MADISON HEIGHTS, MICH. — Ten years, nine acquisitions.
In capsule form, that has led to the meteoric rise of automotive-parts supplier Cambridge Industries Inc. The Madison Heights-based company has been on a tear, primarily buying divisions of other suppliers that made parts from sheet molding compound.
In doing so, Cambridge has become the dominant player in SMC products, with sales rising from $180 million in 1994 to $530 million expected this year.
But the news out of Cambridge today is not about purchases; those high-flying days could be over. Saddled with too much debt and some plant-efficiency issues, the company has turned inward for future growth.
In April, new President and Chief Executive Officer Larry Kazanowski — a 34-year veteran of Dearborn, Mich.-based Ford Motor Co. — joined Cambridge to lead the charge for the next phase of growth.
``It's definitely a new era for Cambridge,'' Kazanowski said in an interview at his office May 18. ``We've grown by external growth — new acquisitions coming bang, bang, bang for 10 years. Now, we're focused on internal growth, funded by lean manufacturing and getting more throughput from our current facilities.''
Kazanowski joins a company with a strong upside. Cambridge has another $250 million in new business booked during the next 21/2 years, he said. And most of that work is coming from product launches, instead of replacements for current platforms going by the boards, he said.
SMC parts also have a future. According to industry sources, both General Motors Corp. and Ford plan to introduce pickup trucks with SMC rear boxes — essentially, the entire pickup bed and tailgate.
Cambridge and competitor Budd Co. Plastics Division of Troy, Mich., will have the lion's share of those new programs, starting early next year, according to sources. Decoma International Inc. of Concord, Ontario, also will have some of that work, primarily using polyurethane in a structural reaction injection molding process.
Pickup-box business could boost sales considerably at Cambridge, to close to $750 million in two to three years. Kazanowski alluded to that fact, saying the company has significant new pickup business with GM and Ford.
Currently, Cambridge commands more than 60 percent of the SMC auto-parts market in North America, Kazanowski said. And the company has no plans to buy the few remaining competitors, he said, or risk creating a monopoly that automakers would not welcome.
``If we acquired Budd, for instance, our customers might go create another SMC company to compete,'' he said. ``Everyone wants good market dynamics. There's no advantage in us continuing our consolidation.''
In the near term, Cambridge's plans do not even include opening large, new molding plants or undertaking major expansions at Cambridge's 20 existing facilities, he said. Instead, he is focusing inward.
Kazanowski takes what he calls a ``three-pillar'' approach to his priorities as head of Cambridge's day-to-day operations: reducing debt through greater plant efficiency, undertaking more management of large programs and opening at least three satellite assembly plants during the next 12 months.
Kazanowski, 57, said his time might be short at Cambridge, anywhere from three to five years. He was brought in to mentor younger executives and direct the company toward its next phase of development.
His arrival meant that former Cambridge President Kevin Alder's role has shifted. Alder now heads operations for Cambridge's automotive and light-truck industry segment, the largest piece of Cambridge's product pie.
Other business segments focus on the commercial truck market and industrial and agricultural products.
Kazanowski has known Cambridge Chairman Richard Crawford, one of the company owners, for five years, he said. Since retiring late last year from Visteon Automotive Systems, Ford's parts-making arm, Kazanowski has been besieged with offers from a half-dozen companies, he said.
But he chose Cambridge for both the enormous opportunities and challenges, he said. The former head of Visteon's plastics operations was brought in to help Alder and others both internally and with customers.
``I think they wanted a mature executive like myself,'' Kazanowski said. ``My experience is working in large organizations. I think Cambridge wanted someone with a lot of product-development experience and the ability to handle complex, global operations.''
Kazanowski faces some initial challenges. Debt levels totaled $330 million at the end of March. Cambridge lost $4.3 million in the first quarter of 1999, according to a recent Securities and Exchange Commission filing.
That combination led Standard & Poor's to assign Cambridge to its CreditWatch list, reflecting concerns over its liquidity.
Companies in Cambridge's situation — with high debt and low operating profit — find it difficult to turn the corner, said equity analyst Gregory Salchow of Detroit-based Roney & Co. Salchow, who does not follow Cambridge, said cash-flow problems make it difficult for such companies to spare the capital needed to become better operators.
``It tends to restrict options,'' Salchow said. ``And it can be a process that feeds on itself. As margins shrink and prices are cut in the industry, some of those companies are caught between a rock and a hard place.''
Cambridge is attempting to reduce public debt by starting an aggressive program of lean manufacturing at each plant.
That, and new booked business, should help the supplier enhance its bottom line, Kazanowski said.
That lean manufacturing system, a Japanese approach called kaizen, involves teaching plant workers basic management disciplines such as standardizing plant practices, simplifying operations, tracking material flow and measuring effectiveness, he said.
In addition, Cambridge plants are shifting to product centers. Work for an entire product — molding, painting and assembly — will be done in a single plant area, instead of conveying parts from station to station. That will save cost and time, Kazanowski said.
The company also has put more effort into program management — supervising other suppliers and toolmakers on a complete project. Cambridge's customers — including Ford and GM — value that approach and are asking suppliers to take on a greater program management role, Kazanowski said.
Finally, the company plans to open satellite plants nearer customers to avoid long shipping times and product delays.
During the next year, Cambridge plans to open small assembly plants in Portland, Ore.; near Norfolk, Va.; and in Mexico, Kazanowski said.
Those plants could include some light molding work. The Portland plant will serve a nearby Freightliner commercial truck facility, and the Norfolk plant will ship exterior body parts to a Ford assembly site. Several customers have plants in Mexico.
If all goes as planned, Cambridge will become a stronger, more profitable company, Kazanowski said.
He downplayed speculation that the company will make an initial public offering in the near future. But he said that if the company hits its operating marks, those plans could change someday.
The company is positioned well for that growth, he added. The company has few competitors in the SMC market, which accounts for about 80 percent of Cambridge's business.
``One of our [employees] said we were one of the tallest of the midgets,'' Kazanowski said.
``We're principally battling steel and aluminum for lower-volume, specialty applications. It's a battle we enjoy having, and we have a pretty good chance of success.''