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Agape Plastics Prepares For Slow Year Ahead
When asked if Agape is primarily an auto supplier, President and CEO David M. Cornelius replied, "Very much so — not that we're not trying to diversify."
Agape Plastics is located on the eastern edge of Ottawa County, just west of Standale.
Founded in the early 1970s by the late Tom Alt as primarily a tool and die shop, Agape got into plastic injection molding in the late 1970s, providing parts to Steelcase and American Seating. The automotive business began in 1983 with a two-bolt stud plate, developed with GM's Oldsmobile division. The stud plate was patented and led to a series of insert molded fasteners that remain the core of its insert molding business.
At that time the business was located closer to downtown Grand Rapids, the "plant" was about 5,000 square feet in an old brewery complex. By early 1986, the business had grown, with 15 to 20 shipments being made per month. By way of comparison, Agape Plastics now makes around 1,500 shipments a month and its monthly sales now exceed the annual sales of 1985. Sales totaled $27 million in 2006; 2007 will "probably be about $28 million," said Cornelius.
The leader of the company today is Tom Alt’s widow, Cynthia Alt, who serves as chairman of the board.
According to Cornelius, the last two or three years "have been very good. A lot of growth through new programs," he said, adding that while 2007 was "a good year," business is "starting to slow down now."
Cornelius said Agape’s business is "probably 95 percent automotive," largely from the Big Three. Agape utilizes the services of IRN Inc., a Grand Rapids consulting firm that has concluded that the excess inventory held by the auto companies is leading to a downturn in North American auto production in 2008.
"We are trying to diversify our customer base," said Cornelius. It has done that mainly by getting more business from what he calls the “new domestics" — a reference to foreign car companies that have been opening plants in the U.S. lately, even as the Big Three face cuts in production.
"It's tougher to break into the new domestics, too," he added. Agape does, in fact, have orders with some of those plants — "But not nearly enough," Cornelius said.
Two years ago Agape Plastics was running lots of overtime to deal with its orders. Then 2007 settled down to a more stable rate of production. Now, he said, "I think we are sized correctly” to handle sales in 2008.
The company did some downsizing in 2007, mainly through attrition but also through a voluntary layoff of 11 employees.
One of Agape’s specialties is gear shift levers, mainly for GM pickups and SUVs. In early December, the company was producing about 40,000 shift levers a week. In the recent past, it had been as many as 50,000 a week.
The 49,000-square-foot plant now employs about 150 full-time employees working three shifts. The company moved into its new plant in 1999, and there is "plenty of room to add on, when we get to that point," said Cornelius. That note of confidence is based on innovation and versatility that has enabled Agape Plastics to grow in the past.
One thing it has done is "individual assembly," rather than the traditional American assembly line where each employee on the line does one thing and passes the part on to the next person.
At Agape, the employees working in the shift lever assembly area each have their own workbench and assemble the shifters from the components. Completed levers are then passed on to the inspection and testing station.
Cornelius said the change to individual assembly has actually increased productivity and quality. He added that individual assembly also apparently has an ergonomic benefit to the employees, because it involves a broader range of tasks and movements, as opposed to the brief, repetitive movements on a traditional assembly line.
"We're not going to be able to compete in shoot and ship," he said. "Shoot and ship" is a euphemism for the high-volume production of simple parts that typifies Chinese production, where the major concern is low cost rather than quality issues.
The engineering staff at Agape continues to innovate with new products, like the part it developed for Oldsmobile that got the company started as an automotive supplier almost 25 years ago. Recently, the engineers found a way to replace a metal stamping with injection molded plastic on the airbag housing installed in GM, Ford and Chrysler vehicles.
"It's a cost and weight savings," said Cornelius. The plastic is cheaper than metal and weighs almost 50 percent less.
Now more than ever, automakers are looking to reduce total vehicle weight any way they can, to help increase fuel economy.