Gill Purchases Plant In Mexico

February 10, 2006
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GRAND RAPIDS —  Gill Industries once again bolstered its presence as an international supplier of precision assemblies and stamped metal products after inking a deal to buy a seat frame and tube plant in Mexico from automotive parts supplier Johnson Controls.

Gill Industries specializes in mechanism design and development for the automotive, office furniture and utility vehicle industries. Its purchase of a 100,000-square-foot plant near Mexico City comes on the heels of the establishment of Gill Industries Europe, a sales and engineering office the company opened Jan. 2 in Hellendoorn, Netherlands.

Opening the European office was the company’s first step toward becoming a global supplier, President and COO Richard Perreault told the Business Journal.

Now, with the Johnson Controls facility in Mexico, the company will not only boost its global presence a significant notch, but will add new manufacturing processes and a couple of new product lines to its mix.

Gill Industries will take over production of the vehicle seat frame and vehicle seat track products currently being manufactured there, both of which represent new products for the company.

It’s a lock, stock and barrel transaction that includes all the factory equipment. In buying the operation, Gill also inherits the wire and tube bending processes of the operation, which is also a first for the company. Those processes are used in the manufacture of automotive and office furniture seating, Perreault said. He said Gill Industries intends to transfer some of the wire and tube bending technology over to its plants in Grand Rapids and Georgia to grow its business even further. Gill Industries serves the automotive, office furniture and utility vehicle industries. Johnson Controls, General Motors, Herman Miller, Continental Teves, Steelcase, Magna and Bosch are among the company’s major customers.

“All of our customers purchase tube bending type of products, so now we can bring that into the equation and offer it to our current customer base, as well,” Perreault said. “It’s actually a turnkey operation. We just move in, sit down in a chair and it’s ours. It’s a world-class facility, equipment wise. It’s similar to the type of business we have here, with press, welding and assembly equipment.”

He said Gill Industries needed the additional manufacturing facility because its 134,000-square-foot plant in Plainfield Township is almost at full capacity, and its 75,000-square-foot plant in Trenton, Ga., will be close to full capacity within the next 12 months.

One small product line will be moved from the company’s Plainfield Township manufacturing plant to the Mexico facility, because that product is currently being shipped to Mexico City, and Gill is incurring a lot of freight costs for it, Perreault said.

Moving the product line will result in the loss of about eight local jobs.

“That’s the bad news,” he said. “The good news is that we’re doing this, as well, because we ran out of floor space here in Grand Rapids. We have additional programs to launch over here, but we didn’t have room for them. The eight eliminated jobs will be replaced by at least eight new jobs for programs we are launching this year.”

Gill Industries will retain the local work force currently at the Johnson Controls facility, so it will automatically increase its employment base by more than 300 people.

Johnson Controls floated the idea of Gill Industries buying the Mexico plant, known in its hometown as the “Eansa” plant. Johnson Controls wasn’t fully utilizing the facility, and the deal just made sense for both companies, Perreault said.

“Certainly, this opportunity doesn’t happen very often, where we have one of our best customers saying, ‘We have an opportunity for you.’”

Perreault acknowledged that access to low-cost labor will help the company compete in the global marketplace, but he said Gill Industries didn’t choose Mexico simply because of its low-cost labor environment.

“Mexico is a very appealing area that’s going to show some growth in the automotive sector. Nissan just announced it’s going to build more cars in Mexico to export to Europe. Volkswagen is probably going to do the same thing. We chose Mexico to serve the automotive and office furniture industry in Mexico itself. This puts us into a global structure and increases our market segment.”

He anticipates the Mexico plant will be at full capacity in 12 to 24 months. When the company has a need for additional capacity, it will look at the possibility of building a manufacturing plant in Europe, possibly somewhere in Eastern Europe, he said.

Perreault joined Gill Industries 13 months ago. Among other things, he’s been responsible for implementing the global strategy that the company hammered out over the past year.

“Gill has always been a great company. Unfortunately, to succeed in this world you need to be global,” he said. “If you’re not, you’re either going to go out of business or be purchased by someone else.”

Joe Gill, vice president of tool and die and technology, was on the executive committee that selected Perreault. He said the company hired Perreault for his global automotive experience and his financial background in acquisitions.

Perreault previously served as CFO for automotive supplier Cignet, spent three years as CEO of Metzeler Automotive Profile Systems in France and four years as president and CEO of Lear Donnelly Overhead Systems, and also served as a general manager at Magna International.    

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