Booming North American sales of the Toyota RAV4 have been a real boon for a Tier II supplier in Ontario.
Global Plas Inc. of Concord, just north of Toronto, says the vehicle’s popularity in Canada and the United States is the biggest reason the parts maker proceeded with a $7-million expansion.
RAV4 is Toyota’s top-selling vehicle in both Canada and the United States. Canadian RAV4 sales are up 23 per cent to 37,869 units through July. While sales are essentially flat in the United States — up just 0.3 per cent through the first seven months — they totalled 240,255.
Global Plas makes door and fender parts for the recently revamped crossover, which underwent a makeover for the 2019 model year. As a Tier II supplier, Global Plas feeds up the chain to Toyoda Gosei, which in turn supplies Toyota.
“We ended up getting this work because Toyoda Gosei realized that they have certain directives from their head office and they wanted support in producing these parts,” said John Hunjan, director of finance and material planning and logistics at Global Plas Inc. “That all comes down to the success of the RAV.”
The all-new RAV4 is assembled in nearby Cambridge, Ont., southwest of Toronto. Global Plas says its production is increasing to 480,000 units per year to meet demand.
Global Plas expanded by purchasing a 71,000-square-foot building a few blocks away from its 55,000-square-foot plant. The company added new production lines and installed four injection molding machines and automation equipment at the bigger building. It also hired 50 full-time employees.
“It was a really large undertaking for a company of our size,” Hunjan said.
Originally, the project was being funded through loans from the Business Development Bank of Canada, Export Development Canada and National Bank. But, the scope of the project required even more funding so Global Plas turned to the federal government, which provided $2.5 million.
“The RAV4 program really helped us out,” Hunjan said. “By getting this program, we got the building, and it allows us to put more machines on the floor and market ourselves to more customers.”
Global Plas also counts Tier I supplier Denso Manufacturing as a customer.
Hunjan said the RAV4 success has “opened up the doors for us to other opportunities with other customers, as well.”
“Because of the RAV4 business we’ve managed to put ourselves in a position to secure our future for the next little while,” he said.
“A lot of the time, I find Tier II suppliers are chasing their tails a little bit in terms of trying to stay afloat. The success of companies like Toyota and Honda and big names are kind of what we’re trying to achieve.
“Tier I suppliers are viewing us as more of an extension of themselves rather than just a separate supplier.”