- change ups
Craft Steel Products under new ownership
Turns out West Michigan hasn't seen the last paycheck for making parts going into a new refrigerator produced by Electrolux.
Craft Steel Products Inc., a small Grand Rapids manufacturing plant at 1048 Ken O Sha Industrial Park Drive, was acquired in July by Grand Haven Technical Sales and is now producing a wine cooler cabinet for Electrolux.
Rich Viveen, the owner of GHTS, said Craft will continue to operate at its Ken O Sha location with its 22 existing employees.
Viveen said he bought Craft because the owner was planning to retire "and basically shut it down. So I said, well, let's keep that business (open) and with my sales team, maybe we can get to breaking even with them."
At the same time, said Viveen, the value of the U.S. dollar has dropped dramatically against the value of the Chinese Yuan RMB, and steel prices have gone down in the U.S., making manufacturing here more competitive on the global market.
Viveen said the dollar has lost about 23 percent of its value in foreign exchange over the last two years, and "probably about 16 percent in 2008" alone.
"I used to be able to buy 8.5 RMB (yuan) for one dollar. Now I can only buy 6.84 RMB," said Viveen.
GHTS began in Grand Haven as a manufacturers' representative, said Viveen, "and then over time, we branched out into owning our own manufacturing companies in Juarez, Mexico, and Ninbo, China." GHTS is now based in Destin, Fla., but still represents Stanco Metal Products in Grand Haven and had been representing Craft.
Craft was founded in 1980 by Garold Snyder. Steven Snyder, the owner and chief executive of the company, sold the business to GHTS on July 7. Craft had been a stamping plant with about 60 employees before much of its workload went to Chinese manufacturers around 2004, according to Viveen. Today it operates as a metal fabrication shop.
Viveen said that before Craft lost much of its work to Chinese plants, it was doing about $10 million in sales annually. More recently, it has been doing only “a couple million.”
GHTS has added a sales person for West Michigan and is targeting "a lot of new business, so I'm hoping we get (Craft) back to where they were," said Viveen.
Lately, "Craft has been doing a little for everybody — Knoll, Steelcase, Herman Miller, Irwin Seating, Meridian Automotive," Viveen said. And like many manufacturing companies in Michigan, "they've been losing money.” That is changing now, and not just because of the currency exchange rates and price of steel.
"Right now, Michigan has a unique opportunity to be competitive on small stampings, for a couple reasons. We have plating capability in our state — zinc plate and powder paint. We also have 100,000 pound load limits for steel (hauling). Most states are 45,000."
Most U.S. steel production is still in the northern states, he noted. "Our margins (of profit) are so low that (the higher weight limits in Michigan) actually becomes somewhat of an advantage," said Viveen.
In 2002, the federal government enacted tariffs on imported steel at the behest of the U.S. steel industry. That made steel more expensive to U.S. manufacturers. At the same time, said Viveen, there was no tariff on imported stampings, which induced much of the auto industry and other metal manufacturers to buy stampings abroad.
"That's why you saw so many metal stamping companies in West Michigan go out of business," said Viveen.
GHTS represents a plant in South Carolina that was making parts for Electrolux, but Michigan is becoming even more competitive with South Carolina, said Viveen. There are few platers there, and consequently, the price is higher there than in Michigan.
"Michigan has hundreds of powder painting and zinc plating (plants), beating each other to death with low prices" in the fight for business, he said.
Overall, the result is that stamping of parts in Michigan that are not labor intensive is getting more competitive, according to Viveen.
As for Craft, "I'm already moving enough business back from China to support them," he said.
GHTS represents another West Michigan manufacturing company: Stanco Metal Products in Grand Haven. Due to the GHTS relationship with Electrolux, Stanco will soon begin making Electrolux parts that are currently being manufactured in China, according to Viveen.
Swedish-based Electrolux AB closed its 1.7-million-square-foot plant in Greenville three years ago and moved that production to Mexico, putting about 2,700 West Michigan people out of work. At the Greenville plant, which has now been demolished and cleared away, Electrolux was making more than 1.5 million refrigerator-freezers a year, including Frigidaire, Kenmore, White-Westinghouse, Gibson and Kelvinator brands.
Viveen said GHTS does "well over a $100 million" in business annually, although "people (in West Michigan) just don't know us."
"This isn't our style, to do a press release," said Viveen, who contacted the Business Journal with the news of the GHTS purchase of Craft Steel Products, "but I've got to help Craft out. We need to get them some business in West Michigan."