STRATTEC Security Corporation measures its success one lock at a time. Many, many locks later, the Big Three automakers, among others, have come to trust the Strattec name and equate it with ingenuity and integrity, as Lorie Greenspan has discovered.
This story begins with Steve Briggs’ automotive aspirations and ends with STRATTEC Security Corporation, an innovative and successful automotive security business. In between is Briggs and Stratton, one of the best-known and well-respected companies in the production of small, single- and twin-cylinder engines used primarily in lawn and garden machinery. In 1995, Briggs and Stratton spun off STRATTEC which, as a division of Briggs, had become the most relied upon automotive lock and key supplier in the North American market. Although separate entities now, what the two companies have in common is a history of inventiveness, a willingness to push ahead and a never-say-die attitude.
Such was the character of Steve Briggs in the heady days of invention following the turn of the century, when many of the consumer conveniences we now take for granted were created or improved upon; among these, the automobile and its various components. So it was a likely task for entrepreneur Briggs to tinker with the automobile. Briggs and his partner, Harold M. Stratton, had founded Briggs and Stratton in 1908 when Stratton, who worked in Milwaukee’s grain business, and Briggs, an electrical engineering student, decided to take advantage of the burgeoning auto industry. “My grandfather provided the seed money and Briggs was the inventor,” says Harold M. Stratton II, STRATTEC’s chairman and CEO. The pair built prototypes of a car they called the Superior, a vehicle with a less than successful design that couldn’t compete against Ford’s Model T. “So their fall back position was to provide components to auto manufacturers. Because of Briggs’ education, he developed a line of electrical switches and ignition devices for the auto industry. One of these was a switch with an integral lock cylinder to safeguard products,” Stratton says. This opened the door for Briggs and Stratton’s entry into the lock business.
Briggs and Stratton’s entry into the engine business occurred with the acquisition of another automotive product in 1919 called the Flyer. This product was a small, two-passenger car – in reality a buckboard, a derivation of a buggy – which came equipped with a fifth wheel. The fifth wheel, driven by an integral motor, was hinge-mounted off the back, and by pulling a lever, the operator could pull the wheel off the ground to put the vehicle into neutral, then drop the wheel to get it moving.
Briggs’ Flyer since has made it into the Guinness Book of World Records as the lowest cost, mass-produced automobile in the world. Unfortunately, as came to pass with many such products, newer and more sophisticated technology quickly overshadowed the competition. So Briggs’ second vehicle never developed into a commercial success either, but it was the motor portion of the fifth wheel that Briggs began to play with, finding new and innovative uses for what was really portable power. Success with these innovative applications, including washing machines for rural America, grew into a steadily growing business.
In the meantime, in 1923, Briggs was experimenting with the emergence of zinc die casting for the lock business. “Up until that point locks were made of brass components and expensive,” Stratton explains. “So Briggs said why not cast them in zinc? It would make them as durable but less costly.” Briggs took his idea to Kenosha, Wis., to the headquarters of the Nash Motor Company (forerunner to American Motors, which was sold to what is now DaimlerChrysler). Nash representatives thought the concept had merit, so Nash bankrolled the necessary tooling to manufacture the lock. “It revolutionized the method of manufacturing auto locks and was popular enough so by the end of the 1920s it was the primary product we were producing for the auto industry – we had close to 60 to 70 percent of the market share,” says Stratton.
The two businesses – lock and key and engine – were relatively equal in size until the end of World War II, whereupon the small engine business grew in proportion to how many new lawns were sprouting in suburbia, lawns that required lawnmowers that were being built with Briggs and Stratton engines. By 1978, when Stratton’s grandson joined Briggs and Stratton, the lock and key segment of the business was only 7 percent of total sales. Eventually the relatively small size of the lock and key portion of Briggs and Stratton led to the consideration of alternative corporate structures in the mid-1990s, and finally the decision to spin off.
