Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Perspective: Making the best of working from home
      Nypro's Gordon Lankton left the plastics industry a better place
      Recognizing Plastek Industries for all-around excellence
      Let's look forward, rather than back, to mark COVID anniversary
    • Kickstart: They're not used shoes, they're 'refurbished'
      Kickstart: Holy guacamole, science is cool
      Kickstart: Coffee with a splash of sustainability
      Kickstart: Live, from Shenzhen, it's an in-person trade show
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • PE resin trends highlighted in Shell report
      Dow's Lowry honored by World Economic Forum for sustainability work
      Africa impacts new colors from Ampacet
      Plaskolite marches into madness with its own online bracket
    • Climate debate in Washington increasingly includes plastic
      There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
    • Annual PN LSR directory grows
      Want prices? Introducing historical resin pricing, now available in a downloadable form
      A new annual ranking: Top processor gains
      Thermoformers: Would you believe a 12 percent gain?
    • Working from home: Rugrats edition
      Nypro's Gordon Lankton left the plastics industry a better place
      Let's look forward, rather than back, to mark COVID anniversary
      Virtual pitfalls derail exhibits for builders' trade show
    • Machine builders press through pandemic with innovations
      PEX pipe maker Uponor donates $30,000 for Texas storm relief
      Virtual pitfalls derail exhibits for builders' trade show
      PPI puts $200 bounty on exhumed HDPE conduit
    • Perspective: Making the best of working from home
      Perspective: The Materials Wars: Is plastic actually better?
      Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Video: Structural foam molding
      Structural foam molding: Flexibility for processors
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - April 2021
      Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Bandera
      Bandera US was born for the North American market
      Sponsored By Ensign Equipment
      Filling systems customized for any process or budget need
      KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei retools in US with investment from parent ownership
      Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
    • KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei Retools in US with investment from Parent Ownership
    • Sponsored By ENGEL Machinery
      Tailored maintenance for injection molding machines and robots
      Sponsored By ENGEL Machinery
      Improve maintenance efficiency with e-connect.monitor
      Sponsored By ENGEL Machinery
      Maximum precision for lowest shot weights
      Sponsored By ENGEL Machinery
      Even more cost effectiveness for small precision parts
    • Shell Polymer
      Sponsored By Shell Polymers
      Food and beverage trends impacting the polymer industry
      Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
May 20, 2014 02:00 AM

Auto suppliers putting more money into expanded production capacity

David Sedgwick
AUTOMOTIVE NEWS
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Rehau AG + Co.
    German auto supplier has spent $115 million to expand production in its Alabama molding operation.

    By David Sedgwick

    AUTOMOTIVE NEWS

    The dam has broken.

    North American vehicle production has grown to the point where it's no longer enough for suppliers to run an extra shift to keep up with customer demand. After years of dragging their feet, companies have no choice but to build or expand factories — and that's precisely what they're doing.

    Just like automakers, suppliers are investing big sums in brick and mortar.

    "Nobody anticipated the industry would come back at the rate that it did," said Danny Infusino, Martinrea International Inc.'s head of business development and engineering. The supplier is based in Vaughan, Ontario.

    In April, Martinrea began constructing a plant in Riverside, Mo., to make engine cradles for General Motors' plant in Fairfax, Kan., which is 3 miles down the road.

    "There is a lot of juggling going on," Infusino said. "The plants are running six or seven days a week."

    Even as demand soared in recent years, suppliers were loath to break ground on a plant or even reopen one they had spent time and money shutting down during the recession. Instead, they turned to three-shift operations and various overtime schemes, such as flex time and volunteer shift work with pay premiums, all in an effort to squeeze out volume without making big capital investments.

    That was then, and this is now.

    "Overtime is an issue and a problem because people are getting exhausted," says Markus Erlbacher, North American commercial manager at German bumper fascia and system supplier REHAU AG + Co., which is expanding a plant in Alabama to supply Mercedes-Benz.

