The TPR interviewed Peter McElroy, Vice President at Key Plastics in Northville, MI.  A Key Automotive Group company, Key Plastics is a full-service, global supplier of injection molded automotive components.  Key supplies products to most OEMs and Tier One suppliers across North America, Europe and Asia. 

What is your company niche, and what does your company do that is notable, unique or different?  

That’s always an interesting question… For Key Plastics, we focus 100% on the automotive industry which helps with our expertise and talents in that sector.  It’s fairly unique in the injection-molding realm as most of our competitors serve other markets in addition to automotive. 

Automotive Industries Magazine named us a “Quest for Excellence” winner for the past three years, including Best Plastics Supplier in their 2004 survey. Around 12,000 people from quality, purchasing and engineering professions at automotive OEM’s and Tier One’s were surveyed. This recognition is significant for us because it is our customers who vote for the award.  They have continued to endorse us for three years since our acquisition in 2001. To maintain that level of consistency tells us we’re doing the right thing and we’re on the right track.

Another item that sets us apart is that we are aggressively investing in low-cost regions to support the growing Asian markets.  With our new joint venture in China, our global capabilities now encompass production, sales and engineering in North America, Europe and Asia.  This geographic diversity allows us to truly support the OEMs and major Tier Ones that are developing common, global platforms.  We are one of the few players in the automotive market that can make that statement. 

When and how did you get into the industry, what attracted you to it? 

Key Plastics was formed in 1986, a combination of Superior Plastics and Aline Plastics, with two plants and about $20 million in sales.  The founders of Key Plastics were originally attracted to the automotive market for the consistent production schedule – working from a stable and known market.  Further, in the late 80’s, it was an opportune time to convert metal components into plastic components for this segment. Exterior door handles and power steering reservoirs were are first product conversions and remain two of our best offerings today.  There are still many opportunities for increased plastic content in automotive and there’s still a firm base to work from.  I know we’re hearing a lot of negative news about the automotive industry in North America these days, but globally automotive is growing and flourishing.  It’s actually growing in every market and it’s a question of whether you are aligned with the customers and have a balanced customer portfolio to grow along with them.  Because of this, we have found we do not have to be diversified outside of automotive, just within that industry, and we are.

Relate a notable "best time" for your company.

Probably the best and most notable time has been the last three years when we were purchased by the Ewing Management Group (April 2001).  The management philosophy and the disciplines that they provide really simplify the management tools that allowed us to create and maintain our success to this day.  Before, there were ups and downs, but since 2001 there’s been a consistent focus and discipline so that we feel we get stronger every day, even in the face of the adversities we all deal with as molders. It is truly a cultural shift that has helped make the recent years the most enjoyable.

Similarly, relate notable challenges that your company has overcome. 

Everyone has the cost management issues, but the most important for us has been the geographic legacy.  In Key Plastics we have a very diverse footprint, as we grew through acquisition in the late 90’s.  In some cases our facilities are in great locations and in others they are not so advantageous.  Our customers are moving to more cost effective locations.  On a limited basis, Key has been able to move where we need to be and not be in love with where we are ‘today’. We have the ability to make those difficult choices and execute the plans.  

Second, crisis management and tooling transfers are where we have been notably advantageous to our customers.  Our customers turn to us when they are having problems of all kinds, including quality, pricing, etc.  We have taken over some tooling programs in the middle of the night and had them up and running the next day.  Our calling card is being able to help customers by mobilizing quickly to solve problems.

When you are working on projects with your customers, what aspects would you like them to  better recognize?

Almost all injection-molded components in the auto industry are assembled into a piece of sheet metal or a larger module.  In almost every circumstance the injection molded component is the easiest to change.  In a perfect world, people need to recognize that continual changes, especially with short lead times, will degrade the project and cause problems.  Customers need to recognize the impact of engineering changes on the viability of primary molds.  When you finally release something, release it and let it go.  Think through the project up front and spend the time to design it right the first time. We have found that Asian automakers are much better at this than the traditional domestics as they respect the process.

List newly acquired technology, machinery or key personnel (in last year).

We’re large and very diverse.  We’ve got every form of injection molding machine that’s out there from our historical acquisitions. Our strength is in tonnage range and capacity within each tonnage segment.  

Technology-wise, our most exciting new technology is three-dimensional electro luminescence (EL), a patented new application of an old technology.  EL lamps have existed for over 30 years as flat panels. They offer numerous advantages for decorative applications in almost any color, along with several tangible advantages including thin design, cold light and power consumption. The technology in question allows for the flat panels to be formed as an in-mold appliqué. New formulations for the inks and thermoforming techniques finally allow this light source to bend without cracking and maintain uniformity of color. You can have the lamp open as the A-surface, embedded underneath a metallic and/or wood grain topcoat, or a multitude of other variations. This new application allows the OEM design studios another decorative technique for brand differentiation. We are currently working with several OEM’s for near term vehicle applications that may shock the market.  

