In 2012, Huf North America wanted to shut down its Greeneville, Tenn.-based plant. Less than a year later, it changed its mind. Now, it’s expanding the facilities. What drove this decision?
One of the most fascinating recent business scenarios involves how Huf North America turned its direction around.
The company, which is headquartered in Milwaukee, Wis., is an innovative automotive industry supplier, producing safe and secure exterior and interior components. It’s a subsidiary of Huf Hülsbeck & Fürst GmbH & Co. KG, which is based in Velbert, Germany. The parent company boasts a product line that includes lock sets, steering locks, and remote control systems.
During the early part of the new decade, Huf North America operated three plants (in Milwaukee, Wis., Greeneville, Tenn., and Puebla, Mexico). It also boasted a comprehensive sales office in Farmington Hills, in Michigan and near Detroit. “That placed us close to our OEM automotive industry customers,” notes Michael Supe, president and CEO of the North American division.
A Shutdown That Never Came
Big-name clients include Chrysler and General Motors – as well as Ford, its largest customer. For sure, it’s a vibrant enterprise. Yet, in 2012, it wanted to shut down its Greeneville facility.
Supe describes the circumstances. “Our business has been on a rollercoaster,” he says. “About two years ago, Huf North America underwent pressure from its major OEMs to reduce prices. That compelled us to establish our operation in Mexico, because we wanted to maintain our market share related to our main products.”
These included lock sets, mechanical keys, steering column locks, and what Supe terms as first-generation key fobs. “Such locking commodities have always been – and will continue to be – our major strength,” he relates.
Two Major Decisions Coincided
“At the time that we decided to move to Mexico, the Huf Group management and the Huf North America executive board deemed it necessary to close the Greeneville plant,” continues Supe. The upper level management expected to suffer from the decision.
“But we were totally wrong in our expectations,” reveals Supe. “Our employees wanted to stick together as part of a big family.”
Indeed, the parent company is a family owned enterprise – and family values run as thick as blood through this global enterprise.
“The Greeneville employees did not hesitate to give us a clear sign that they would stick together – and to stick with us,” says Supe. “Obviously, as far as their jobs were concerned, they wanted to survive, and they wanted the Greeneville operation to survive – in both good and bad times.”
Such support further compelled Huf North America to strongly review – and then revise – the shutdown decision. “Also, the plant was awarded an order for 2.5 million door sets from Ford, our leading customer,” adds Supe.
All things considered, Huf North America now had the confidence to move forward. It proved a smart move. “Subsequently, we received an equal award from Chrysler. So, you’re looking at a total of five million door sets. And that was followed by an order awarded from BMW, specifically for its X5 model, which comes out of its Spartanburg, N.C., location.”
So, the decision was reversed – and the strategic goals updated. “To realize our goals, and achieve long-term competitiveness, we felt it necessary to include plastic molding and in-house painting processes.”
That led to the expansion – as opposed to the shutdown.
“The expansion project was started in the early part of last year,” says Supe. “It was part of the revised strategic plan related to how we wanted to operate in the next 10 to 15 years.”
The expansion involved a substantial investment: $20 million. The dollars will go toward a 52,000-square foot addition. “We’re constructing a new building next to the existing building, and that will place the plastic injection molding and paint facility under one roof,” says Supe.
So, instead of putting people out of work with a shutdown, Huf North America will add more than 100 new jobs. “We’re looking to add about 28 professional positions, along with about 75 production positions, five administrative positions and about four positions related to shipping,” reports Supe.
Construction is expected to be completed in late 2013. “Then we are looking to make first deliveries to our OEMs in April 2014,” adds Supe.
The $20 million investment was bolstered by Tennessee’s Jobs4TN Plan, which was designed to support existing businesses in the state and, of course, create more jobs. And, for sure, as Huf North America has been a two-decade mainstay in Tennessee (the plant was established in 1995, while the North American division was established in 1975), the state government wanted to make sure that the company remained. Indeed, Gov. Bill Haslam and Economic and Community Development Commissioner Bill Hagerty identified the automotive industry as one of the “six key clusters” that provided the state with a competitive advantage as far as job growth.
The shutdown would have been a considerable loss. As Supe has pointed out, the Tennessee site is considered a central logistic location for the Huf organization, as it has supplied both German and US-based OEMs.
Huf North America is not only community friendly (as it contributes to jobs and the local economy) it is also an environmentally friendly business. More than a world class supplier of lock mechanisms, latches, and assemblies, the company has committed itself to preventing pollution via compliance to all environmental and legislative regulations.
The company feels that this is not only socially responsible, but it makes good business sense – as it contributes to its competitive strength, benefits customers and employees, and serves the economic health of the community in which it resides. In this area, its objectives include:
- Exceeding regulatory, legislative and other requirements;
- To be locally and globally responsible for the conservation of resources and the prevention of pollution;
- Providing an atmosphere of continual improvement;
- Establishing objectives and targets to improve environmental performance as a company;
- Training employees in the policy and principles of our Environmental Management System;
- Measuring the scope and performance of the Environmental Management System;
- Conducting audits to ensure that objectives and targets are met;
- Providing an efficient operating system in order to reduce waste;
Confident About the Future
Looking ahead at the next five years, Huf North America expects to increase its revenue by more than 50 percent. This results from its decision to expand Greeneville, instead of shut it down. “The decision provides us with more opportunity,” says Supe.
This will continue to keep Huf North America’s position with its OEM clients – as a preferred partner for car access, security, and immobilization.