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Friday, May 25, 2012

Innovation a Must

Here is an article from the Detroit Free Press by Tom Walsh:

Shahid Khan left his homeland of Pakistan at age 16 to study at the University of Illinois at Urbana-Champaign, where he also worked at a small automotive parts firm, Flex-N-Gate, as he earned his degree in industrial engineering.
In 1980, nine years after graduation, the 30-year-old Khan bought Flex-N-Gate, which he has since grown into the 14th-largest U.S. auto supplier with 48 plants and sales of $3.4 billion last year, according to a ranking published this week by Automotive News.
Oh, and Khan bought the Jacksonville Jaguars NFL football team in January for $760 million. Today, Khan and Flex-N-Gate will be singled out for praise by Ford, for codeveloping a two-shot molding process to produce plastic parts for the 2013 Ford Fusion and Lincoln MKZ models to go on sale later this year.
Ford says it bought $5.1 billion in goods and services from tier-one minority-owned businesses last year, up 34% from 2010, and $1.1 billion from female-owned businesses, a 22% increase. Some gains were because of higher car and truck sales, but some sprung from a so-called Joint Technology Framework, in which Ford has shared technology and helped develop products and processes with minority suppliers. Flex-N-Gate was able to mold two different materials in a single press cycle.
"You can get rid of some of the fasteners, some of the assembly, and you have a superior product for less cost," Khan told me in a phone interview Wednesday. "It's a great example of looking in Ford's vault, us bringing something to the party and getting their help and mentoring and developing something that's new and adds value for them and business for us."
As a minority-owned supplier, Khan said Flex-N-Gate has been able to take advantage of training and mentoring programs from Ford and other automakers. "You've got to meet the same metrics, obviously, as anybody else," he added, "and to be successful in this business, you've got to be paranoid. Everybody's disposable, and you've got to innovate. You've got to add value."
About 60% of Khan's $3.1 billion of North American business is with the Detroit Three, split about evenly among Ford, General Motors and Chrysler. Chrysler and GM also reported big increases in purchases from tier-one minority suppliers: Chrysler's reached $2.15 billion last year; GM's total was $3.2 billion.
For most of his manufacturing career, Khan kept a low profile. That changed when he bought the Jaguars. "It's a big change, because football is huge," he said. "In automotive, you have (a) few significant customers, and you talk to them in private. In football, you've got thousands of fans, and they have an opinion, a viewpoint, and you have to respect that. It's a different way of listening to the customer."
The notoriety can be awkward, too, as Khan discovered when workers from a Highland Park plant -- idled since 2009 -- sought attention last month by staging a protest at NFL offices in New York about alleged chemical contamination by Khan-owned plants in the Midwest. Khan said Wednesday his plants are in compliance with environmental standards.
He's matter-of-fact about the tradeoffs of a higher profile. "It kind of goes with the territory," he said. "That's the nature of the beast, and I think you have to accept it for what it is."

I hope the business people in the Rogers City area read this article.  The line: "you've got to innovate.  you've got to add value."  is a powerful statement.  We have smart creative business people in our area.  Innovation is not reserved for the businesses down state.  We can do it too!

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