The success of Shiloh – supplier of engineered metal products to the automotive, light truck and transportation industries – is partially a result of its control of the value chain and its total commitment to supporting the customer. Michael Terreri files this report.
Cleveland is home to Shiloh Industries, Inc., a company that started in 1950 as a small machine shop. Originally focusing on tool and die work, the fledgling firm achieved early success using an innovative idea: listening to the customer. That practice has continued to the present. Shiloh is now a major supplier to original-equipment manufacturers such as General Motors, Ford, DaimlerChrysler and Nissan, just to scratch the surface; and to major steel mills across the nation. The company provides services for steel mills’ secondary operations — such as slitting and pickling, a process in which acid is used to clean hot-band steel, and then oil is applied to the steel to protect it from rust.
Shiloh has gone through several growth spurts and, during the past two years, has made a major market transformation. Historically, the client basis was primarily American steel mills. Now, through the company’s aggressive shift to more advanced engineered applications, marketing to the automotive OEMs and Tier I suppliers has gone front and center — along with enhancing the service center business. Shiloh accomplished this switch through acquisition, divestiture, new green-field facilities, process optimization and product development.
There has also been a shift in the internal organization of the firm. All the sales, marketing and business unit managers now report to one individual: Mark Theisen, the sales and marketing vice president. The group is responsible for developing new customers and strengthening relationships with existing clients. Shiloh is customer-allied in its business structure. Each director reporting to Theisen is not only responsible for the sales and marketing to each prospect, but, once the prospect has become a client, he or she is also the point person in bringing product through the complete production launch process, on time and on budget to the customer.
The strategy has worked. The company has grown its sales from $235 million in fiscal 1998 to $325 million in fiscal 1999 and to $630 million in fiscal 2000. Shiloh is on track to produce equally remarkable numbers this year, even in the down market that is affecting the automotive industry. Further testimony to the unusual growth of the firm is the spate of recent hires. Shiloh employs close to 3,500 employees. More than 40 percent of the salaried personnel have been with the firm for fewer than 18 months.
Despite the preponderance of new employees, the company’s entire staff works together like seasoned veterans. Three specific efforts ensure success. The first involves a unique vertical integration. When a sales representative approaches an OEM such as Ford, for instance, in an attempt to interest the company in a Shiloh product, such as stamped, structural body assemblies — frame rails, cross members or pillars, perhaps — the prospective customer will ask, “Why Shiloh? What’s the difference?” It’s a big one. After the steel is made at the major mills, Shiloh controls everything else in the value chain, right up to the delivery of the product at the customer’s doorstep. It services the steel, cuts it to the appropriate size, applies the appropriate coating, builds its own tool and die processing equipment, stamps, assembles and paints — all in house. It takes the team to make the process work.
Another Shiloh hallmark is its application of technology. The company is doing some things outside the traditional metal-stamping arena, such as laser welding, remote laser welding and flexible assembly. These processes are beyond simple stamping. Shiloh can stamp metals, make product out of tubes or roll-form it into channels, and stretch into the appropriate shape. In addition, the company uses varying gauges of metals and then laser-welds them together to make a strong, lighter, more cost-effective solution for the customer. The technology portfolio allows Shiloh to choose the appropriate solution for the specific customer application.
Finally, there are the Shiloh people — flexible, responsive to the customer and willing to improve. They can react to opportunities quickly to satisfy the customer.
Raising the Profile
Shiloh’s management is headed by chief executive officer Jack Falcon, the company’s dynamic leader. Falcon’s 20 years’ experience at General Motors, coupled with another five at Lear, helped give him what it took to transform the company into the corporate machine it is today. He aggressively grew a low-profile but efficient company into a major player in the automotive market.
Shiloh has 16 facilities throughout North America. Located in Ohio, Michigan, Georgia and Tennessee, the 16 facilities focus their efforts on steel processing, first-operational blanking, laser-welded blanking and engineered products, such as body-in-white structural systems to the OEMs and major Tier I suppliers.
The company’s newest plant addition is its Saltio, Mexico, operation, which started up last year and provides laser-welded blanks to General Motors and DaimlerChrysler. Also last year, the company began a laser-welding operation in Cleveland and followed this move with acquisitions in Ohio and Tennessee within a short span.
Shiloh’s newest products include modular metallic seating systems and unique body structural applications, which incorporate various new manufacturing technologies. Its strategy is to take the technology to the customer and provide solutions that lighten and strengthen vehicle parts for better gas mileage and improved emissions, important mandates in the North American marketplace. Successful product weight reduction, which Shiloh has been able to accomplish without sacrificing performance, is another key to its success.
Shiloh will continue to search the marketplace for new processing technologies that will add flexibility to the portfolio. In product development, it will look for ways to apply new processes and new materials to create product solutions.
Three major factors will continue to contribute to Shiloh’s growth. The first is the globalization of the automotive industry, which will continue to require an international supply base. The second is the continued outsourcing of the metal-stamping business. The last is the consolidation of the industry, with Shiloh in the forefront of the expansion curve.