says Chetcuti."We've gone from (AEV being) one percent of Quality Metalcraft capacity to about 20 percent."
The future may be for the strong, but it's also for the nimble. Decker Gear is a smaller company with only 25 employees and about 20,000 square feet of manufacturing capacity, but they can move on a dime to meet customer needs. Recently, one of Decker's clients, an American company, had to close its assembly line because foreign parts were delayed. Within three days, Decker Gear manufactured, heat-treated, and shipped the parts, recalls Edgington.
Edgington wouldn't be staking his future on manufacturing if he wasn't convinced of the potential. But he's also not blind to the risk:"It's going to be tough. We've faced competition from Taiwan. They can do the work a lot cheaper than us. But in the end, our gears have better quality."
Opportunity lies not in mass production of commodities, but in specialized, high quality production – which also requires a highly skilled workforce. The factories are much brighter now, computerized, and spacious.Workers are often highly skilled and the manufacturing processes much more efficient.
"When people think of manufacturing, they think about dirty factories, you're at a machine all day, pressing a button," says Edgington."Workers at Decker Gear need computer skills and need to be able to think on the job. They have to design, problem-solve. We're constantly prototyping parts. You can lead a department of four or five guys. You're responsible for ordering your tooling, time frame, scheduling. It's a challenging job every day." He believes that the combination of technology and skilled labor gives Michigan manufacturers an edge on foreign competition. "You have to figure out different ways of making (products), and making them faster. That's the only way you can compete with companies in Asia."
Walker concurs. "You can compete on certain products and in certain products you can't. Our niche is very large, complex, highly skilled processes and products. If we were going to try to compete on small fabrication that can be done all over the world, we wouldn't be competitive. Most of what we do here is very large, very complex."
W-Industries has prospered in Detroit, having grown from $15 million in sales five years ago to an estimated $150 million this year. It plans to buy and outfit a neighboring 500,000-square-foot building to expand its complex – not something you hear manufacturers doing in Michigan.
The tool and die business may have declined in the region, but there's still a need for specialty work, says Chetcuti. "If you're going to try to build tools, whether they're plastic injection molds or stamping guides and compete with India, China, and Mexico, best of luck." When changes are required during production, flexible, precision tooling is still in demand. "That's when you can make some money in the tool and die business," he says.
In each case, these men represent a new generation of Michigan manufacturing. Their companies expect good-to above average sales this year and plan to hire. If less is more, a smaller, more specialized manufacturing sector may be emerging.
Dennis Archambault manufactures words and stories on a freelance basis. He is a regular contributor to Metromode. His previous article was Land Of The Small Giants.
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