Chaos is opportunity, says Flex-N-Gate CEO

Shahid Khan has achieved meteoric growth for his Urbana, Ill., auto parts company, Flex-N-Gate.

The producer of metal bumpers, plastic interior and exterior parts, lighting, signals and metal assemblies posted $8.89 billion in worldwide sales to automakers last year — nearly twice its volume just five years earlier.

It ranks at No. 33 in Plastics News' ranking of North American injection molders with an estimated $290 million in injection molding sales annually.

But the reclusive billionaire, who also owns the Jacksonville Jaguars NFL team, rarely talks about himself in public, and he almost never meets with the media to discuss his business or his plans.

But the Pakistani-born Khan, 70, participated in a virtual version of the Original Equipment Suppliers Association annual automotive suppliers conference, Nov. 9-11.

He offered the auto industry audience a few observations about the market, his philosophy of business and ideas about how the industry will power through the pandemic.

"I'm a big believer [that] chaos is opportunity," Khan told the industry trade group. "As we've grown, some of the best growth spurts we've had have been when the status quo was getting disrupted."

Khan, who came to the U.S. at age 16, worked for Flex-N-Gate as a University of Illinois engineering intern in the 1970s, according to past press reports. While there, he obtained a $50,000 small-business loan to launch a bumper manufacturing enterprise called Bumper Works.

By 1980, Khan had purchased Flex-N-Gate and combined it with his bumper company, supplying the Detroit 3 and Toyota in North America. In 2001, it purchased Ventral Group Inc., a Canadian plastics molding specialist.

His company today has 64 manufacturing plants worldwide with more than 24,000 employees.

Khan acknowledged that the coronavirus pandemic has forced many suppliers to reevaluate their R&D priorities and consider partnerships or merger and acquisition opportunities to stay afloat, and forced them to reexamine their working relationships with key customers.

But Khan urged suppliers to stick to their values during the pandemic. He said suppliers must hold the upper hand with customers to remain profitable.

"I have this absolute, universal rule of thumb," Khan said wryly. "You do everything the customers want you to do, there's only one outcome: You are going to go bankrupt.

"The customers want the best product, latest innovation, on time. You absorb all the investment and give them the cheapest price," Khan said. "Not all of those are going to be possible all the time."

He also hinted at the company's dynamics with its customers, particularly given the impact of political tumult in the U.S. and the pandemic. He stressed that pragmatic leadership is more crucial than ever.

"You have to be authentic, and you have to evolve over time," Khan said. "What worked in the past is not normally going to work right now. Some things will, some will not. Hands-on empowerment, and one of the things I think doesn't change [and] is universal, is humility.

"It's very important for me not to buy into the flavor-of-the-month thinking or just following the herd," Khan added. "You've got to have a mindset of, 'You must grow, or you're going to die.' The growth is personal growth and, obviously, growth of the business."

Not following the herd includes weighing unpopular decisions, something Khan is familiar with.

Two years ago, Khan decided to do something that "was not a sexy thing to do" at the time. He spent $160 million to open a 480,000-square-foot manufacturing plant in Detroit. But the move set Flex-N-Gate apart from competitors in the eyes of its Detroit customers.

"Following the herd is not a good thing. I have seen enough of the trends — globalization and many, many other things — where that is the normal thing to do, but it doesn't feel right, isn't going to work for us," Khan said.

"Can we be sustainable? Can we be profitable? Can we make a difference? Those are more important for me and the people who work with us."