DETROIT — Adding assembly to its arsenal, Cambridge Industries Inc. has formed a joint venture with minority-owned supplier Mexican Industries of Michigan Inc. to make automotive interior systems at a new plant in Detroit.
The firms will build a 100,000-square-foot injection molding and assembly facility in Detroit's Empowerment Zone, a designated industrial area that offers tax and business incentives.
The facility will employ more than 200 when it reaches full capacity in the fall of 1999, said Pat Pavelka, president of Cambridge's interiors division.
The new plant, scheduled to open in December, has about $60 million in business initially with General Motors Corp. to assemble parts for several upcoming car lines, said Mexican Industries President James Merkhofer. The firms are discussing future projects with other carmakers, he added.
The firms have invested more than $10 million initially in building, land and equipment, Merkhofer said. The investment includes more than 10 injection presses with clamping forces of 500-1,000 tons and automated vacuum forming equipment to assemble cover skins for the interior parts, he said.
A name has not been selected for the venture, of which Mexican Industries owns 52 percent.
Plastic parts supplier Cambridge, based in Madison Heights, Mich., and Detroit-based Mexican Industries signed the agreement May 28. The companies had discussed the coupling for more than a year and began the new plant this spring, Pavelka said.
Cambridge, a maker of thermoplastic and thermoset parts, had used Mexican Industries to help assemble its interior parts.
``We looked at the organization and how best to grow both sides of the business,'' Pavelka said. ``For our situation, they add a tremendous amount of expertise in assembly and cut-and-sew operations. The company has a track record in that, whereas we're primarily a molder.''
The agreement is one of the larger partnerships, in expected plant size and work force, between a major plastic parts supplier and a smaller, minority-owned company.
Several other projects are upcoming, including a joint venture between plastic fuel-system supplier Walbro Corp. of Cass City, Mich., and two minority partners. The group is investing $65 million in a new, 150,000-square-foot blow molding plant scheduled to open in July in the empowerment zone.
Plymouth, Mich.-based Johnson Controls Inc., another large interior supplier, is seeking a minority partner for a new, 70,000-square-foot plant it plans to build in the zone.
GM, Ford Motor Co. and Chrysler Corp. want to generate 5 percent of their North American purchases from minority-owned businesses by 2000. No automaker currently is at that level.
Collectively, those carmakers do $5.8 billion annually in business with minority-owned companies, said Renaldo Jensen, Ford's director of minority supplier development. The companies would like to increase that total by $3 billion in three years, Jensen said at a May 13 news briefing in Detroit.
``I think you're going to see more of these as times goes on,'' Ford spokesman Ron Iori said in a telephone interview from his Dearborn, Mich., office. ``We want strong, healthy, viable minority suppliers. In general, I think partnerships like that help both minority suppliers and us.''
Mexican Industries, which was founded by former Detroit Tiger pitcher Hank Aguirre, has Hispanic ownership. About 90 percent of its 1,500 employees come from the minority community, Merkhofer said.
Now headed by Aguirre's daughter Pamela, the firm assembles leather-wrapped steering wheels, air bags, tire covers and automotive soft trim at eight other plants.
``The auto industry wants to buy systems instead of parts. Now, we have the ability to make substrate systems by forming an alliance,'' Merkhofer said.
The supplier, which expects to record $176 million in 1998 sales, also is part of a joint venture with Collins & Aikman Plastics Inc. of Troy, Mich., to make and assemble instrument panels for GM vehicles. The firms are building a 40,000-square-foot assembly plant in the empowerment zone due to open this fall.
The venture will help both companies develop a strong molding and assembly base, said Paul Von Jankowsky, Cambridge director of marketing communications.
The companies hope to employ about 50 when operations begin.
Cambridge has grown from a $5 million supplier with 50 workers nine years ago to one with $426.1 million in 1997 sales and 4,207 employees.
The company also is growing rapidly into thermoplastics, an area that once was secondary to its core thermoset parts business. Cambridge, which has 19 facilities worldwide, makes interior parts from a variety of thermoplastics, including polypropylene and ABS.
Cambridge ranked 53rd among Plastics News' North American injection molders, with 1997 injection sales of $95 million. The firm also is a large compression molder of sheet molding compound parts.