How to succeed in tough times. (Supply Side).

Blackhawk Automotive Plastics, Inc. has developed a Formula For business success that provides customers with an unusual combination: low-cost parts and sophisticated engineering services. The current soft economy notwithstanding, it plans to double its business in the next few years.

Clifford Croley, president and CEO of Blackhawk Automotive Plastics, Inc. (Salem, OH), calls his company a "'tweener." That is, with around $200-million in annual revenues, the maker of interior and exterior plastic parts is neither particularly big nor small for the automotive industry. Which means it is attacked from one side by nimble competitors and from the other by companies that can command huge economies of scale. But Blackhawk has not only avoided the difficulties of many automotive suppliers its size; it's having a record year and has plans to rapidly expand.

Croley says he and his management team have "cracked the code" of success as an automotive supplier by delivering both low-cost parts and high-quality engineering services to their OEM and Tier 1 customers. That may seem oxymoronic on the surface, especially for a supplier of injection molded plastic parts, which are often mere commodities. But Croley outlines the methodical way that Blackhawk has forged its success as a template for others to follow:

* Be the low-cast producer. It doesn't matter how good your engineering is if your price is so high that customers won't let you get a foot in the door. Blackhawk chums out parts for less largely because it has a tight grip on costs. And the prerequisite to controlling them is knowing what they are. It assiduously tracks factors including labor costs, scrap rates and material costs; which seems like a no-brainer for any company. But Croley maintains that many firms don't have a good real-time knowledge of their costs because they don't have the procedural or computer systems in place to account for them. Blackhawk does, so it can quickly identify and attack areas of waste. The company also maintains a labor policy that reassigns workers rather than laying them off, which has led to a very low (2%) turnover rate and reduces hiring and training costs.

* Use design as a strategic weapon. Unlike many of its competitors, Blackhawk does a lot of the design work on its parts. It co-locates designers at its customers' facilities, which speeds communication and eliminates reduplicated efforts. And while many manufacturers would see this as an unnecessary expense, Croley says it gives Blackhawk a competitive edge by strengthening the relationship with the customer and making its parts more than commodities. "We have an intimate relationship with our customers," explains Croley. "They don't just call us up and say, 'Hey, quote me this part'." One recent example of this custom design approach involved the air vents on the Chevrolet Impala instrument panel. General Motors' design czar Bob Lutz wanted, in effect, a Mercedes look at a chevy price. Blackhawk was able to use its long design experience with air vents to provide the low-cost but upscale look and win all of the Impala business.

* Control key technologies and processes. Outsourcing seems to be the name of the game these days, even for smaller suppliers, but Blackhawk has kept many processes in-house to better control quality and costs. For example, a big part of the company's business consists of parts with thermoformed patterned appliques, like wood grains and faux carbon fiber. But instead of outsourcing the vacuum forming process as many of its competitors have done, Blackhawk runs its own high-speed vacuum forming machines which are monitored closely by its engineers. Since even minor irregularities in the appliques caused by the forming process can lead to scrapped parts, keeping it in-house greatly reduces the time needed to detect and fix problems, and shrinks the pile of defective parts. And though there is obviously a higher up-front investment in keeping key processes in-house, Croley says maintaining control of quality and scrap is well worth it in the long run.

* Innovate. The inertia of "the way we have always done it" can drive even a well-run company into extinction, so Croley seasons his mostly straightforward business model with both small- and large-scale innovations to add value and stay top-of-mind for his customers. On the small side, Blackhawk has instituted measures like a robot-applied silicone bead on the back of its impala instrument panels that vulcanizes at room temperature. The bead reduces squeaks and rattles, as well as the need for hand-applied felt. It does so at significantly lower labor costs, and with no need for heating ovens. More far-reaching is Blackhawk's application of nanotechnology to its parts. The company has begun producing thermoplastic olefin (TPO) parts that substitute microscopic nanoclays for the usual talc filler. (For more information on these nanocomposite parts, check out http: //www.autofleldguide.com/columns/gary/1001mat.html.) The parts are lighter and better looking than their traditional counterparts and are poised to form a large part of Blackhawk's business in the future--a potential that wouldn't exist if the company had not innovated in the first place.

Lest you think this is just a paean to the wonders of Blackhawk, you should know that the company is far from perfect. It is just now promulgating lean manufacturing practices throughout all of its plants; it has not yet optimized machine location for better in-plant logistics; and it still has such glaringly wasteful practices as packing and unpacking parts just to move them across the plant. These are practices that stand starkly at odds with the company's drive to know and control all of its costs, and are on the list of items to be improved. However, despite these faults, Blackhawk Plastics' success in other areas makes its business model worth examination and, perhaps, emulation.