March 6, 2006
MiBiz West

Tim Gwozdz

GRAND RAPIDS — ADAC Plastics Inc. is now wearing a much larger pair of shoes. A recently formed business alliance has given the privately owned automotive supplier a huge global footprint, a footprint that is already opening doors to new business opportunities.

ADAC joined Witte-Velbert GmbH & Co. KG of Germany and Milwaukee-based Strattec Security Corp. in a new international enterprise called the Vehicle Access Systems Technology (VAST) Alliance. The alliance will focus its efforts on the global market for vehicle access systems.

“We view this as the right step for our future,” ADAC President and COO Jim Teets told MiBiz.

That “right step” is a confident step forward into the global automotive marketplace. One aspect of the VAST Alliance is VAST LLC, a joint venture that supports the alliance partners’ operations in the United States, Mexico, Germany and the Czech Republic, plus joint ventures in China and Brazil.

“There are three global door handle jobs that we’re quoting right now for Honda, General Motors and Nissan. If we didn’t have this global footprint, we would not have been quoting them,” Teets said.

ADAC is preparing to produce what Teets refers to as its first “global door handle” for Honda. It will manufacture both interior and exterior handles for the European version of the model and interior handles for the North American version. The European handles are being made in conjunction with Witte in Germany. They will be shipped for assembly to the UK Honda plant. ADAC is producing the North American handles in West Michigan and shipping them to Honda’s Ohio plant. Teets said that is just a small example of how global projects can be secured through the alliance.

The desire to partner and establish a network of worldwide resources has been in the works for a while Teets explained. ADAC was engaged in conversation with Strattec for a number of years to explore the possibility of doing business together in North America. But 18 months ago ADAC officials decided to search the globe for a partner that met its qualifications. As it turned out, aligning with two partners —Strattec and Witte — presented the best opportunities.

“We have complementary products, plus our management style, philosophies on how we treat people and our business practices are very similar,” Teets said.

If ADAC would not have succeeded in finding partners to give them a global presence, Teets told MiBiz the company’s future would be murky.

“We wouldn’t have closed our doors, but it would have led to a stagnation of the company. And when you stagnate and profits go down, you have to adjust the employment force to match your sales,” he said. “Instead of trying to weather a few years, we decided to be proactive.”

The VAST Alliance enables ADAC to “spread the risk” from both a capital and a human resources standpoint, remarked Teets. It also enables the sharing of technology expertise among the firms. The alliance has a home markets-based cross-licensing agreement, explained Teets.

“If ADAC needs to support GM production in Europe, Witte would produce the European volume for GM and Witte would pay ADAC a commission for that privilege. Likewise, if Witte requires support for Volkswagen in North America, ADAC will handle the production here under the same agreement.”

Witte manufactures automotive latches, hinges, specialty fasteners and door handles primarily for the European market. Strattec designs, develops and manufactures ignition, door, trunk, tailgate and glove box lock cylinders, conventional mechanical keys, high-security transponder keys, and keys integrating remote-entry electronics along with other lock accessories. ADAC produces molded and painted interior and exterior door handle components, exterior trim, cowl vent grilles and marker lighting. Teets sees a lot of synergy between the three companies’ products and the research and development work being done among them.

“One thing we add to the party is our finishing capability, primarily body color painting. We have unique rotational paint systems at our facilities in Muskegon and Kentwood,” Teets said. “We’re in preliminary discussions with our partners on how we could leverage our paint capability in other parts of the world.”

The fear of going global is often the fear of jobs lost at home. However, Teets assured MiBiz that design, engineering, research and value-added manufacturing would remain in West Michigan.

“Our chairman and CEO Ken Hungerford and I always want to make sure that the value-added products and the technological parts of what we do are kept in West Michigan. But in the future there might be some low-tech, non-value-added jobs that might over time be produced in another region in the world.”

Teets has stated that the VAST Alliance will help ADAC sustain its present workforce, however the North American elements of the global jobs that are now being quoted could mean more work for West Michigan.

“ If we get those jobs, they will be produced out of our Muskegon facilities because they require body color paint capabilities,” said Teets.

With last month’s announcement of the VAST Alliance, ADAC introduced a new corporate identity and logo. The new entity is now ADAC Automotive, a name officials say better reflects the company’s automotive focus.

ADAC’s West Michigan operations generate $160 million in sales; its UK partner has sales of $65 million. The privately held company has 1,300 employees, including 1,000 in West Michigan.

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This article appeared in the March 6, 2006 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who do business in West and Southwest Michigan. For further information about MiBiz Network, visit www.mibiz.com.