Volume 7 | Issue 2 | Year 2004

Simply put, MRC Industrial Group, Inc. (MRC) makes steel parts that hold your vehicle’s systems together: the bushings for the suspension components in your luxury sedan; the worm gear for the seat regulators and window regulators in your multi-passenger SUV; the rivets and welding nuts that join stamped parts tucked into your zippy sports car; the door-latch assembly for your hardworking pickup truck.

Though some of those parts are quite small – a single bolt, for example – each part must meet two exacting manufacturing criteria. First, each must be designed and made to the customer’s precise specifications. Second, the quality must satisfy the zero-defects standard established by the major vehicle manufacturers. That those parts must be made in great volume and be delivered on time for a contracted price adds to the challenge.

In an industry that has undergone significant consolidation and is now coping with competition from offshore manufacturers, MRC Industrial Group is more than holding its own as a metal-parts supplier. From its beginnings as a family-owned business more than 50 years ago to its recent purchase by a team of investors, MRC has consistently provided precision parts to tier one and two automotive companies who in turn supply the major vehicle manufacturers.

President and CEO Steven E. Engelman, one of the three investors who purchased MRC in September 2003, discusses the long-term value of the organization’s attributes. “MRC is a 55- year-old company with a rich history of success and a strong reputation for quality, service and dependability. We want to build on that and expand our business with existing customers, develop new customers and expand our product range.”

The heritage Engelman refers to is the combined expertise of the two companies that form MRC:
• Michigan Rivet Corporation, founded in 1949, manufactures specialty steel fasteners (primarily rivets and hinge pins), studs, worm gears, special bolts, cold-form ball studs, weld nuts, spacers and washer assemblies. The business occupies 120,000 square feet of manufacturing space and 25,000 square feet of warehouse space in Warren, Mich.
• The McLaughlin Company, purchased by Michigan Rivet Corporation in 1981, is a leading U.S. manufacturer of nuts, hollow parts and tubular-type parts. Operations occupy a 65,000-square-foot plant, 11,000 square feet of warehouse space and 4,000 square feet of office space in Petoskey, Mich.

Both plants are QS 9000 and ISO 9000 certified. MRC’s combined operations employ 170 people, with 140 in manufacturing, 20 in sales and 10 in administration. Engelman describes those employees a major asset. “One of the strong points of this company is its people. We have skilled and experienced workers in manufacturing – people who have spent their entire careers here. Our challenge now is to bring the next generation along. We are developing training programs that will get young people into metal manufacturing and particularly into the metal-forming industry.”

Successes and Challenges
Net sales of $30 million in 2002 and high-volume output are primary indicators of MRC’s presence in the metal-parts industry. The Warren operation turns out approximately 204 million parts annually for the automotive industry. That plant also makes 100 million parts each month under a defense-related government contract. Operations in Petoskey produce 80 million automotive parts a year.

Both plants use a cold-forming process, which changes the shape of the steel gradually in a machine that has multiple dies and a transfer mechanism. The steel is shaped and transferred to the next die, shaped and transferred again, in as many steps as required. MRC uses up to six transfers in its operations.

“The company has steadily improved and advanced its cold-forming technology,” Engelman says. “At the same time, the company has invested in more advanced multi-die forming equipment, which enables MRC to manufacture more complex parts and parts with precise dimensional tolerances.”

The requirement to meet the industry-wide zero-defects standard also created a need to invest in operations. Engelman says, “MRC has responded to this trend by improving its process controls, cascading the zero-defects requirement down into its supply base and implementing end-of-the-line 100 percent sorting to assure that no defective parts reach its customers.”

However, Engelman cites the decreasing number of domestic suppliers of coldheading-quality steel, the raw material from which fasteners are made, as one of the serious current challenges to MRC and the metal-parts industry. “This reduction of domestic steel supply, coupled with the imposition of protectionist tariffs on imported steel, has created significant cost pressure on fastener manufacturers. In most cases, cost increases such as raw material, energy and labor, especially employee health benefits – all of which have increased dramatically in recent years – cannot be passed on to our customers.

At the same time, the size, number and capability of foreign fastener manufacturing companies, mostly in Asia, have increased steadily over the past 10 years.”

Shaping the Future
Still, Engelman says that he and his partners are optimistic about the future. “We intend to adapt to change and are developing a business model that will enable us to provide our customers with the benefits of world-class, low-cost manufacturing coupled with the quality, reliability and personalized service that only a domestic fastener producer can provide.”

The executive, who has 30 years’ experience in the automotive and fastener industries, outlines his market-expansion planning. “MRC has been very successful in developing a niche market in its product range by focusing on smaller automotive suppliers such as stamping companies, modular-component manufacturing and assembly companies, and distributors. Now we’re most interested in growth, so there will be a more aggressive sales effort and a serious targeting of certain customers where we believe MRC has an opportunity to increase its market presence. Since the acquisition of the company, we have
more than tripled our efforts on the sales and customer support side of the business.”

Addressing the need for ongoing investment in equipment, he says, “Going forward, we plan to continue this strategy and expand it further in terms of more advanced tooling designs and newer, more advanced multi-die heading equipment. This will enable us to manufacture even more complex parts where there is less competition and higher value-added margins.”

One new product in development is a ball stud that would replace the plastic part used on engine covers. MRC’s completely cold-formed part requires no machining and can better withstand engine heat.

MRC is also investigating the option of establishing its own offshore manufacturing site in China. “There is a great movement to buying products produced offshore, but I believe there is a place for U.S. manufacturing in the equation,” says Engelman. “We believe that we can leverage and complement our strong U.S. manufacturing presence and capability with foreign-sourced raw materials and /or components. Our customers will benefit by having a local fastener manufacturer and provider of support services as well as local inventory and warehousing support – but also receive the cost advantage of high-quality, foreign-sourced materials in those areas where it makes the most sense.”

Domestic liaisons constitute another arena where Engelman is pursuing growth. “We are actively looking and in fact are currently engaged in discussion with several other companies regarding potential acquisitions or joint-venture opportunities. We intend to aggressively seek out add-on acquisition or joint-venture opportunities that will complement our existing business on the commercial side or the manufacturing side.”

Taking the view of the investment in MRC, Engelman says, “We saw and still see a great opportunity in a wonderful company in an industry that has fewer and fewer wonderful companies around. We think that we can double the size of this company. We set our goal for five years at $60 million.”

MRC Industrial Group, Inc. – a fastener company with staying power.

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