“We spun off because management recognized that we had two separate businesses and each was going through a period that required significant capital investments,” Stratton recalls. “We also felt there was no recognition of the lock business in the price of Briggs and Stratton stock – no one was going to buy or not going to buy stock because of this little component; it was lost in the shuffle.”
STRATTEC still enjoys roughly 70 percent of the market share in its niche business. Adds Stratton, “Our experience level and our understanding of the product and manufacturing provides value to customers. We pride ourselves on engineering, and being able to provide service to customers. It has put us in good position over the years.”
In its current configuration, STRATTEC designs, develops, manufactures and markets mechanical locks, electromechanical locks, latches and related security/access control products for global automotive manufacturers. Its products are shipped to customer locations in the United States, Canada, Mexico, Europe and South America and the company provides full service and aftermarket support. It also supplies products for the heavy truck, recreational vehicle, marine and industrial markets.
With net sales in 2002 of $207.3 million, STRATTEC has led the way in the production of enhancements and technical innovations. STRATTEC is poised to meet auto industry security requirements with the engineering expertise and manufacturing know-how new technologies demand. Through the company’s alliance partner, WITTE-Velbert GmbH in Germany, security and access control products are manufactured and marketed globally.
Locks and their components
A typical automobile contains a set of four to five locks: a steering column, ignition lock, a glove box lock, one or two front door locks and a deck lid or trunk lock. Pickup trucks typically use three to four locks and sport utility vehicles and vans use four to six locks. Each lock has to work in synthesis with an array of components and there is no room for error.
To help us all start our cars more easily, STRATTEC has perfected a line of zinc die-cast steering column lock housings along with its electronic vehicle access control system (VACS). VACS is a passive security system for commercial delivery vehicles and illustrates the company’s ability to effectively integrate mechanical and electronic components such as radio frequency identification (RFID) and hall effect sensors.
It supplies its state-of-the-art componentry directly to OEM auto and light truck manufacturers, over-the-road heavy truck manufacturers and recreational vehicle manufacturers. For the 2002 model year, the company saw a 61 percent market share in the North American automotive industry, supplying locks and keys for nearly 84 percent of General Motors’ production and more than 62 percent of Ford’s, 97 percent of DaimlerChrysler’s and 100 percent of Mitsubishi’s production. The company also is OEM components supplier to other tier one automotive suppliers and a wide range of small industrial manufacturers. Most products are sold in North America; however, dominance in the North American market translates into a world market share of around 20 percent, making STRATTEC the largest producer of automotive locks and keys in the world.
Direct sales to various OEMs represent approximately 84 percent of the company’s total sales; the remainder is received primarily through sales to OEM service channels and the locksmith aftermarket.
New products on the horizon
Having the nearest term impact for STRATTEC is a relatively new product line for the company: ignition lock housings. “We don’t have as dominant a market share here as we do with the lock and key business,” Stratton says. “Housings actually is a business we’ve expanded into. It is a feature of steering column or instrument panel assembly.”
Steering column design architecture, he explains, traditionally has been comprised of complicated assemblies that car companies performed in house. “The design philosophy precluded any but the lock cylinder,” Stratton says, “but when steering column design became more modular, the assembly of all the relative components into the steering column gave STRATTEC the opportunity to use its die-casting expertise to provide the mating componentry for the lock cylinder, enabling it to control the interface between the two products. We have roughly 20-24 percent market share of that product in the North American market now.”
That same expertise is being leveraged for expansion into other areas, such as door systems, equally as complicated as steering columns because of the numerous controls contained within the door: security, access control, window glass, rear view mirror, speakers, various controls for electrical equipment, door latch mechanism, both inside and outside door handles, as well as the hardware that interconnects all these elements.
“Because that whole system is complicated we felt we could play a part in finding solutions to simplify that assembly process,” Stratton says.
