The Southwestern Michigan Coalition proves that success can be found in cooperation with industry peers, not just competition, with benefits to be realized by all. It's well-known that Michigan's manufacturing industries have suffered tremendous losses over the past five years. In the molding and mold manufacturing industries, many companies have been forced to close their doors, shrinking the number of suppliers that primarily serviced the automotive industry in that state. One group in the state, however, not only survived the downturn and subsequent recession, but grew their businesses thanks to some encouragement - and tax abatements - from the state of Michigan through the formation of the Berrien Tooling Coalition.
In 2005, Michigan recognized it had a problem. Many small-to-mid-sized suppliers (molders and moldmakers, among others) were going out of business and those that were left were struggling to survive. "These industries were deemed critical industries for the state," says Ken Patzkowsky, president of Hanson Mold in St. Joseph, MI, and one of the 16 members of the Berrien Tooling Coalition, which also comprises metal fabricating and machine shops, welding and stamping companies in Berrien County, with fewer than 100 employees. Hanson Mold operates from a 50,000-square-foot facility and employs 90 people. The company's customer base is solely automotive.
"Through a survey, the state realized that most shops are smaller enterprises," explains Patzkowsky. "Many times companies can't take on large programs from certain customers because they don't have the capacity or all the capabilities required. However, if they work together, they can be awarded larger projects. Potentially, that would keep the work in Michigan."
"What has made our area survive - obviously we're not in the ideal location as there are no big OEMs in Berrien County - is that as a group we work together," said Bill Mach, president of Mach Mold Inc., a 46-person mold shop in Benton Harbor, MI. "We have several organizations that have spurred this along over the years, including the AMBA, the NTMA and certainly because of the Berrien Tooling Coalition activity over the past several years, we've seen an increase in our work loads."
Patzkowsky concurs. "The AMBA already had a good group of members in this area, but the Coalition took what some of us were already doing and took it to the next level," he says.
One of the goals the state hoped the Coalition would achieve when it came to Berrien County was better equipment utilization, something that Mach says the shops in the area have always done to some extent: "We call it workload balancing."
The State of Michigan challenged the manufacturers in Berrien County to formalize their cooperative efforts, actually set down guidelines for the cooperative efforts, and hold regular meetings at which attendance is mandatory for members. The State has since designated the region as a Tool and Die Recovery Zone. In return for developing and following the Coalition's structure, the state provides tax abatements, both property and income, to the participants of this unique cooperative. The Berrien Tooling Coalition is a registered non-profit organization.
"We had to jump through some fairly substantial hoops in developing the Coalition, including submitting regular reports, establishing the guidelines, and holding meetings," Mach says, "but, to a great extent it was the formalization of things we'd done in the past."
Touring each other's plants
One of the first steps the group took was for each member to examine its customer base, and look at the RFQs that were coming in. A great deal of the large programs that the automotive industry outsources contain many components other than just moldmaking or fabricating metal parts. Often, these packages contain all the elements of producing an entire assembly for a vehicle including molds; metal stampings and fabrication; auxiliary tooling; and special machines and fixtures.
Secondly, each member company listed its capabilities and areas of expertise, and the type of work it would like to do. "We then went on plant tours of everyone's shop so that we had a good idea of what they could do," says Mach. "So we really got to know each other very well, and now we can call and say 'hey, is there something we can do for you? Or is there something you can do for me?'"
The biggest challenge to the group was who should handle the RFQs and the subsequent purchase orders that may result from a winning bid. It was decided that whichever company made the sale would handle the purchase order. The group then meets, decides which company is capable of doing which part of the package, and which company has machine time to tackle the various jobs. "The benefit to this method is that the customer has one point of contact and gets a complete project through a single source," says Mach. "If I get the project, my customer stays my customer and the others are subcontractors to me."
Each company then does the type of job for which that particular company is best suited. "I do some portions of the package that other shops can't do, and others take on the portions of the program that I can't do."
Smaller coalition, better logistics
For logistical purposes, the group felt that it was "strategically advantageous" to limit the members within the county, and hence the name Berrien Tooling Coalition. "As the distance increases, so do the logistical issues," says Mach. "When you have a job you need done and you're under a time constraint, it's better to have the have the work done close - less than one hour's drive."
The Coalition also works with the M-Tech Training Center in Berrien County to find new talent for the various metal working trades represented by the group. Patzkowsky adds that they often hold technical and educational meetings to encourage students to stay in the County and get a job with one of the Coalition's members.
Both Mach and Patzkowsky agree that now that business has picked up thanks to the cooperative efforts of the Coalition, the next effort is finding skilled employees. "Now we're back to challenge of finding qualified people," says Mach, with Patzkowsky also seeing a "tremendous shortage of skilled talent right."
Eventually the tax abatements will phase out over a period of years, but Mach notes that the benefits of forming the Coalition will be realized in the increased business that the member companies will acquire through their cooperative efforts. "There are more reasons to do this cooperation than just the tax breaks," Mach adds. "We'll continue these efforts beyond the tax abatements.