JCIM LLC's new corporate office has open space to promote communication, a range of conference rooms where development teams can meet, samples of new and future products on display all elements of the typical contemporary office complex.
But JCIM's history is hardly typical. It was created in the aftermath of a sudden bankruptcy by one of the largest plastic auto suppliers in the North American auto industry, and quickly linked to another supplier that had spent the past few years trimming its in-house molding.
But since Johnson Controls Inc. took majority ownership of the interior manufacturing operations of Plastech Engineered Products Inc. under the name JCIM in July, the auto industry has been rocked by a staggering slowdown in production. In the turmoil that has followed, JCI has found that having JCIM in house has given it a stable source of manufacturing it wouldn't have otherwise.
If anybody's able to sleep at night at all in the industry right now, it does allow you to sleep a little better knowing that you have control over more of your value-added vertical chain, Jeff DeBest, vice president and general manager of Johnson Controls' auto interiors group, said in a recent interview at JCIM's Plymouth headquarters. DeBest's duties include overseeing JCIM.
JCI was Plastech's biggest customer when the Dearborn, Mich.-based auto supplier entered Chapter 11 with the U.S. Bankruptcy Court in Detroit in February 2008. JCI, with an auto interiors division based in Plymouth, was suddenly faced with the potential that delivery of its parts could be halted without warning, forcing it to shut down its production lines.
In a series of meetings and court appearances that took place over less than six months, the court agreed to divide Plastech's manufacturing, with the newly formed joint venture JCIM LLC taking on the interiors work and Canadian supplier Magna International Inc. taking the exterior plastics group.
JCI owns 70 percent of JCIM, controlling more than $1 billion worth of plastics molding. JCI also folded its existing North American plastics operations into JCIM. But the new company is not just injection molding, DeBest pointed out.
We have got to be very good at injection molding, but we've got blow molding, two-shot injection molding, rotational molding, [vacuum] wrapping, vac forming, cast skin production, he said. We have a whole myriad of processes that we perform now as part of our daily work.
The portfolio of products JCIM inherited also includes non-typical parts for JCI, such as under-the-hood plastics including blow molded reservoir bottles previously molded by Plastech.
We traditionally haven't been involved in those particular areas of the vehicle, but being the size molder that we are, with the business that we inherited, it's intriguing, DeBest said.
It's also a long way from where JCI thought it was headed just a few years ago.
The company had a business plan to decrease its own manufacturing footprint and focus on proprietary products where it could get the most value-added return on its molding investments. It retained development and some molding, with its engineers and designers coming up with new parts and new ways to make existing parts using multishot molding and automation.
Other parts were purchased, with Plastech selected as its key supplier of plastic parts.
Everyone was into the dot-com line of thought in terms of outsourcing everything, said DeBest, who spent 12 years with injection molder Prince Corp. of Holland, Mich., before JCI bought that firm in the 1990s.
It made sense at that time, and was popular with investors and Wall Street analysts to leave production in the hands of high-volume manufacturers who could supposedly make their profit on high volumes that would economize their costs.
But outsourcing and high-volume concepts showed their weaknesses when the auto industry began to slow down. Highly leveraged firms like Plastech, Blue Water Automotive Systems Inc., and Cadence Innovation LLC began to fall by the wayside, and vertical manufacturing suddenly had new life. Companies like JCI competitor International Automotive Components North America Inc. of Dearborn, Mich. itself created in 2007 had the ability to minimize their exposure to failing sub-suppliers by making their own parts, reducing their exposure to faltering firms elsewhere.
It almost seems like right now, with smaller players dropping off like flies, there is a comfort level in vertical manufacturing, said Jim Gillette, a Grand Rapids, Mich.-based supplier analyst with consulting group CSM Worldwide.
So while JCI may not have planned to have a major manufacturing element under its control, it has found real advantages to JCIM and has been working to make the new company make economic sense in the long term as well. That includes branding the IM within its name as interiors manufacturing.
What JCIM gives us that we did not have in the past is a very effective footprint, DeBest said. Just geographically if you envision the continent of North America, we start in the northeast and continue to the southwest. You can follow the line of automotive manufacturers in a line from Ontario to Mexico and we feel we have a competitive advantage just because of the geographical footprint we now have.
That range of production sites makes it easier for JCIM to expand its proprietary processes to a wider variety of customers, making its high-value parts anywhere and reduce shipping costs.
JCI also has worked to establish a new identity for JCIM. As a private company, Plastech had a tendency toward holding information tightly within its corporate offices. As part of the publicly owned Johnson Controls, JCIM focuses on open communication and generating ideas from throughout its holdings. Part of that can be seen in the office it acquired in October with its open spaces, compared to the Plastech offices, which had a series of individual spaces spread across multiple floors.
The new management team also has had to develop a plan for its complex series of manufacturing facilities. Some presses still being used by Plastech were 30 years old. Some were brand new.
The plan has included restructuring, closing some plants and cutting jobs at others to create a company that makes more sense in today's automaking environment.
Capacity has got to come out, DeBest said. For a while, there were a lot of acquisitions of companies that was just getting a new name on the building. It wasn't taking machines out of the equation. We've got to get capacity out.
That still leaves JCIM with 739 injection molding machines ranging in size from 50-5,000 tons.
JCI's moves to restructure its holdings has been gotten some approval so far. Stock analyst Rod Lache of Deutsche Bank noted in March that the bank has grown increasing comfortable with Johnson Controls' ability to restructure and mitigate downside in its auto segments.
More closures may be on the way, with JCI officials in the corporate office in Glendale, Wis., noting in March that the company expects North American auto production may fall to 8.8 million vehicles, and warning that JCI may close 10 more plants this year, with the bulk of those in the auto sector.
For now, DeBest said, JCIM is focusing on fine tuning its holdings and settling in for an expected rough year.
We're a manufacturing company and we like to make things, he said. That's what we're about, and if you ask me what the vision is for JCIM, it's to be the best molder on the continent, and to define that, it's safety, it's quality, it's delivery and its fiscal performance those are the four things that define that.