At one end of International Automotive Components' Iowa City complex, toolmaker Rick Glick is carefully inspecting a mandrel that will be used for an electroformed nickel tool used in forming a car's instrument panel. He is looking for any tiny defects in the surface and repairing them with liquid silver.
Nearby, two other IAC tooling specialists are getting other nickel tools ready for their final hours in the electroforming bath, checking the thickness of the nickel and masking off portions of it that have already reached the appropriate levels.
Across the parking lot in the main building, one crew is molding and trimming spray urethane skin for a sedan's instrument panel, while another team removes slush molded skin for General Motors Corp.'s Chevrolet Corvette IPs.
Walk another hundred feet and there's the line injection molding and assembling interiors for the new Chevrolet Camaro. Around the corner, another team is rotational molding the armrest skins for minivans.
Keep walking through the 364,000-square-foot complex and you will find material compounding, thermoforming, blow molding, welding and paint lines.
At this one plant, IAC has brought together a range of processes that demonstrate how the auto supplier is embracing vertical integration of manufacturing — giving it more control over key elements of the interior parts it produces.
It's a reversal of the industry trend of the past in which companies streamlined production to core assets and focused on one or two specific processes. But at the same time, IAC executives said they are careful to vertically integrate where it makes sense. Injection mold tooling, for instance, is available from hundreds of strong companies, said Lee Childers, vice president of advanced development for Dearborn, Mich.-based IAC. The electroformed nickel tools IAC makes for interior skins, on the other hand, are far more specialized.
“It gives us a product capability we wouldn't be able to achieve if we purchased our [skin] tools,” he said during a July 28 interview at the Iowa City plant. “There is a cost to running your own tool shop, but when you buy your tools, everybody else has access to the same technology.”
IAC competitor Johnson Controls Inc. took on more vertical integration when it created JCIM LLC of Plymouth, Mich., out of parts of the bankrupt injection molding company Plastech Engineered Products Inc., but IAC has been more active in voluntarily embracing vertical integration, said Jeff Mengel, a partner with consulting group Plante & Moran PLLC of Chicago.
Just consolidating individual parts of the industry alone has been a failed business venture in the past, Mengel noted, so companies have to make the right plays and look at where it makes sense in opening strategic opportunities.
Iowa City seems an unlikely place for IAC to showcase its vertical integration. While the auto supplier has plants throughout the Midwest — many nestled close to automakers — Iowa City's nearest customer is Chrysler Group LLC's assembly plant in Belvidere, Ill., nearly 180 miles to the east.
Despite the distance, the site has adapted over more than 40 years to develop processes and technologies its customers needed, when they were needed. Its standing as an auto supplier in a state not known for the auto industry also meant IAC employees were less likely to find a job with an auto parts plant down the street, and the firm could invest in training for long-term results.
The plant has been doing its own compounding for urethane foam since the 1960s and building its own electroformed nickel tools for skins for about the same time. It developed capabilities in rotational cast molding for auto skins and expanded into other skin-production processes as customers demanded them — including a spray urethane skin program that launched in 2005.
At one point, the plant was making up to 15,000 arm rests per day used in minivans and sport utility vehicles.
As the plant picked up more capabilities, its ownership passed from one company to another, eventually becoming part of Lear Corp. and then IAC as financier Wilbur Ross created that business out of elements of Lear and other molders that were looking to focus on core products, rather than making such a variety of parts.
The Iowa City equipment also includes programs transferred from one-time Collins & Aikman Corp. plants and other competitors that fell by the wayside, but made sense for IAC to pick up.
“The technology here isn't just something you throw into the mix and start making,” said John Smith, program manager.
That does not mean that IAC's embrace of vertical integration takes in everything that the company does, nor does it want to duplicate production at every site. Iowa City makes tools used by IAC plants globally and ships complete interior parts to assembly plants throughout the U.S. and into Canada and Mexico — and even for one vehicle made in Russia.
Its range of processes gives it more opportunities to take on new business and keep lines running. Although the workforce dropped from about 700 to 485 when the auto industry slowed this year, it always had some production going, such as the instrument panel for the Chevrolet Camaro, which debuted last spring.
The nickel tooling facilities also make non-automotive molds for the aerospace, defense, recreation and medical industries. Some of the biggest projects the plant is bidding on now are for non-automotive business, such as producing a synthetic skin used in medical training dummies, Smith said.
Iowa City will continue vertical integration and bringing in new processes where IAC thinks it makes sense, such as leather wrapping for high-end interiors, said plant manager Brian Pedrick.
“This gives us a unique product to offer to our customers,” Childers said.
Copyright 2009 Crain Communications Inc. All Rights Reserved.