What Strattec has pioneered is a module, or a collection of access control products that go into the door assembly. “We can provide the design and connection that greatly simplifies the door assembly process,” he explains. “It has significant potential and makes it easier to assemble the door and its components into the vehicle in the manufacturer’s plant, where tight spaces make intricate assembly difficult.”
“The assembly of doors has been of interest to auto makers for a long time,” he adds, “so we had an advanced development group focus in on that. It took a two-year cycle to design and develop. Our next effort is to get concept approved for a specific application.”
Also going into production in the near future is an integrated key that puts the electronics mechanisms into the key head instead of into a remote, cutting down on the number of implements needed to access a vehicle. “We will never be an electronics manufacturer because our expertise is on the mechanical side,” says Stratton, “but people involved in the design and manufacture of electronics don’t understand the mechanical interface that has to be there in terms of access control. We provide a bridge between electronics and end product.”Other systems also deserve mention. For example, STRATTEC has developed switching devices installed onto locks that are tamper proof. For example, if a trunk lid faces a blow from an intruder, the alarm cannot be disarmed.
Because the majority of STRATTEC’s sales are to the Big Three North American auto manufacturers, STRATTEC is organized to assure that its activities are focused on these major customers and their associated entities. The company maintains customer focused teams for General Motors, Ford, DaimlerChrysler/Mitsubishi and for tier one steering column suppliers. A fifth team deals with programs and new products associated with alliance partner WITTE-Velbert of Germany and a sixth team handles industrial and service customers, including heavy truck manufacturers Peterbilt, Kenworth, Mack, Freightliner, Navistar and Volvo. Additionally, STRATTEC employs an extensive staff of experienced lock, housing and latch engineers, capable of providing complete design, development and testing services of new products for customers.
Most of the components that go into STRATTEC’s products are manufactured at the company’s main facility and headquarters in Milwaukee, Wis. This facility produces zinc die cast components, stampings, and finished keys. Key finishing also takes place at STRATTEC Componentes Automotrices in Juarez, Mexico. Assembly is performed at the company’s Milwaukee location but mostly takes place at STRATTEC de Mexico, also located in Juarez.
R&D activities are centered around a dedicated research engineering staff called the Advanced Development Group, which has the responsibility for developing future products, and processes that will keep the company in the forefront of the markets.
German alliance opens opportunities
Through its alliance with WITTE-Velbert in Germany, the company is expanding its security/access control product offerings to include hood latches, trunk or liftgate latches, door latches, door handles and vehicle access modules that contain some or all of these components.
The alliance with WITTE-Velbert consists of two main initiatives. The first involves a set of cross-licensing agreements by which STRATTEC manufactures, markets and sells WITTE products in North America with WITTE doing the same for STRATTEC in Europe. This enables both companies to establish international reach for their respective products and services while sharing the potential profits of products sold outside of their respective home markets. The second initiative is a 50-50 joint venture company, WITTE-STRATTEC LLC, a legal entity through which STRATTEC and WITTE pursue emerging markets outside of Europe and North America.
Adds Stratton, “We are actively looking for acquisitions. There’s wonderful technology in the products available through our German alliance but technology isn’t always what drives the market in the U.S. – cost does. Some of the things accepted in the way of technology in Europe are not accepted here. One of the things we’d like to entertain is the possibility of getting into the rear compartment latch and door handle business in North America through acquisitions.”
Success lies in superior engineering While the automotive industry typically has been characterized by ebbs and flows, STRATTEC has been able to weather the tides by consistently developing and engineering ever-more sophisticated locking systems that become more electronically advanced with the changing demands of the marketplace. The company’s success has been a testament to the way in which old companies can make new inroads and lead the market through extensive research and manufacturing initiatives.
“STRATTEC’s significant market share is the result of an eight-decade-long commitment to creating quality products and systems that are responsive to changing needs,” says Stratton. “As technologies advance and markets grow, STRATTEC retains that commitment to meeting and exceeding the expectations of customers.”