Enlists 10 Firms For Mercedes

August 8, 2003
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GRAND RAPIDS — Riviera Tool Co. President and CEO Kenneth Rieth believes collaborations are likely key to the future of tool and die companies competing with elements beyond their control — such as competition from China.

If that’s true, Riviera Tool is cruising on the right track into the future.

When the company was awarded contracts for the Mercedes Benz M-class sport utility vehicle and the Mercedes 251— a hybrid SUV vehicle — in March 2002, it took on the role of lead program manager, managing the work of 10 West Michigan tooling suppliers.

Riviera itself has hired 40 engineers, toolmakers and machinists to accommodate increased production requirements.

Production on the two Mercedes programs began last fall and involves slightly more than 95 part numbers, Rieth said. On any given part, the company has to produce a minimum of 300 panels each, or 300 prototype cars. He estimates Mercedes will produce anywhere from 60,000 to 80,000 of each vehicle per year.

Rieth is especially proud that the collaboration is not only giving tooling shops here a chance to showcase their abilities, but that it also both preserves and creates jobs in West Michigan.

“Now we’re starting to work almost hand-in-hand like it’s a seamless small company across West Michigan,” he remarked. “We want to encourage them to continue to do a good job because it’s going to be a win-win for everybody in West Michigan.”

As program manager, Riviera takes full responsibility for the quality of the end product — and all the logistics involved in getting parts to their required destination on time.

“We don’t go in and micromanage the companies. What we really do is oversee the results. We’re involved really heavy on the front end in terms of the process planning, the simulation, the computer modeling of the forming process and what not.

“What we do is pick companies that know how to run a good show. What they have to do is know what they have to produce, what the criteria is, and the dates work is due. We have to make sure all the parts are there at the right time in the right place to make and that the whole module comes together properly.”

Landing the coveted role of lead program manager was a first for Riviera. Reith described the collaboration as a pilot program that’s similar to the way tool and die work is outsourced in Europe.

The collaborative strategy is one both Mercedes and competitor BMW have used before, and it’s a common practice in Europe.

“It appears, through our involvement with the Center for Automotive Research, that this is a fundamental shift that’s starting to develop,” Reith said.

Riviera had developed a relationship with and began doing work for BMW when BMW started bringing production over from Germany to a partner plant in the United States, Rieth recalled.

Mercedes saw the work Riviera was doing for BMW, he said, and the Mercedes supplier in the United States recommended that Riviera take the lead in developing the tooling for the Mercedes 251 and M-class vehicles.

Riviera handpicked 10 tooling suppliers to participate in the program. Reith said that strategically, Riviera had been trying to move in that direction for years, but a lot of domestic tooling shops weren’t initially receptive to the idea of collaborating.

“We picked companies that had very progressive attitudes, that had an ongoing focus on technology and process improvement design, and that were willing to try something new,” he said.

He acknowledged that a few companies asked to participate declined, indicating they preferred to get their business directly from the stamping companies. Some felt the whole idea was somewhat threatening, he recalled.

But that’s not the case, he said, because the traditional customer relationships the tool and die shops have developed over the years are unaffected by the collaboration.

“What we did was bring another source or another channel for them to obtain work,” Reith explained. “It doesn’t alter their business, it’s just another customer. It’s just part of change.

“We see this as very encouraging not only to our company, but to numerous good quality, smaller and medium-sized shops in West Michigan. We’ve got some fantastic suppliers in West Michigan, and all we’re doing through this program management channel is creating another source of work that maybe some of the smaller companies may not have otherwise been able to participate in.”

Reith said perhaps the only disadvantage West Michigan has is labor rates, because even small shops paying $20 to $25 an hour have a tough time competing with 60-cent-an-hour rates overseas. To combat that, tool and die shops have to do things better with more technology and keep prices competitive globally, he added.

Collectively, all the Mercedes work Riviera is overseeing is valued at just under $40 million and the contract runs through roughly May or June next year. Riviera has outsourced slightly more than $10 million to participating tooling shops.

But that’s just on the tooling side. Rieth said Riviera also is working with lots of other suppliers in Grand Rapids and throughout West Michigan to form additional services for customers.

The project management role, he observed, has allowed Riviera more in-depth involvement in everything from process planning, to design and construction, to prototype coordinating.

“We feel very blessed to have this kind of program and honored to work with these very fine companies in West Michigan to get it done. Collectively, if we do a very good job — and we will — I think this will become a pattern that is emulated into the future.”

Reith said a similar program and similar role might be on the horizon with BMW. Next month the automaker is expected to select a supplier to oversee an upcoming program.

If Riviera is awarded the contract, it will choose suppliers according to whatever the requirements are for the particular car modules or parts.

“Anyone that has been in our network that fits the size and criteria of the parts we might get will obviously be favored for the next round. We’re looking at long-term relationships, not just one-shot deals.

“If we can continue to demonstrate, the business will continue to come, especially with the number of new models coming in for both BMW and Mercedes. We’re really expanding our customer base beyond the traditional Big Three.”           

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