DETROIT - Walbro Corp. and two minority business owners have formed a joint venture to blow mold fuel tanks for General Motors Corp. and Chrysler Corp. in Detroit. The venture partners already have been awarded a five-year, $300 million supply contract from GM and a promise of future business from Chrysler. Walbro and its partners said the joint venture, as yet unnamed, will build and equip a new, $50 million plant in Detroit's empowerment zone and has set a scheduled opening date of mid-1998. The empowerment zone program offers federal tax relief through employment wage credits, tax-exempt bond financing and special grants and loans.
Walbro, based in Cass City, Mich., is forming the business with William Pickard, majority owner of injection molder Regal Plastics Co. of Roseville, Mich., and Lawrence Crawford, majority owner of Saginaw Plastic Molding Inc., a blow molder based in Saginaw, Mich.
Crawford said the joint venture partnership comprises Walbro and Pickard and Crawford, as individuals. However, Crawford said, both Regal Plastics and Saginaw Molding would be providing the manufacturing support for their personal interests in the joint venture.
Although the final formula is not in place, the minority partners are likely to own slightly more than 50 percent of the joint venture, according to Walbro.
Walbro is providing product technology and manufacturing expertise while Crawford and Pickard bring their minority status and business relationships developed through their respective molding companies.
Walbro also received a $13.6 million tax credit for the project from the Michigan Economic Growth Authority. Without the tax incentive, Walbro probably would have built the fuel tank plant in Ossian, Ind., where it already has a plant and 20 acres, said Lambert E. Althaver, chairman, president and chief executive officer.
He said the venture partners had been in negotiations with customers for at least a year before the project was put together.
The minority partners allow both Walbro and its original-equipment customers to expand their participation in the minority supply business, Althaver said. And the project also makes good business sense.
``Every piece of business has to stand on its own,'' he said.
While other large suppliers have joint ventures with minority suppliers, Althaver noted that this one is unusual because of its high technology: coextruded blow molded HDPE fuel tanks made of high density polyethylene. He said it is likely that the new Detroit plant will use Krupp Kautex technology, which is also in place in Ossian and another Walbro plant in Meriden, Conn.
Crawford was effusive in his praise of Walbro's mentoring efforts.
``They've brought us along into the market with technical expertise and financial support,'' he said. ``It's been a fantastic relationship.''
Saginaw, which employs 55, has five blow molding machines. The 6-year-old company makes a variety of products, including photocopier toner bottles, automotive service parts and toys.
The new partnership with Walbro will help Crawford move closer to his goal of establishing Saginaw Molding as a stable, growing company with solid technical capabilities.