GROWTH CHALLENGES CAMBRIDGE INDUSTRIES

Comments Email Print

DEARBORN, MICH. — For Richard Crawford, chairman of Cambridge Industries Inc., surviving and growing in the automotive parts business is a lot like ``walking the tightrope.''

Cambridge, a Madison Heights, Mich., supplier of plastic automotive components, has made eight acquisitions in eight years.

The company boosted its annual sales over that span from $4.5 million to about $400 million last year.

The company is one of the most active players in the consolidating original equipment parts business, bulking up on product offerings, expanding its customer base and getting into position to push into emerging markets around the globe.

But Crawford worries that exponential growth could stretch Cambridge's management ranks too thin, bringing the entire high-wire act crashing down. The challenge: gaining a critical mass without losing focus.

Managing the need to grow and the need for capable managers to run a global business is ``the most difficult task we face,'' Crawford said.

Crawford made his remarks at an executive forum last week in Dearborn. The conference was sponsored by Automotive News, McKinsey & Co. Inc. and investment bankers Bowles Hollowell Conner & Co.

For companies eager to participate in the global supply business, a certain amount of size is necessary, said Sam Licavoli, president of trim operations at Textron Automotive Co.

``You either have to grow or you're going to have to shrink or disappear,'' he said. ``You really don't have a choice.''

But a supplier's growth and acquisition strategy focuses on what it does well.

``If you extend yourself beyond your level of expertise, I think it's going to come back to hurt you,'' Licavoli said.

Merger and acquisition activity in the auto parts industry went into high gear last year, according to a new report from Bowles Hollowell Conner. The number of transactions in 1996 increased to 98, up from 63 a year earlier, while the value of the deals tripled to $12.1 billion.

In spite of the conglomeration trend, the industry still offers lower-tier suppliers a chance to profit and grow.

Licavoli said automakers are not likely to concentrate all of their business among a few large systems suppliers. But to stay in the business, Tier 2 and 3 suppliers will have to become as efficient as the biggest suppliers or face consolidation at their end of the supply chain.

And there's plenty of room for improvement.

Said Licavoli: ``There really truly is a lot of waste in the process.''