The drive for diversity is merging the world's biggest auto supplier with some of the industries' smaller concerns, and producing potential growth for each company. Delphi Automotive Systems of Troy, Mich, announced May 18 it has formed a joint venture with Plastech Engineered Products Inc. and its own Packard Electric Division to turn out plastic wiring harnesses and cockpits.
Plastech will own 51 percent of Automotive Modular Concepts LLC.
Just a week earlier, Delphi launched an industrial partnership agreement with plastics molder Regal Plastics Co., also of Troy, a wholly owned subsidiary of Regal Holdings Co.
Both Plastech of Dearborn, Mich., and Regal are minority-owned suppliers. Julie Nguyen Brown, a Vietnamese design engineer, founded Plastech in 1988. William F. Pickard, the majority owner of Roseville, Mich.-based Regal, is black.
But the partnerships extend beyond race, Delphi officials said. Both firms are strong, healthy concerns that already have good reputations in the industry.
"This new alliance expands our minority supplier base and strengthens our ability to win new business," David R. Heilman, Delphi vice president and president of Packard Electric, said in a written statement about the Automotive Modular Concepts announcement.
"Plastech has a very strong business foundation and is capable of handling a diversified product mix," he said.
Delphi is ranked by Plastics News' sister publication, Automotive News, as the top global automotive supplier, with more than $27 billion in annual sales and 213,000 employees.
Plastech had an estimated $400 million in sales last year, with 3,500 employees at 16 facilities.
Regal Plastics has about 350 employees at two plants in suburban Detroit, accounting for about $35 million in sales in 1999.
Plastech and Delphi have not set a location for Automotive Modular Concepts, but the venture has a contract to produce wiring harnesses for a future Ford Motor Co. vehicle, said Kari Gaffe, spokeswoman for Warren, Ohio-based Delphi Packard.
The venture will produce extruded plastic housing for the copper wiring, typically from PVC or cross-linked polyethylene.
The two companies expect to win far more business once the venture is established fully, Gaffe said.
"We view this as a great opportunity for both of us," she said.
While it is easy to see the benefits of a link with Delphi for Regal — with the molder of trim and functional pieces gaining access to Delphi's technological expertise — there also are some strong selling points for Delphi, said Ray Deibel, Delphi Interior Systems spokesman.
"Our strategy is to supplement our organic growth with strategic alliances such as this," Deibel said. "They expand our capabilities and they extend our market reach."
Regal has won extensive quality awards, he noted, and its great variety of business contacts in the auto industry interested the former GM parts division, which was spun off last year.
"Regal is a pretty healthy organization already," Deibel said. "This is really just a beginning. It lets the world know that we're out there and we're working together."
Regal's primary processes are insert injection molding, gas-assist injection molding and two-stage injection molding. It already has firm contracts with nontraditional Delphi customers such as Ford and Toyota Motor Corp.
Rather than using the smaller firm merely as a subsupplier, Delphi aims to build both businesses by combining their expertise.
"From our standpoint of how we look at it, it's a partnership that will allow us to move forward quite a bit,' said Don Allen, Regal's vice president and director of policy administration and human resources.
"We see this in terms of an awful lot of potential that it offers the men and women of Regal."