By: Catherine Kavanaugh
October 4, 2013
AUBURN HILLS, MICH. — Recaro Child Safety LLC President John Riedl didn't have to look far to find an injection molder to make the largest component for an infant car seat that will be assembled at its facility 35 miles north of Detroit.
The polypropylene shell of the Guardia — Recaro's next product — and 13 other smaller, mostly nylon and acetal parts will be made two doors away in Auburn Hills at Delta Engineered Plastics LLC.
Recaro awarded a multiyear parts production contract to Delta, which supplies injection molded parts to a variety of transportation and industrial customers. The deal could be worth about $5 million to Delta if infant car sear sales hit 200,000 units as expected.
"Recaro could have sourced this business to any company in the world but they chose Michigan," said Barry Kempa, Delta's chief operating officer. "This certainly is a testimonial to the renaissance occurring in American manufacturing and it's great to be part of that renaissance."
Recaro is taking more than baby steps to bring back business from overseas; it is making great strides in reaching out to U.S. suppliers, particularly those in hard-hit Michigan, which is still shrugging off the Great Recession.
"A year ago we bought 60 percent of our plastic and metal components from overseas. By the end of 2014 that will be about 70 percent U.S.," Riedl said, adding that domestic trim and fabric remains cost prohibitive because of Recaro's volume.
Riedl and Kempa gathered Oct. 3 with their staffs at Recaro for a luncheon sourcing celebration. Their workforces will grow before the Guardia hits national stores and online outlets in the spring for about $250. Delta will add 10-15 more employees to the 225 it has and Recaro at least 20.
Riedl is a big believer that supplier proximity will pay off in the long run for Recaro, which reshored production of half the plastic parts for its child booster seat back to the United States in 2013 and plans to source the other half in a year.
While Asia offers cheaper labor, Riedl sees plenty of other advantages for dealing domestically. The company will save on travel time and expenses, get products to market sooner, and communicate more in person or by phone than email.
"It makes sense if I don't have to send five engineers to China four times a year, if I know the quality is good every time because I can drive and measure the wall thickness. And if there's a problem, I find out about it that day and not after we shipped product," Riedl said. "And if I can release a new product nine months earlier because we can do it faster here, that's nine months of sales and profits that I would have lost if I made it in China.
"I have a philosophy that the end-to-end cost is actually less expensive here for our business bottom line even though the unit cost is slightly higher."
Recaro has seen its sales triple in two years to $13 million, Riedl said. Sales are projected to grow to $20 million in 2014, he added.
The Guardia fills a niche in the product line of the company that got its start making car seats for Porsche. With the introduction of an infant seat that can be used to carry a baby home from the hospital, Recaro will offer safety seats for all ages and stages of childhood.
Riedl said the infant seat will bring a couple new features to the market, including a padded harness system that won't twist, making it easier to buckle in babies, and an adjustable base for secure fits in any kind of vehicle. Delta is making the base.
"It doesn't inspire confidence when you pay all this money for technology and have to put a towel under the seat," Riedl said. "We developed a double-adjust base. You gain 11 degrees of adjustability."
Delta will use 170-ton to 1,450-ton machines to manufacture 14 parts that range in weight from an ounce to 2½ pounds. The company's molding process also will allow it to make changes and improvements for other features that are on the drawing board for the second-generation Guardia.
Kempa likes Recaro's forward thinking.
"We're looking for good companies, well-managed companies, focused companies that are going to be leaders and grow their business," he said.
Recaro plans to promote its domestic partnerships with Guardia and other products.
"We can't say 'made in the USA' because the trim cover is part of it, but we will tell people over 70 percent of the content is U.S. content," Riedl said. "I think the American consumer will say they're making a significant effort to keep manufacturing here as best they can."