There is an old way and a new way to do things. Old: Take what you’ve produced for years, tweak it a little and tell everyone it’s new and improved. New: Throw out the old model entirely and ask yourself, “What would be our ideal solution?” And then get to work.
In this way, AGS Automotive Systems has grown and prospered since its purchase in December 2002 by J2 Management Corp. In its drive to become a singular force in the supply of myriad automotive components, including chrome plated bumper systems for many popular SUV and truck models, AGS has reinvented itself in several ways. The first involves a total rebranding initiative, which precipitated a name change from A.G. Simpson Automotive Systems. Still a reflection of founder Art Simpson’s ingenuity, AGS now moves forward with a renewed outlook based on three fundamental principles: quality, technology and teamwork, which has already enabled the company to stand out among its peers.
“The whole automotive industry is challenging,” says company Co-President Joe Leon (the other half of J2 is Co-President Joe Loparco). “There is so much cost focus in the industry, and it often causes people to cut prices to be able to deliver product. The answer is not to sacrifice quality or take on business at a lower price, because you end up endlessly servicing a low cost business model. It’s very tempting, but we’ve avoided that because we understand that to be successful you need to produce something of the highest quality. You need to avoid planning in the short term and plan for the long term.”
Director of Communications Maria DiZio adds succinctly: “You need to make your business distinctive; you’ll never succeed by doing the same thing.”
Not doing the “same old, same old,” has enabled the company to improve its performance substantially since J2’s entrance: With 2004 sales of just over $300 million (Canadian) the team’s focus and discipline have resulted in significant revenue growth and profitability improvements in the past two years, a trend that is expected to continue. Reflective in the triad of “quality, technology and teamwork,” and witnessed in its rise in revenue, is AGS’ nose-to-the-grindstone approach, bearing proof that the company is on the right track.
The nuts and bolts of what AGS does is in the design and manufacture of various automotive components; it supplies body in white to larger OEMs and tier one producers Delphi, Lear, and American Axle, TI Automotive, and Karmax. It maintains 30 percent of the chrome plated bumper business in North America. TS-certified, the company is able to supply from concept to product through the life of the part. It maintains 150 presses up to 2,500 tons and also has deep draw stamping and exposed metal stamping capabilities in addition to new robotic weld cells and new automation equipment, modular integration and sequenced assembly. A full 76 percent of its business is with General Motors.
Founded in 1947 in Toronto, Canada, AGS now has seven facilities in Canada and the United States – including Troy, Mich., and Shreveport, La. – totaling two million square feet of manufacturing floor space that has been upgraded to world class status. A total of 1,200 employees in the company’s team engineers and manufactures highly valued systems within the automotive sector.
“Our customers want us to do what it takes to simplify the process and reduce costs,” notes Sales Director Rob DiNatale. “We offer end-to-end value added service – literally the entire breadth of service. Our focus is to supply entire modules, which in turn are delivered to the user plants directly.” In April, AGS received the Delphi Pinnacle Award, given for excellence in quality, delivery and technology. DiNatale adds: “We offer scale and focus: scale is the opportunity to offer geographic diversity and increased assets.” For example, he explains, an alliance with its customers precipitated the company’s most recent moves to Shreveport and Troy. In both instances, AGS is an extension of the GM and DCX assembly plants. “We can provide customers with the best solution because of our multiple locations in both Canada and the United States.” Focus, he adds, “centers on our ability to leverage our technology and human resources.”
“Teamwork is our cornerstone,” DiZio acknowledges. “When you combine great ideas, innovative technology, and a committed, capable team, you have a winning formula for success every time.”
With those characteristics serving as building blocks, the company is set to respond to new trends within the industry, particularly in the manufacture of steel chrome plated bumpers. Once considered the over achiever in terms of applications, steel is fast taking a back seat to sibling plastic, which offers better diversity within the bumper system.
“The market is moving away from steel because of the need to be light weight, so we’re taking the lead in complementing steel with plastic,” DiNatale says. “The ultimate consumer continues to push the styling envelope which in turn forces suppliers, like AGS, to become more flexible. Various design changes in both plastic and steel result in “Out of the Box Styling” currently on vehicles today. Bumpers are more integral to vehicle styling than they used to be.” Because of this new trend, AGS, is exploring opportunities to further diversify its capabilities and offerings. “We want to capitalize on this new trend, and grow with the right amount of equipment and controls,” DiNatale reports.
Leon adds that the process of manufacturing an exposed steel bumper system relies on a very high level of expertise. “It is such an intricate process: you need to get the right steel and put it into the right shape and all steps are intricately tied together. Through our R&D efforts over the last few years we have been able to meet our customers’ requirements. These efforts have also culminated in a product/process that will enable us to win more market share.”
To go hand in hand with the lighter wave in motor vehicles, explains DiNatale, AGS’ R&D department is also doing research “on a number of fronts” to develop a lighter-weight steel “to make a more formable product.”
“We also want to promote chrome and have it become integral to the design of more vehicles,” DiNatale says. Because of another trend toward retro design, DiZio adds, chrome affords another way for a vehicle become differentiated in a competitive marketplace. “OEMs want their vehicles to look unique,” she says. “Chrome plays a part in that.”
AGS’ capabilities and engineering expertise have enabled the company to become a part of a number of automotive programs. Its longest standing relationship is with the Dodge Ram; it also supplies to the GM G-Van and Savannah, Silverado and Colorado/Canyon truck lines as well as the H3 (Hummer 3), Jeep Cherokee, in addition to a number of mid-sized cars, including the new Equinox hybrid slated for 2006. “In the area of trucks we generally supply bumpers, impact systems, and medium- to- large modular welded assemblies,” DiNatale says.
People and product
At AGS, people and product form a symbiotic relationship; one cannot exist without the ingenuity of the other. J2’s principles are well aware of the human potential that needs to be tapped in order for advances to take place in the industry and this speaks directly back to Joe Leon’s long term approach. “My partner and I feel much of the industry is driven by the stock market and investors, which sometimes forces companies to do things in the short term. We think OEMs are also looking for companies with a long term vision that entails investing in people and processes. Our ability to control our priorities is an advantage for us. This, combined with our focus on teamwork has given us a competitive edge. Building the right teams is something you must do over the long term.”
In many cases, DiZio says, invoking a long-term view involves an incremental approach to all facets of the organization in order to reach sustainable levels. ‘It allows you to adapt to change – you look beyond the next six months to ensure a quality process.”
Through reputation, quality, delivery and experienced labor force all working together AGS has made itself a better company. Says DiZio, initiating an employee suggestion program helped to gather more than 400 suggestions. “Through this we’ve been able to deliver significant customer savings and implement leaner and more efficient operations.
Leon adds, “Through an intense focus on R&D and people our company has emerged with a greater knowledge of making quality impact systems. This R&D thought process had been missing before. We are now starting to see the rewards of our focused efforts; which leaves us very optimistic about a bright future for AGS.”