In 2009 when Guardian Industries Corp. created automotive supplier SRG Global Inc., a small molding facility in Suzhou, China, was part of the global footprint.
At that time, the plant — acquired by Auburn Hills, Mich.-based Guardian when it bought the automotive group of Siegel-Robert Inc. — focused on making parts to export to international automakers. China was still seen as a location for low-cost production.
But now China is the world's largest auto market, with 18 million cars sold last year, and carmakers are forecasting potential sales will more than double within 10 years. Some predict the country could sell 40 million cars annually by 2020.
Those numbers are hard to ignore, and for companies like Warren, Mich.-based SRG they have meant continual growth.
“It's like the U.S. industrial revolution on crack,” said Jon DeGaynor, SRG vice president of business development and strategy, and Asia managing director, during an April 23 interview at the 2012 Auto China show in Beijing. “But it's not just about volumes at an incredibly rapid growth rate. They expect you to perform to quality standards that are equal to anywhere else in the world.”
Global carmakers want to build a global platform, using a supply base that can deliver consistent, quality parts from anywhere in the world. That means when Ford Motor Co. launches production at its new $760 million assembly plant in Hangzhou, China — announced just before the Beijing auto show — it wants to make a car there as it would in Belgium or Michigan.
SRG wants to be one of those key suppliers picked for those global vehicles, so it has focused on technical capabilities in Suzhou to bring the site up to the same level as its other operations in Europe and North America. And it has had to develop those skills among a young Chinese workforce while also adding production to keep up with the pace of growth.
“As we look at adding presses, we have to be cognizant of what else is going on because our customer wants to have parts made to the same standard,” DeGaynor said.
The company has expanded the Suzhou operation three times since SRG came into existence. The plant's 380 employees include only two expatriates; the rest have all been trained in China. And it's a young workforce, he added: The oldest employee is 47; the plant manager is 43. Most workers are in their 20s and reflect the new generation of Chinese workers — who have advanced production skills.
“We've worked hard to develop them to provide the same common standards and meet the same demands as [at] every other facility,” he said.
And it is not only international automakers driving the new emphasis on quality over quantity, said marketing director Tom Schneider. China's domestic automakers also are pushing for more.
“In the past three years, you could see … domestic carmakers moving from a copycat of international car styles to one of developing their own style, their own way of doing things,” he said.
The increasing Chinese consumer base wants the same quality in vehicles they would find anywhere in the world, Schneider said. The general rule of thumb is that car buyers might buy a first car just to own a car. But with the second one, they will look at materials and fit and finish.
“Anybody who thinks it's just about high volumes at low cost is going to miss out,” he said.
SRG specializes in decorative interior and exterior trim, with a focus on chrome-plated plastic parts and metallic trim. It makes front grilles, body side moldings and other key parts, and can produce those parts anywhere, DeGaynor said.
As China continues to grow, SRG is also looking at potential expansion locations there. The auto-production market is moving beyond its traditional locations near Shanghai and Guangzhou and into central and western China — just as other industries look to expand to other regions.