Auto Parts Makers Change Tack, Seek Fair Winds
Firms Struggling On Clean Energy, Defense Contracts
Thursday, August 13, 2009
EATON RAPIDS, Mich. -- Determined not to sink along with other links in the auto supply chain, family-run Dowding Industries borrowed $12 million to leap into the green future and leave the dirty assembly line behind.
Almost two years later, Dowding has built the plant and bought the machines to make parts for wind turbines, providers of clean energy intended to help the country become less reliant on foreign oil. But so far Dowding has found little demand.
Instead, Dowding's big new machines are making a 35-foot-long, 20-ton steel part for a high-powered water jet system used to cut disposable diapers, brownies and even steel. The plant is running, but hardly at a level the company expected.
"We've never stepped out this far," Chris Dowding, the chief executive of the 44-year-old company, said of borrowing the $12 million. "It is scary and frustrating that the market isn't there yet. You're banking 40 years of your life on a new deal. Everything we have is now highly leveraged because of this new business."
She compares it to a kid getting a graduate degree. "You're proud of the accomplishment, but when the economy is bad all you're thinking is he just needs a job. That's us. We just need a job."
Here in Eaton Rapids, a town of 5,200, many residents work in auto and auto parts plants in and around the nearby state capital of Lansing and they have an intimate view of the industry's struggle. The Dowding family and dozens of businesses that once thrived by supplying the Big Three American automakers are trying desperately to adapt.
They are doing exactly what economic development officials and politicians hoped they would. Some are trying to produce parts for medical equipment. Others are switching to aerospace and defense. But it's harder than many expected. Expense, time and a hostile economy can clobber even the most well-thought-out move to a new business line.
Over the last six months, more than 500 auto suppliers have gone to workshops around Michigan, set up to help them transform themselves. Not all will survive. At least 500 to 600 of the nation's roughly 5,000 suppliers are expected to go under in the next few years, according to auto industry analysts at CSM Worldwide.
In the Family
Chris Dowding comes from a long line of people who worked with their hands. Her grandfather raised dairy cows and worked in Detroit's auto industry. Her father, Skip Dowding, opened his own business, making auto parts in 1965. Skip, now 77, worked his factory floor six days a week, sometimes working through the night at the shop to keep up with orders from the Big Three automakers. Even so, he tried to stay diversified, selling wood-burning stoves, building tractors for Third World countries, making ice-fishing gear. The company's auto business has made a range of parts, including turn-signal levers, gas tank nozzles, and brackets for alternators and transmissions.
Twelve years ago, Skip and Chris, a 50-year-old Northwestern MBA graduate, hired Jeff Metts, a 55-year-old former football player with a firm handshake and a thousand-watt smile, to help beef up sales and diversify the business still more. Two and a half years ago, Jeff and Chris married. Chris is considered the bean counter. Jeff, who is president, and Skip, chairman, are the visionaries.
Metts launched a full-court press to get into wind turbines after he and Skip heard a pitch at a Los Angeles trade show -- it would be the next hot manufacturing business. Auto parts have gone from 100 percent to 10 percent of their sales, and they're hoping wind turbines will become the company's largest revenue stream, though for now they're relying on other lines of work, including making parts for satellites, dump trucks and subway cars.
But they're finding that nothing takes the wind out of a new idea like the worst recession in decades. Deals with several banks and venture capitalists have not worked out.