Has your company recently expanded?  Plans to expand or form partnerships/alliances? 

The most significant event was a very large acquisition in September 2004 of automotive parts supplier Kendrion RSL and Systems Group.  Our previous European operations were mainly in France, Italy and Portugal with limited tonnage range to 750 tons.  With Kendrion and their $250 million in additional revenue, we now have an additional presence in Germany, Spain, the Czech Republic and Poland with a tonnage range over 2,000 tons.  This helped balance our customer and product portfolio, while allowing access to new, low-cost manufacturing sites in Eastern Europe.  

In May of this year we formed a joint venture with Jiehua Automotive Trim Development Center, Shanghai, PRC. Located West of Shanghai, the new partnership is called Shanghai Key Automotive Plastic Component Company, Ltd.  It gave us our first two production facilities in the Asian market – both are located in Shanghai.  That JV was completed and official on Aug. 31^st.  It has started off very well. 

What started as a $25 million JV has already booked revenues in excess of $50 million for 2007.  This joint venture is targeted to support the local Chinese market. The current book of business is almost exclusively with the domestic OEMs in China.  We are focused on that market given its potential for growth in the near term.  They are currently making 2 – 3 million cars per year and intend to increase that to 9 – 10 million autos per year in the next 10 years.  There are still some things they have to work out in order to export their vehicles; however, they will be as much a threat as anybody else in the next 2 to 3 years.  They have every bit of the ability, the education and infrastructure to be a competitor in the global marketplace, they just have to form their own identity and stop copying current designs. European vehicles have a certain character, as do U.S. and Japanese vehicles. When the Chinese develop there own “brand” – watch out.  

Are you involved in any industry organizations or educational programs related to the trade? 

We are members of OESA (Original Equipment Suppliers Assoc.).  All of our facilities are involved in their local chambers of commerce.  Because we are so diverse, each facility participates in outreach programs and organizations as appropriate to their location.  Various employees are members of the Society of Automotive Engineers (SAE), of course, and we have participated in government relation fly-ins with MEMA (Motor Equipment Manufacturers Association).   

What do you think about changes occurring in the industry due to globalization?  How has it affected the way you do business?

It’s important to not be ‘married’ to the company you are today. You have to have the ability to change as the market changes. It is an unprecedented opportunity for molders but only if you understand it and have the fortitude to go with it.  Plant locations that are no longer viable have to be closed and the business relocated.  There is no other choice. As painful as it is on the people and community, you are also developing new jobs and supporting a new community somewhere else. Embrace it, be proactive, be professional and be the first to do it. 

What will the industry look like in 3 to 5 years? 

Greater consolidation - that’s the obvious answer.  There will be fewer players under $30 million in annual revenue as they are absorbed or just close shop.  It will be geographically different, too.  With logistics as they are today, plus JIT requirements, a lot of the tooling and injection molding facilities will have to move to low-cost regions such as the Southeast of the U.S. to support growing organizations such as Toyota, Honda and Nissan.  There will also be continued movement to Mexico and Asia for sub-components.  In the automotive segment, the world is changing and current suppliers have no choice.  We are measured on a full landed cost and if you don’t move, somebody else will.  

Additional background information: 

Number of years in business:  Established in 1986

Current number of employees:  1,600+ in Michigan; globally 4,100 employees

Current square footage (each location):  Approx. 2.6 million square feet globally among 39 plants.  30% of molds are built in-house. 

Additional locations: 

Key Plastics North American Manufacturing Operations Locations

United States

• Felton, PA

• York, PA

• Grand Rapids, MI

• Hamilton, IN

• Hartford City, IN

• Howell, MI

• Plymouth, MI

• Sault Ste. Marie, MI 

Canada

• Markham, Ontario 

Mexico

• Chihuahua City, Chihuahua 

Europe

• Czech Republic

• France

• Germany

• Italy

• Portugal

• Spain

 Asia

• China

• Japan

Website: www.keyplastics.com  

Types of tools built and/or run:  Injection molding – all forms, including one shot, two-shot, insert, vertical, horizontal and more. 

Industries served:  Automotive 100% 

World Headquarters
Key Plastics L.L.C.
21700 Haggerty Rd, Suite 100N
Northville, Michigan 48167
Phone: (248) 449-6100
Fax: (248) 449-4105

productinfo@keyplastics.com