Columbus Foundry finding new life through new owner Chassix

tadams@ledger-enquirer.comFebruary 2, 2014 

  • ABOUT CHASSIX
    • Southfield, Mich.-based Chassix is the only casting and machining auto-parts supplier to offer around-the-clock design and engineering capabilities, with manufacturing operations in the United States, Mexico, South America, Europe and China, according to its website.
    • Chassix, with $1.2 billion in annual sales, was launched in April 2013 following the merger of SMW Automotive LLC and Diversified Machine Inc. The newly combined business produces precision ductile iron and aluminum chassis components, with more than 3,700 employees in 26 locations in every key region of the world.
    • The Chassix footprint includes Columbus Foundry, an iron casting operation at 1600 Northside Industrial Blvd., and the Columbus Machining operation at 1558 Northside Industrial Blvd. The facilities are located just south of the Bradley Park Drive shopping area.
    • Columbus Foundry now has about 590 employees, who produce brackets, brake components, control arms, knuckles and supports.
    • The Columbus Machining facility employs nearly 50, assembling and machining knuckles, wheel hubs and assemblies.
    Source: Chassix website, company officials

In fall 2009, Columbus Foundry appeared to be on its death bed, with bankrupt owner Intermet Corp. delivering a letter to the Georgia Department of Labor -- its final 169 workers were being laid off.

Behind the scenes, a Wixom, Mich.-based company called Diversified Machine Inc. was making a deal to pull the auto parts foundry out of the fire, then build production back to profitability.

"It's going to grow quite a bit," said then-DMI Chairman and Chief Executive Officer Bruce Swift. "The business that's in there right now we'll be doubling over the next 12 months. So the plant's going to get pretty busy pretty quickly."

In hindsight, that projection is certainly on target, if not a bit understated. The 350,000-square-foot foundry at 1600 Northside Industrial Blvd., just south of the Bradley Park Drive shopping area, has not only grown to 590 employees, but it has also hitched its wagon to a company that ultimately is the property of Tom Gores, billionaire owner of NBA's Detroit Pistons.

Los Angeles-based Platinum Equity -- which specializes in buying, selling and operating businesses -- is headed by Gores, whose company bought DMI in December 2011, quickly followed by the purchase of Troy, Mich.-based SMW Automotive Inc. in January 2012.

Platinum Equity and Gores -- whose personal website has the quote, "You can't control the market. You can control your company." -- combined the two auto parts companies last April. Chassix, a play on the fact that the firm manufactures vehicle "chassis" parts, became the umbrella name.

Hired to run Chassix was Robert Remenar, an auto industry veteran and top executive with Delphi Corp., Delphi Steering and Nexteer Automotive. The global company is now headquartered in Southfield, Mich., a suburb of Detroit.

At the time of their union, DMI and SMW were pulling in a combined $1.2 billion in annual sales, according to Chassix and Platinum Equity. Remenar and his management team have spent the last several months improving their plant sites and looking for additional customers to ramp up production.

'We've fixed up the house'

In a recent conference call at Chassix offices in Columbus, Remenar said the local foundry and a sister machining plant set up in a portion of the Char-Broil space in the industrial park is critical to his company's growth plans.

"We are proud of what we've done in the factory. We've fixed up the house, if you will," he said of the Columbus operation, in which Chassix has invested more than $10 million after finding the foundry property less than well-maintained. "We're seeking more business. Because of the dedicated workforce we have down there -- and that's management and labor -- we want to place more business in that location."

A recent tour of the foundry, apparently built on the site in the mid-1960s, found workers turning scrap metal -- magnesium, manganese and copper alloys -- into various "safety critical" parts, such as steering knuckles and brake components used to steer and stop cars and pickup trucks.

Furnaces are used to heat the metals up to a lava-like 2,700 degrees before it's poured into vat-like containers bound for an area where workers rake "slag" off the top, ridding the eventual ductile iron of impurities.

"The melting process is automated, but the slagging and the temperature checks are all manual," said foundry general manager Robert Bridges during the tour, a distinct smoke wafting through the facility that he said is within federal safety requirements.

When the iron is brought to exact specifications, it is then poured by hand levers into casting molds. Sand also is used to help form the shape of the parts, with a four-piece mold making brake parts every 9.7 seconds on one of the production lines.

Toward the end of the process, workers separate some of the completed castings from the sand using hammers. Bridges said those employees receive a salary premium and additional breaks because of the rigorous nature of the chore.

The iron auto parts are then loaded into boxes. Some will be trucked next door to the machining plant that opened in November, while others will be shipped to other Chassix plants or customers' own facilities for additional assembly. Machining itself smooths the rough edges and any imperfections from the parts.

'State-of-the-art' facility

The opening of the 96,000-square-foot machining operation in Columbus is aimed at streamlining the production process, said Tom Bane, vice president of operations over machining at Chassix. It currently employs 47, with plans to increase that to 60 before the year ends.

