Suburban component makers see uptick as Ford, others recover
Addison-based Woodland Plastics Corp. had to lay off a handful of workers last year due to the recession and the historic slowdown with one of its main clients, the automotive industry.
Making ashtrays and transmission parts for Ford just didn't bring in enough income. And the company's revenue from automotive-related business had been reduced from about 80 percent to about 50 percent of overall sales, said Steve Sinderson, president of the family-owned business.
"This has been one of the toughest times in decades," Sinderson said.
Woodland is among the suburban manufacturers that make components for the auto industry, including Ford. Now some of them, including Woodland, are getting a boost from the restructured auto industry and the improving economy.
Recognizing that growth, President Obama on Thursday is expected to visit the reopened Ford plant in Chicago, which put people back to work and provided more business to component makers along the supply chain.
Such component makers as Woodland are often called second-tier suppliers, meaning they provide an ashtray or a gasket that is shipped to another vendor, which then installs it in the larger section before shipping the whole thing directly to Ford. Component makers were among the first casualties - either with layoffs, shift reductions, or bankruptcies - during the bloody reorganizations among the automotive giants. Today, they are beginning to see some hope.
After Woodland laid off four of its 27 workers last year, its revenues started to slowly grow again and it expanded its product offerings to other industries.
As the economy has begun slowly to recover, workers were called back this year, said Sinderson.
"We called them all back, but some already found other jobs," he said.
In Northbrook, the 60-year-old Ramcel Engineering Co., owned and operated by the Mengarelli family, moved into more product lines for the automotive industry to keep growing. The company produces a variety of items, including gasket plates for automatic transmissions and brackets for steering columns for Ford vehicles.
As the recession eased and the automotive industry began retooling, Ramcel continued to work with the industry. It hired a few more employees and purchased new equipment to provide better products more efficiently, said Ramcel President Rocco Palmi.
So the reopened Ford plant in Chicago was good news.
"That's phenomenal," said Palmi. "Anything you could do to keep more manufacturing in this country, it's great."
The automotive industry had a 40 percent decline in exports alone, and perhaps the worst year in automotive history since World War II. The decline had a devastating impact on Illinois automotive suppliers, with many shedding more than half of their employees. Many of those jobs will never return due to improved efficiency and automation, said Mary Rose Hennessy, executive director of Naperville-based University of Illinois Business and Industry Services.
Companies that sustained the least damage had found niche markets by designing new features, such as safety, environmental or fuel-efficiency products or offering innovative solutions to their customers. These survivors adapted by positioning themselves in the global marketplace and are very aggressive with exporting, Hennessy said.
"A common refrain through the worst of it was: 'We're flat this year - the new good.' Most of our companies are now growing again and are extremely busy. They are finding that they can do much more with fewer people and are slow to hire back at the same employment levels," said Hennessy.
Ford's leadership position has given hope to the future of the American automotive industry, and the outlook for its supply chain is very positive, experts say. Buying from local automotive suppliers will give a boost to our economy and allows Ford to save on transportation costs, and have the flexibility to receive parts just when they need them, Hennessy said.
"Ford and now GM are starting to build plants in Brazil, Russia, India and China, all huge emerging markets," said Hennessy. "This will continue to shake up suppliers as they must figure out a way to address the customer needs in those growing countries, and stay ahead of the competition through continuous innovation.
"On the other hand, due to the weak dollar, some manufacturers have chosen to locate even more production in the United States. Smart automotive suppliers will be able to adjust to all markets, so navigating the volatile road ahead will continue to be exciting."
Component manufacturers rely on orders from their customers, and when there is a slowdown in the economy for newly produced products, they are among the first to feel the impact, said Illinois Manufacturers' Association spokesman Jim Nelson.
"The good news is that while overall economic growth right now is anemic, the last 12 calendar months have seen a modest improvement in manufacturing," said Nelson. "Manufacturers remain hopeful the trend remains in the direction of expansion, but like everyone else, is cautiously optimistic that our worst days are behind us."