Small is Satisfactory: Dura Builds a Niche

From Detroit Free Press

DETROIT — So it’s not as big as Delphi. It doesn’t employ as many as Lear. But Lawrence Denton, chief executive for Dura Automotive Systems Inc., says he’s satisfied with his company’s size.

Dura, he says, is just better off being small.

“I think we do less business with ourselves and more business with our customers this way,” said Denton, who spoke Tuesday at the Society of Automotive Engineers World Congress. “I call it being very nimble.”

Dura is the 26th-largest North American supplier to the automakers, according to Automotive News. The company, based in Rochester Hills, Mich., has an executive management team of just six people. It employs 18,000 workers worldwide, compared with more than 100,000 at companies such as Lear. Most of its workers make less than $11 an hour, even though many of its rivals pay their employees close to $20, Denton said.

Dura, which makes products ranging from adjustable vehicle pedals to sliding windows, is relying on this low-cost structure to help its sales grow by 6 percent to 8 percent in the next five years, Denton said.

Dura, with annual sales of $2.4 billion, is aiming to cut costs by $50 million to $100 million this year by making its plants more efficient and getting price reductions from its suppliers, he said.

Another goal is to get new customers, Denton said. About 56 percent of Dura’s sales are to the Detroit automakers, but the company sees plenty of opportunity with foreign car companies such as BMW, Nissan and Peugeot. It hopes to grow by supplying such parts as hinges, latches and pedal systems to those companies.

And Dura’s been on the move. Last year, the company moved its headquarters from Minneapolis to Rochester Hills to be closer to its customers and to speed up product development.

Launched in 1990 by Hidden Creek Industries, Dura has achieved a lot since its initial public offering in 1996, company officials say. Since that time the company has grown its earnings on average by 20 percent per year and expanded its customer base.

Nevertheless, it has had growing pains. Like many suppliers, Dura made a series of acquisitions during the 1990s that ultimately became difficult to integrate.

Dura has been busy the past two years trying to divest non-core businesses, including its steering-gear division and its European Mechanical Assemblies business. The company has announced plant closures in the past couple of years, including a plant in Livonia, Mich.

“They’ve had a couple of years of tough times,” said Jim Gillette, an analyst with CSM Worldwide . “They’ve done their share of weeding out over the years.”

In addition, Dura is looking to reduce its debt load from some of those deals. Denton said the company hopes to reduce its debt level by $40 million to $50 million this year. The total net debt is $900 million.

The restructuring has led to losses. The company posted a fourth-quarter net loss of $2.9 million, or 15 cents a share, compared with a year-earlier loss of $90.7 million, or $4.97 a share.

Denton, who joined the company about a year ago, thinks the future is promising for Dura. But he can’t help but worry about rising steel prices, a contentious issue among suppliers and automakers these days.

Delphi has secured a restraining order against two of its suppliers to keep them shipping steel parts. The suppliers had wanted to stop shipments because Delphi didn’t want to pay extra to offset the recent run-up in steel prices, which has been in the range of 30 to 40 percent.

“I think OEMS (automakers) and suppliers are in this together,” Denton said. “I think we need to approach this as one voice.”

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