shape, with the exception of
DaimlerChrysler, which felt the effects
of a sales drop-off and the looming cut-
backs. To partially make up for profit
reductions in general, the manufacturers
are taking it out on their suppliers,
squeezing them for lower prices.
"They're definitely putting the pres-
sure on us to cut prices," said Joel
Tauber, head of Tauber Enterprises in
Southfield. "As a result, it's been a dif-
ficult few years for the automotive
suppliers. Too keep operating, many
companies have been involved in
mergers, reorganizations and other
types of combinations. When the
stock price plunges, you must try
everything to stay viable."
Tauber is an investor in Key
Plastics of Plymouth, a major sup-
plier to the auto industry, which has
continued to fare well in the topsy-
turvy business. The company,
founded in 1979, has 34 plants and
5,000 employees around the world
and last year did $550 million worth
of sales.
Key Plastics makes and sells plastic
parts for vehicle interiors, doing busi-
ness with every manufacturer.
"The over-capacity in the North
American industry has really affected
the sales and profitability of many
suppliers," Tauber said. "Our profit
margins are very low anyway, so when
the manufacturers ask you to reduce
prices to them, you're just trimming
those margins even more.
"You try to negotiate with them.
And you must find better ways to
improve your operation, such as
increasing productivity,through the
use of new technoloov
Brian Hermelin, chief operating
officer of Active Aero, based near the
Willow Run Airport, said suppliers
face the same general problems as the
rest of the industry, mainly the out-
come of fluctuating interest rates and
fuel prices. The latter is especially
important to his firm, which provides
just in time (JIT) freight delivery serv-
ices to the North American plants of
auto manufacturers.
Several years ago, the industry adopt-
ed JIT from a Japanese-developed sys-
tem, whereby auto plants keep a supply
of parts on hand that is only enough to
accommodate production for a few days
... the low inventory saves money. But
when the parts are needed, Active Aero
helps move them by air freight and
trucks — sometimes even helicopters
— to make sure production is uninter-
rupted.
Five-hundred employees are at the
Willow Run location, near Ypsilanti,
using the Internet extensively and
working directly with transportation
officials at the auto companies.
"We'll move almost anything, any-
where, at any time," said Hermelin,
who has been active in the firm
since 1994. "Sometimes, it's difficult
finding the right plane and the clos-
est airport. But we persevere and get
it done.
"As a sideline, we even expedite pets
and perishable foods to people and
companies. Mainly, we feel we're pro-
viding a major service for the auto
industry. Having to put up with their
requests for price reductions is just
part of the business."
Hermelin feels DaimlerChrysler's
problems are unique, but will have a
major impact on the industry.
"They're doing the right thing by
making a rapid correction, so it could
turn out to be a short-term situation,"
he said. "Meanwhile, if the industry
could accomplish a 16-million-plus
sales year in 2001, it will be great for
all of us."
ri , "4 < o zz" ,.
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• Complimentary in-suite continental breakfast
• On-site fitness center
• Two great restaurants, including Houston's
• Convenient adjacent or valet parking
• Ask about new packages for shoppers, families and
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°Special seasonal rates through 4/30/01 are per suitr, per Right, plus tax. Rates vary by da y and week, cuudare subject to change.
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3/23
2001
9