STERLING HEIGHTS, MICH. - While other auto suppliers splurged on acquiring companies through the late 1990s and into early 2000, U.S. Farathane Corp. held off and instead brought in new equipment.
In an automotive industry noted for huge volumes, Farathane has mapped out a strategy that calls for seeking unique sales opportunities that utilize pioneering new technology. Farathane executives believe it will be a difficult path for competitors to follow.
Executives say the plan is paying off. The company has doubled its sales since 1995 - on track for an estimated $70 million this year. It has purchased seven new injection molding presses in the past year, including two that just arrived. It is about to purchase equipment to produce microcellular urethane components for suspension systems and said it may expand one of its three plants years ahead of its earlier schedule.
``There is no more taking on programs just to make sales and then figure out how to make money from it,'' said USF President Andrew J. Greenlee. ``Growth is secondary to profitability.''
Greenlee took on the president's job in April, moving up from executive vice president at the privately held business, which opened in 1971.
Farathane specializes in multishot, multimaterial auto parts, with 510 employees divided among three Detroit-area facilities and 87 presses with clamping forces of 75-720 tons. Its products have made it a finalist for Society of Plastics Engineers Inc. awards and the auto industry's PACE awards, conducted by accounting firm Ernst & Young and Automotive News, a sister publication of Plastics News.
Farathane has helped create poly-propylene and thermoplastic elastomer latches for a minivan's sliding door, drain plugs and heating and cooling seals. The parts are small and rarely noticed but require a high degree of skill to produce and can save money for customers.
``They can remove three, four, five, six different [manufacturing] steps,'' said Jeff Mengel, an industry consultant and partner with Auburn Hills, Mich.-based Plante & Moran LLP, who has advised Farathane on its business plan.
``They're always looking for that little edge that says, `We can do this, and not everybody else can.' They've done a very good job of focusing their energies in an area that's not highly populated.''
In a competitive industry, Mengel said, firms have to seek out ways to add value to a product in order to stand out from other molders.
USF proves that companies do not have to be huge, multibillion-dollar manufacturers to afford innovative programs, he said.
``You've got to take every edge you can, and that edge is going to be in technology and processing,'' he said.
At the same time, though, companies must keep an eye on how they can sell those new programs to customers.
U.S. Farathane has an in-house, three-person design shop that can work with automakers and Tier 1 suppliers to troubleshoot problem areas, Greenlee said. When one carmaker came to the company citing concerns about an annoying rattle in door latches, USF created a PP part with a TPE layer that could absorb and soften vibrations.
``We're taking a lead on design,'' he said.
The company also has forged alliances with European molders that have proprietary technology and are on the search for partners that can extend programs into North America.
Group Neyr of Izernore, France, developed a foam-in-place heating and air-conditioning seal that does not require adhesives, as well as brake reservoirs that USF just started to produce. Hyperlast Ltd. of Manchester, England, is expanding production of its microcellular urethane jounce bumpers for shock absorbers to North America through USF.
The firm also collaborates with its material suppliers, including Akron, Ohio-based Advanced Elastomer Systems LP, which supplies Santoprene TPE used in a variety of applications.
``We do the advanced development work that gets you out there first in the marketplace,'' said Judy Deutschman, sales manager for the AES North American automotive division. ``We teach them about materials, and they certainly teach us about our materials in their processes. We both enjoy the growth. It's very mutually satisfying.
``You've got to have the right talent [to create new products], and they've certainly done that.''