Key Plastics LLC has made the transition from bankruptcy to new ownership to stability and now the company is moving forward, with plans in hand to build an $18 million auto supply plant in Slovakia.
The 350-employee operation in Dolny Kubin will be Key's second molding operation in Eastern Europe, making parts for the growing ranks of carmakers in the region.
``In terms of an evolution, you first have to stabilize,'' President and Chief Operating Officer Tim Nelson said during an interview at the auto industry's Management Briefing Seminars in Traverse City. ``There's quality, fixing your costs, the right cost structures. You work on those first because if you're not doing those right, then nothing else matters.
``We feel that we've got our arms around quality very well. We've got our arms around the cost picture very well. The competitive picture never ends, but we feel that we've got it under control. Now we are shifting some of that energy and focus to growth.''
Key already supplies PSA/Peugeot Citroen and South Korea's Kia, which are building plants in Slovakia. It makes sense for companies like Key Plastics to follow its customers, Nelson said, but the region has other selling factors.
``If you read the statistics and look at the comparisons ... there's as much to be said for Eastern Europe as there is for Asia,'' Nelson said. ``In some ways even more in terms of perhaps intellectual property protection, in terms of regulatory stability, things like that, it's a very attractive market.''
Nelson began working at Farmington Hills, Mich.-based Key in 1985, and has seen it grow through a series of acquisitions in the 1990s, then suffer with a heavy debt load that landed it in Chapter 11 in 2000. It spent more than a year there before turnaround expert Ed Ewing bought it in 2001 with additional backing led by Carlyle Group. He since has struck a deal to buy out all of the shares in the firm.
Ewing opted to reinvigorate the bulk of the management team already at Key, which included Nelson. Nelson was group president for exterior and underhood products when he was selected to take over as president in February.
The firm has been investing in developing new products, including a proprietary washer reservoir filler cap and has patents pending on other parts that give it more opportunities to grow organically through increased sales to existing customers.
It extended its physical size through the acquisition of Soo Plastics Inc. of Sault Ste. Marie, Mich., in 2002 and took on additional work when General Motors Corp. awarded it contracts previously done by bankrupt supplier Regal Plastics Co. of Owosso, Mich.
Key Plastics began boosting its access to Asian automakers in January when it opened its first sales office in Japan and intends to add engineering capabilities there soon, he said, and will look at other focused growth strategies.
``We continue to look for acquisition opportunities that make sense,'' he said. ``I think we're much more disciplined about that than we were years ago. Now it's part of an overall strategy.''