Automotive Manufacturing: Heavy metal
- May 9, 2014
The Problem: Remaining competitive in a tough global market
The Solution: Innovation and flexiblity
Ontario auto parts stamper knows the road to success
Canada's automotive industry is entering a three-year period before the end of tariffs on South Korean imports, and those companies that are doing well after the downturn of 2008-09 have a lot to tell us about how best to address the coming challenges. One example is AGS Automotive Systems, a Tier 1 and Tier 2 supplier that has learned the hard way that innovation is crucial if a company wants to stay afloat in today's competitive environment.
"Our company got its start back in 1947, when a tool maker named Arthur Simpson started it from the ground up," says Lisa Tucker Boulton, general counsel for the company. "After Mr. Simpson died in the 80s, it was run by a management team and then his son."
But the company ran into difficulties in the late 90s, and filed for bankruptcy protection in 2001. New ownership emerged after a year and half of restructuring. AGS Automotive then fought its way through the downturn, and is now in growth mode. How does it do it?
"We are of the view that our success is a function of three prongs," says Boulton, who also heads business development at AGS. "First, you need to collaborate; second, you need skills that apply to innovation; and third, you have to be flexible."
The big picture
When Boulton references collaboration, her vision extends beyond the usual emphasis on having machinists, designers, and managers working together to get the most out of processes on the shop floor.
"In the past five years we've done a great job collaborating with the federal and provincial governments, as well as being closely aligned with educational and industry organizations," says Boulton. "We have also collaborated with companies that we would have previously considered to be our competitors."
This approach has allowed AGS to develop innovative relationships with suppliers that include co-location in facilities, thus deepening ties to ensure mutual benefit. This is true also of the company's connection to the educational community, which ensures that AGS has access to the best and brightest for new ideas.
"We have to be innovative on more than just products," says Boulton. "We also have to look at processes, including ancillary processes that address environmental procedures, automation, as well as developments in core, tried-and-true areas like chrome plating."
It helps that AGS has access to its sister company, Tiercon, which is a Tier 1 supplier of exterior components and systems, mostly involving plastics.
"We are on the cutting edge when it comes to deploying other people's research and development," says Boulton. "For example, on the Tiercon side they are innovating processes, doing cool things with materials, and improving designs."
The third component to AGS Automotive's success–flexibility–is based on the realization that the industry is not as static and predictable as it once was. The proof lies in the recently signed trade deal with Korea, with its three year tariff phase-out. Jayson Myers, president and chief executive officer of Canadian Manufacturers and Exporters, Canada's largest industry and trade organization, has described this schedule as "quite aggressive".
The only constant is change
But the Korea deal is indicative of a global reality in which the only constant is change, and in which disruptions can become opportunities to gain market share.
"One of the interesting things about us is our flat and lean management structure," says Boulton. "We learned the hard way that you have to be able to spin on a dime; and the bigger you are, the harder that is."
In fact, during the downturn in 2008-09, one of AGS's major customers went bankrupt. How did AGS's management and staff respond? They went in and ran the other company.
"There was no other way to get a part," says Boulton. "To succeed in this market you have to be smart and committed, with workers not bound by job description."
The result is a nimble company with a flat and lean management structure that values simplification and automation. One that can–as Boulton says–"jump the ice floes" when faced with a challenge. SMT