Automotive News Canada - October 2017 - 5

* OCTOBER 2017

A successful supplier
is one that causes
no drama, CEO says

MARTINREA'S
Though a low-profile company, Martinrea has 44 plants
globally and 2016 revenue of US $2.95 billion.
(PHOTO: JOHN IRWIN)

By JOHN IRWIN
TORONTO BUREAU

DIVERSIFIED SUPPLIER
Martinrea International Inc. strives
to be like Casper the Friendly Ghost,
CEO Pat D'Eramo says.
The Ontario-based company is in
the midst of a massive reboot, digesting the acquisitions that spurred
rapid growth and making its manufacturing process leaner. The goal
is to make the company so effective
and productive that heads of automaker assembly plants don't even
know certain parts were produced by
Martinrea, D'Eramo said.
"If we can become like Casper the
Ghost, meaning they don't know who
we are until they need us, then we're
in a good position," he said.
Martinrea is one of the largest and
fastest-growing auto suppliers in the
world. Beginning in 2001, it ranks No.
70 on Automotive News's list of the
top global suppliers by 2016 annual
sales. The company is traded on the
Toronto Stock Exchange.
Growth has been fuelled by a host
of acquisitions, particularly in metallics, fluid-management systems and
aluminum. Most recently, in 2014,
Martinrea completed a takeover
of aluminum-components supplier
Honsel AG.
Martinrea began as Royal Laser in
November 2001. Following the acquisition of fluid-management-systems
supplier Rea International Inc. in
2002, the company changed its name
to Martinrea. It acquired several
more companies in the ensuing years,
including metallics suppliers Depco
International and SKD Automotive.
The acquisitions allowed the company to gain expertise in lightweight
materials and emerging technologies,
D'Eramo said.
The problem was that the plants
were too often inefficient, he said.

EX-TOYOTA EXECUTIVE
D'Eramo, a former vice-president
of manufacturing at Toyota, was
hired, in part, to fix that problem.
"I worked at Toyota for 10 years,

Ghostly
goal

and I'd been to a lot of really good
suppliers in my time," he said. "Some
of the plants I walked into during my
first week [at Martinrea] were some
of the better plants I had seen. And
also some of the worst plants I'd seen.
"One thing I saw was that the
plants that were better didn't necessarily share what they did with the
other plants because we were very
decentralized."
Drawing upon his experience, D'Eramo worked with other
Martinrea executives to develop a
flexible manufacturing model.
He said the idea is to make worker assignments more flexible on the
line. Instead of having a set number
of workers on a particular assignment, they can be flexed in and out of

MARTINREA FACTS
* Headquarters: Vaughan, Ont.
* Executive chairman:
Rob Wildeboer
* CEO: Pat D'Eramo
* Founded: 2001, as Royal Laser
* Employees: About 15,000
* Sales: US $2.95 billion to automakers globally in 2016. Ranks
No. 70 on Automotive News's list
of top global suppliers
* Operations: 44 plants worldwide:
13 in Canada, 13 in the United
States, 10 in Mexico, two each in
China, Germany and Spain, and
one each in Brazil and Slovakia
* Parts: Steel and aluminum body,
chassis and engine components;
fluid-handling components and
assemblies
* Products: Provides parts for the
Ford Escape, Chevrolet Equinox,
Ford Fusion, Ford Edge, Chrysler
300, Dodge Ram, Chevrolet
Impala, BMW utility vehicles and
more

trouble with other suppliers, you'd
go find out who the good ones are
and transfer business or get them the
business next time."
Martinrea Executive Chairman
Rob Wildeboer said that flexibility
will be key for the supplier moving
forward as automakers demand lighter parts and electrify more vehicles
to meet stringent fuel-consumption
regulations.
CEO Pat D'Eramo is rebooting
Martinrea to make production more
efficient. ( P H O T O : M A R T I N R E A )

stations depending on need.
"If our orders have dropped, you
can pull people out and manage your
margin. That's one of the secrets of
this."
Also, parts are delivered to and
taken from work stations in short
intervals - every hour, for instance
- instead of workers having to pile
up parts in large bins next to where
they work over the course of their
shift. With less space needed for each
worker and no need for forklifts to
take large bins away from them, plant
space is used more effectively.

LABOUR COSTS DROP
For Martinrea's Vaughan, Ont.,
plant, which builds much of the
lower frame for the Chevrolet
Equinox, floorspace use is up about
28 per cent, while labour costs have
fallen by about 16 per cent.
"You can run multiple products
through it," D'Eramo said. "When
the volumes go down enough, you
can run different products on the
line. Your capital lasts longer. You
can fluctuate your manpower based
on volume."
He said having more flexibility
to adapt to automakers' needs puts
Martinrea in a better position to
become more like Casper; an invisible but reliable supplier.
"The best suppliers we had [at
Toyota] were the ones we didn't
know about," D'Eramo said. "They
delivered on time every time and had
good quality. When you were having

READY TO ELECTRIFY
"Electrification is coming,"
Wildeboer said. "The speed is probably less than what the electrification
optimists would say, but it's coming.
We've geared our company to take
advantage of that."
He pointed to the Vaughan plant
as an example, saying GM was able
to reduce the weight of the redesigned Equinox by about 10 per cent
thanks partly to the lightweight parts
Martinrea provides.
Still, the supplier is not betting
entirely on electric vehicles and
hybrids. Wildeboer said there will still
be a future for the internal-combustion
engine, especially in North America,
even if it constitutes a smaller share of
overall vehicle sales.
"You also shouldn't bet completely
against combustion engines," he said.
"There are improvements being made
there all the time. You'll see a lot of
competition between electrification
folks and internal-combustion folks."
Wildeboer would not rule out
future acquisitions as a way to
expand the company's reach and
products, but Martinrea could accomplish similar goals through partnerships, particularly start-ups and electronics companies.
"Other industries have done things
better traditionally when it comes to
combining expertise and talent than
the auto industry has.
"But we're now seeing a lot of collaboration, sometimes between [automakers], and as they partner with
Silicon Valley, we have to do that.
"We can't have everyone spending capital on the same thing. We're
pretty nimble thinkers as far as that
goes." - ANC

Table of Contents for the Digital Edition of Automotive News Canada - October 2017