At the end of November, Blue Water Automotive Systems Inc. announced plans to close three plants.
Within weeks, Blue Water was awash with opportunities from its customers to take on millions of dollars' worth of new business.
Welcome to the current state of affairs in the North American auto supply industry, where pre-emptive restructuring efforts not only can help the company in the long term, but also may mark it as a safe harbor in increasingly stormy seas.
Companies that prove themselves as long-term survivors could reap millions of dollars in new business, despite the industry's current chaos. Customers can view a supplier's restructuring as a solution not a problem, said Michael Lord, chief executive officer for Marysville, Mich.-based injection molder Blue Water. If a supplier downsizes operations as a consequence of a customer's production cuts, the customer can see the belt-tightening probably makes sense, he said.
``What happens is they say, `Well good. You're a solid guy. Can you take over this [business] for me? Can you take over that transfer for me?'
Some of that work is coming by way of larger firms like Collins & Aikman Corp., which is in the midst of selling or shutting down plants - including an injection molding facility in Port Huron, Mich., that employs more than 500 making door trim and other interior parts.
Add to that the uncertainties created by companies like Delphi Corp. and Automotive Components Holdings LLC - made up of former Visteon Corp. plants - that are seeking to sell some operations.
There also are dozens of smaller players teetering toward potential failure, and nervous customers want to make sure there are manufacturers available to take on the work those firms' former competitors can no longer handle.
``It's really gotten to be unbelievable to see the amount of [transfer work],'' said Jim Gillette, director of supplier analysis for CSM Worldwide, a Northville, Mich.- based consulting group.
Blue Water, which was something of a question mark for automakers itself a little more than a year ago, has been remaking itself as a player the industry can trust, with the help of financial backers that had no previous ties to automotive.
Under New York-based KPS Special Situations Fund LP, Blue Water has established a business focus on air management. It acquired the automotive division of Injectronics Inc. to boost its capabilities, and has added new injection molding presses to existing facilities.
But the auto industry itself was in turmoil. By the end of summer 2006, North American automakers Ford Motor Co., DaimlerChrysler Corp. and General Motors Corp. were all announcing production cuts.
Every supplier had to find a way to respond to the cutbacks.
``The first thing is that you've got to be flexible, you've got to be nimble,'' said Jeff Mengel, a partner with consulting group Plante & Moran PLLC of Southfield, Mich.
For Blue Water, that meant bringing in Lord - who refers to himself as ``specializing in change.'' He joined Blue Water to shift its rehabilitation into ``hyperdrive.''
``When the market's changing that fast, the first thing you do is make sure you take a very cold-eyed look at what is happening. Don't kid yourself,'' Lord said in a Dec. 14 interview.
``Don't do it when you're forced to do it. If you wait until then, you have no control over the outcome.''
Blue Water also announced all of its planned closures at once, so employees could prepare for job cuts that may not happen for months. Many of the Michigan workers - from sites set to close in Lexington and St. Clair - will have a chance to transfer to other Blue Water sites, in part because the company is getting business being shifted from other suppliers.
``Now we have the Big Three of the big Tier 1s that are all doing their own turnaround and who are calling on a Friday and saying: `Can you take this and start production by Monday?' '' Lord said.
The amount of business up for grabs is huge, he said.
At any given time, Blue Water may be considering between $30 million and $50 million worth of potential new work that automakers want to move away from troubled suppliers. In total, that transferred business could add up to more than 20 percent of Blue Water's total revenue, according to Lord.
Blue Water is just one example of the trend. Opportunities are popping up across the auto supply sector to take on transferred business. And it is not just companies the size of Blue Water, with $140 million in annual sales, that are tapping into the work.
CSM's Gillette and P&M's Mengel both said they know of companies with fewer than $20 million in sales currently being asked to consider transfer work worth millions of dollars, easily worth a quarter of a smaller firm's annual business.
``Everything is in motion,'' Mengel said.
But not every company - even healthy companies - should consider taking on transferred business.
The bulk of the work on the move is for the North American Big Three carmakers, which could cut production plans if cars and trucks don't sell.
In addition, the tools for parts now up for bid were made and launched on different equipment, Mengel noted. They may not run as efficiently on other presses, and companies need to know that they have people in place who are good at troubleshooting problem areas.
Transfer business could come in almost overnight. A flexible production crew may be able to handle the change easily, Mengel noted, but others may not.
There also is a different art to bidding on those parts. Typically companies are looking at business three to four years in the future, and they have time to prepare their sites for the work. Now, however, they must know current conditions and costs and must have immediate capacity, rather than adding equipment to handle the work later on.
That fast turnaround in bidding points out the advantage to going after the work now. Companies know what their resin costs are at this time. They know the cost of their current employee benefits package per piece and how much they pay for utilitites.
``That's really the good part,'' Gillette said. ``You have the opportunity to correct mistakes that were done in the original bidding.''
And firms also can use transfer business as a way to gain exposure to new markets. A molder that makes a lot of truck parts may want to expand into parts for small cars or promote its expertise in under-the-hood components for a customer that generally contracts for interior trim, Mengel said.
But the same rules that apply for business as usual apply for bidding on transfer work.
``From my side, I want to be as picky as possible. We're not going to take everything,'' Blue Water's Lord said. ``You look at each proposition as it comes along. You say, `That one makes sense, yes, that one we could do, yes, that one looks right.'''
Molders must keep in mind that the basic rules of business survival still apply, Mengel noted. But some companies may be able to find a new edge.
``One person's turmoil is another person's opportunity,'' Mengel said. ``As long as you're nimble and can take advantage of it, there is money to be made.''