In the 1990s, many automotive suppliers have played a decade-long game of monopoly, setting up high-stakes hotels that now dot the playing field.
You want to become a force in the industry? Why not buy Boardwalk and Park Place and worry about paying them off later?
The game is about buying critical mass, and few have done it better than Cambridge Industries Inc. The privately held plastic-parts supplier in Madison Heights, Mich., was barely a blip on the map in 1990 with just $2.9 million in sales.
Then the supplier went on a buying jag that only a few others have matched, becoming the mouse that soon roared like the king of the jungle.
The company's initial targets were suppliers making thermoset composite auto parts, especially those from sheet molding compound. The steellike, compression molded substance was beginning to take off in the early parts of the decade, landing parts for body panels, deck lids, fenders and other functional components.
Cambridge came from nowhere to form a minimonopoly in SMC parts. The company made one of its earliest forays in 1992, when it bought — and then turned around — financially troubled molder Voplex Corp. of Troy, Mich. It was off to the races from there. The company later would snatch up, among others, the thermoset molding units of auto suppliers Rockwell International Corp. (1994) and GenCorp Inc. (1995).
Then, Cambridge made two more breathtaking moves that virtually wiped out the competition. On the same day in 1997, the firm announced it had landed the composites parts plants of both Eagle-Picher Industries Inc. and Goodyear Tire & Rubber Co. for $75.5 million.
Cambridge had cobbled together an SMC auto-parts empire, with sales last year of close to $460 million.
Now that the dust has cleared, Cambridge has only a few remaining SMC parts competitors — including Budd Co. Plastics Division in Troy, Mich., and Bailey Corp. a division of Fraser, Mich.-based Venture Industries Corp. — and the lion's share of the market.
Today, Cambridge plans to slow down its acquisition pace and focus on internal growth and new technology, said President Kevin Alder. The firm is building a larger base in thermoplastic parts and attempting to shed its label as purely a thermoset molder. It also has long-term debt of more than $300 million to contend with and would like to be more profitable. Even so, Cambridge has no regrets over its snowballing accumulation of companies.
``We needed to build a firm foundation with OEMs as someone who had some mass to them,'' Alder said. ``We now have a pretty large foundation, and we're trying to digest everything we've acquired. It was the right thing for our growth, the best way we could meet our goals.''