AUBURN HILLS — Canadian auto supplier Martinrea International launched its US$26 million technical centre in suburban Detroit last week, a move that promises to bring its auto-making customers more r&d and other services for fluid management systems and metal parts production, but CEO Pat D’Eramo has plenty of challenges ahead as the gleaming new facility recruits more engineering talent.
The construction of the centre was supported by partnerships with the state of Michigan and city of Auburn Hills, Mich., executives said May 17 at the building's grand opening. Martinrea is getting a US$420,000 performance-based grant from the state and an eight-year property tax abatement valued at US$852,000 from the municipality. The Michigan Economic Development Corp. said last year the technical centre would create 60 new jobs and lead to US$1.7 million in spending on equipment and machinery. Martinrea currently employs around 15,000 people in eight countries.
The 108,000-square-foot (10,033-square-metre) tech centre took 19 months to complete and is currently home to 156 employees. The facility will ultimately accommodate the company's employees from its Toronto fluid lab, where the company is based, within a year, executives said. Among the biggest automakers Martinrea serves are Ford Motor Co., General Motors Co., Fiat Chrysler Automobiles, and Toyota Motor Corp. Those with facilities and technical centres in metro Detroit, which Martinrea executives say is a "hub" for the changing automotive industry, will be the first to benefit from the location shift.
DEMAND FOR TALENT
D'Eramo emphasized an increasing demand for access to talent, technology and resources as reasons for the expansion and spoke on the role the centre’s construction holds in the company's future growth, particularly with becoming an economic influence locally and statewide.
The company's revenue last year declined seven per cent to C$3.69 billion (US$2.88 billion) from the year before, it said in its annual report to shareholders, which it attributed to changes in customer contracts. Adjusted earnings grew 27 per cent to US$165.5 million while the company's adjusted profit margin grew two percent to 10.9 per cent.
"It became evident we needed to do something more," D'Eramo said. "This tech centre does an excellent job in allowing us to move forward.
"[The industry] is getting sexy again.”
Michigan Gov. Rick Snyder said transformational trends within the industry, particularly within the state, introduce challenges to automakers and suppliers that can be addressed by new investments. The company's interest in tackling these challenges was much of what led to the state and local partnership with Martinrea.
"There has been no more exciting time in the auto industry since its inception than now," Snyder said. "If you're in the industry, there is probably no more challenging time."
Later, D'Eramo told Automotive News education is a challenge the company faces, particularly with filling new jobs that are still developing. Another challenge is making the company flexible for workers who haven't traditionally been in the industry. D'Eramo said challenges stem from having too many jobs to fill but a gap in recruiting workers with the training necessary for the industry.
"The projections are that there's a substantial gap coming," D'Eramo said. "So, how do you make automotive and manufacturing more attractive to this generation as well as women who are available, but not in our industry – it's almost half the workforce and only a quarter are interested, and less in automotive."
Chairman Rob Wildeboer spoke to Automotive News on the state of North American Free Trade Agreement talks. The United States, Mexico and Canada are currently in negotiations in modernizing the agreement, but have faced delays and missed unofficial deadlines to get a deal done due to disagreements on some parts of the agreement. Reports say the Trump administration's demands for renegotiating aim to bring auto manufacturing jobs back to the U.S.
Martinrea, Canada's third-largest auto supplier, serves customers in all three North American countries. Wildeboer noted being stationed in both Ontario and Michigan proves advantageous, but said he is looking for better jurisdiction negotiations.
"We can't find enough people for the jobs," he said. "We need to have a low-cost jurisdiction."
Martinrea International Inc., of Vaughan, Ont., ranks No. 68 on Automotive News' list of the top 100 global parts suppliers, with estimated parts sales to automakers worldwide of US$2.95 billion in its fiscal 2016.