As production for the 2015 model year of vehicles ramps up, one West Michigan automotive supplier has capitalized on a recent capacity expansion to accommodate growth.
Wyoming-based Undercar Products Group Inc. recently began production on $50 million in new programming stemming from contracts with General Motors and Ford Motor Co.
Undercar supplies components for the 2015 Ford F-150 and Ford Mustang, as well as GM’s K2XX platform that underpins the heavy duty models of the Chevrolet Silverado and GMC Sierra pickup trucks.
The manufacturer of plastic injection and blow-molded HVAC components, washer bottles and air induction systems is a division of Tier-One supplier ABC Group Inc. of Canada.
When ABC won the new business in 2011, the supplier decided to move its production to Undercar to cut freight costs and lower transportation times to its customers’ assembly plants throughout the Midwest, said Mike Smokovich, a controller at the company.
To meet the increased demand, however, Undercar needed to expand its operations.
“It was a matter for us to not be so crammed and meeting (customers’) requirements,” Smokovich said. “We have a lot of trucks coming in here every day.”
In 2010, Undercar expanded its facility by 135,000 square feet to create a shipping dock and additional warehouse space to free up room on the production floor for additional equipment to address the need for more capacity, Smokovich said. The expansion gives Undercar a total of 435,000 square feet of production space.
The company currently employs 380 people and hired 150 employees over the last two years to accommodate its growth.
As MiBiz previously reported, the facility was recently purchased by a group of national real estate investors.
Naperville, Ill.-based Franklin Partners LLC had owned the facility at 4247 Eastern Avenue for seven years, Principal Don Shoemaker told MiBiz. After extensive renovations — including raising the ceiling of the building to accommodate Undercar’s manufacturing machinery — the developer felt it was a good time to sell the property.
“Our job was done on that one so we took it to market,” Shoemaker said, noting the building sold in July for $19.85 million.
For Undercar Products, the new contracts have helped the company more than double sales from $35 million in 2011 to around $80 million expected this year, Smokovich said. The company projects sales to reach $90 million next year as the domestic auto market continues to grow.
North American light vehicle production is expected to reach 17 million units this year, up from 16.2 million in 2013, according to data provided by IHS Automotive Group. That number has the potential to increase to 19 million by 2020, said Mike Wall, an analyst in Grand Rapids with IHS.
Expansions throughout the automotive supply base are likely to continue as companies that remain lean from the downturn run into capacity constraints in the growing market, Wall said.
“In the last 18 months, more suppliers are stepping out on the limb and expanding,” Wall said. “Those suppliers that are stepping out and making investments are finding themselves in a viable position for the future.”
Going forward, Undercar Products plans to continue an aggressive sales strategy for future contracts with the large domestic OEMs, Smokovich said. As the company prepares to begin production on its new programs, Smokovich expects a period of relative stability both for Undercar and the industry.
“I don’t see another good book of business coming, but you’re quoting on programs two or three years out. So if we see that bubble coming or someone struggling and we’re able to get that business on a takeover claim, then we’ll do that,” he said. “You never know what the landscape will be.”