"The opportunity here is that as the foundry grows new business or the machining grows new business, they share in the rewards," said Bane, pointing out the company intends for the Columbus site to be "our state-of-the-art facility."

The machining operation, which is a combination of manual and automated work, could top out at about 130 employees, depending on what types of new business Chassix lands down the road, he said. High-volume contracts will require more automation, while lower-volume ones will use human operators much of the time.

Mark LeForge, general manager of the Columbus machining plant, said he has found good talent in the local area in the early months of his facility's operation. He hopes to work with Columbus Technical College at some point to develop some type of training program.

"There's a fair level of talent that we've been able to pull in. If not, we would have had to do a lot of retraining. So we've got some good people, good experience and good operators," said LeForge, noting Chassix has picked up some workers from Goldens' Foundry, some former Cessna Aircraft employees, and a few from the South Korean auto-parts companies in West Point, Ga., where Kia Motors operates a major auto assembly plant.

Supplying major automakers

Bane stressed that Chassix is the largest manufacturer in the world that makes both aluminum and cast iron safety critical parts that large auto companies -- known as original equipment manufacturers or OEMs -- must have in the assembly pipeline on a steady and reliable basis.

"We don't go out and drum up business," he said. "It knocks on our door because we are one of the few that have that (capability)."

Chassix parts, he said, can be found on vehicles assembled by the major U.S. automakers, including General Motors, Ford Motor Co. and Chrysler, as well as Nissan and Mercedes-Benz. It has yet to do any business with Honda and Toyota, which have their own supply network.

Foundry manager Bridges said this is his second stint with the Columbus plant, the first time with Intermet before leaving in 2000. He returned last year as Chassix was being created from DMI and SMW and is pleased at the progress being made by the company that once had one foot in the grave.

"We still have a way to go, but it's coming along with blood, sweat and tears and being frugal with the money and spending it on the right things," said Bridges, recalling the heyday of the foundry, when it employed more than 1,100 people in the Columbus area.

"I think it all goes back to the people. At Columbus Foundry, there's a lot of people with a lot of seniority and a lot of heart," said the GM, who knows of some employees with more than three decades of experience at the plant, meaning they've lived and worked through several up-and-down business cycles and -- like the foundry -- have survived.

Playing a 'game of pennies'

It's that fortitude and talent of the employees, along with smart financial practices, that Chassix CEO Remenar is counting on moving forward. He describes the competition in the automotive industry as "very ruthless" and a "game of pennies," particularly with the major automakers looking to pinch expenses and get any kind of edge they can find on their rivals.

"The auto industry is one of the thinnest margin businesses there is," he said of the car companies' dealings with parts suppliers such as Chassix. "They are not willing or able to pay a penny more than their next best deal."

That factor, stressed the CEO, means the Columbus operation, like its parent company, must remain a stickler on overhead costs and infrastructure. Remenar even answered his own phone recently when contacted by a reporter.

He said the company wants to offer competitive pay to employees, make certain they have a safe work environment, and be good corporate citizens and members of the local community.

"We're proud that we could come in and rescue it and bring it back to life," he said of the Columbus Foundry. "But it's a tough journey and our margins are still not where they need to be to sustain the growth we would like to have there. So we've got to get better at what we do."

Not that there won't be growing pains along the way, possibly locally, but certainly within Chassix as a whole. For instance, the company is closing a casting foundry in the Milwaukee area early this year, eliminating 218 jobs, according to the Milwaukee Business Journal. Another facility in the northwestern Ohio community of Edon will be shuttered by the end March, cutting 82 jobs, reported the Toledo Blade.

Those moves come with the auto industry now hovering around 16 million light-duty vehicle sales per year, which is dramatically higher than the 8.5 million units sold annually entering the Great Recession, Remenar said.

Cautiously optimistic

That dip during the economic downturn also shook out auto-parts manufacturers operating on the edge financially, he said. Those suppliers without enough production volume to justify their overhead expenses collapsed. That left stronger survivors in better position to rebound, but not without plenty of healthy caution.

"I'm optimistic, but at the same time I've very cautious," the CEO said. "We cannot make the same mistakes that were made in the past, and we cannot afford to be careless in any way, shape or form with regard to economics."

Remenar said he would love nothing more than to see the Columbus Foundry and the machining plant grow to more than 1,000 employees combined. After all, both now have open production capacity.

"I have ovens and furnaces on, and infrastructure there," he said. "We would like nothing more than to fill it. But to fill it, we have to do it at pricing that's attractive to our customers, yet still covers our cost of capital and allows us to earn a fair return."

And contrary to the plant closings in Wisconsin and Ohio, Remenar said he enjoys resuscitating businesses that are moving toward their death throes. He likes to see them thriving and growing again, and that certainly includes Columbus. But, again, the overriding caveat is that there is no room for waste and error.

"We like preserving jobs in the U.S. We like preserving manufacturing capacity in the U.S.," the CEO said. "Nothing pleases me more personally. I can sleep great at night because I like to say, 'Hey, here were jobs lost. Here was a shuttered factory. You know what? We've brought it back to life.'"

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