    Production of light vehicles in North America is expected to top 16.8 million units this year, according to IHS Automotive. In 2016, production is expected to rise to 17.5 million units, topping the previous record of 17.3 million units in 2000.

    There has been especially strong growth of investment in North America among suppliers based in Europe and Asia, said IHS analyst Mike Wall.

    "North America is a safe haven, in some ways," Wall said. "We are a mature market, but we still have growth, and we are not nearly as volatile as emerging markets."

    North America is an especially attractive market at a time when the economies of the vaunted BRIC countries — Brazil, Russia, India and China — have become increasingly volatile and Europe's economy remains stagnant.

    So foreign suppliers are expanding in North America. Some examples:

    • REHAU has spent $115 million to expand its plant in Cullman, Ala., to produce bumpers for the redesigned Mercedes-Benz C-class sedan, which will be produced in Alabama for the first time. The company already had molding and assembly at the site for other vehicle production. It also invested $3 million for a North American technical center in Cullman to add more product development capabilities in the region.

    • Austrian firm Voestalpine Group has opened a $62 million plant in Cartersville, Ga., to produce body-in-white components for Mercedes-Benz.

    • Fuyao Glass Industry Group of China plans to spend $200 million to convert GM's shuttered assembly plant in Moraine, Ohio, into a glass production facility.

     

    Rehau AG + Co.

    Rehau's investment in the U.S. includes a new technical center in Cullman, Ala.

    Following the customer

    Foreign suppliers are investing in new North American plants because their customers are doing so.

    For example, BMW AG plans to spend $1 billion to expand production at its plant in Spartanburg, S.C. And in February, Honda Motor Co. launched production of the Fit in its new $800 million plant in Celaya, Mexico.

    Likewise, Daimler AG was reported to be spending an estimated $2 billion to expand its Vance, Ala., assembly plant. The plant builds the M class, GL class and R class and is starting production of the C class this year. And when Daimler expands, its suppliers expand, too.

    REHAU's Alabama plant, which also supplies Nissan and BMW, needed additional floor space to accommodate a new production line for the C class.

    The existing plant routinely has been running weekend and triple shifts to keep up, Erlbacher said.

    The expansion will allow the company to reorganize production, hire more workers and ease the stress on the plant staff, Erlbacher said.

    "It doesn't matter if it's Nissan, BMW or Mercedes — production figures are always higher than expected," he said.

    North American suppliers are investing, too, according to data compiled by consulting firm PwC. Last year, capital expenditures of 30 publicly traded suppliers totaled 4.4 percent of sales, up from a low of 3.0 percent in 2009.

    "The increase in capital spending reflects rising confidence with the industry," said Jeff Zaleski, a PwC partner in Detroit. "You are seeing a lot more investment."

     

    Banks are lending

    To finance their expansion, suppliers are finding it easier to qualify for bank loans, Zaleski noted. "Banks are willing to loan companies more money," he said. "North America is a very attractive investment right now."

    Like their European and Asian peers, U.S. and Canadian suppliers are racing to keep up with rising production. Martinrea International's engine cradle plant in Missouri will launch production late in 2015 for GM's Epsilon platform.

    The Fairfax plant assembles the Chevrolet Malibu and Buick LaCrosse.

    At any rate, Infusino says the Riverside plant will avert production bottlenecks in two of Martinrea's stamping plants.

    Previously, the plants would stamp components for the engine cradle, then weld the cradle together. But cradles are difficult to ship long distances because of their odd shape.

    Instead, Martinrea will ship the stamped components to the new Riverside plant, which will weld them together just a few miles from its customer, GM.

    Infusino calls the new approach a hub-and-spoke strategy, since the stamping plants will ship stamped components to satellite factories for final assembly.

    Shipping costs will be much lower, and Martinrea won't have to undertake a costly expansion of its stamping plants, which are a seven-hour drive from Riverside.

    And that, in turn, will cushion some of the strain on Martinrea's plants to fill rising orders from the Detroit 3, Nissan and the German automakers. A number of plants are running at or near capacity, and Infusino expects that to continue in 2015.

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions