The McGregor Metalworking Companies have been named a Tier I supplier for Honda, meaning the company will have an expanded role shipping parts directly to the automaker.
It’s not yet clear how many additional jobs could result from the new designation because it’s still early in the process, said Jamie McGregor, vice president of business development for the company. The Springfield-based firm has about 390 employees at its five facilities now, including about 50 workers at a site in South Carolina.
Honda has a major footprint in the region’s economy, where it employs 13,000 Ohioans, including more than 1,400 residents from Clark and Champaign counties. Several of its local suppliers have made significant, multimillion-dollar expansions and hired new workers recently as the auto industry rebounds from the Great Recession.
McGregor is considering an expansion to one of its facilities now and could eventually invest in additional equipment due to the new work, he said. Last year, the company invested about $2 million in equipment and will invest about $3 million more this year.
“With a 50 percent jump in investment we’re making, we’re certainly planning on being here for a long time and making investments we need to make to win more work,” McGregor said.
Yamada North America Inc. — a South Charleston company that supplies oil pumps, water pumps, steering components and other parts for Honda — has more than doubled its workforce in recent years and has added production lines.
KTH Parts Industries in St. Paris supplies auto body frames to Honda. The St. Paris company is finalizing a roughly $29 million expansion that includes more space for storage, training and locker rooms and an expansion of a trailer yard. The biggest portion of the investment includes the installation of an $18 million, 3,000-ton servo press designed to produce strong, light-weight auto parts.
McGregor began ramping up production for Honda in October but wasn’t officially named as a Tier I supplier until late last month, McGregor said. The company had been considered a Tier II supplier for more than two decades, meaning they produced some parts but didn’t ship directly to Honda.
“It’s very exciting news for us and something we kind of lucked into because Honda was having trouble with a supplier in Michigan and they needed someone to react quickly,” McGregor said. “They picked up the phone and called us and in 24 hours we were running parts in our facility.”
McGregor will produce small metal stampings and welded assemblies, mostly for Honda engines at a plant in Anna, Ohio. It will also supply a variety of parts to Honda’s other factories in Ohio as well as a facility in Mexico.
“This really changes the relationship with Honda because there was a barrier of protection between us and Honda,” McGregor said. “We were supplying other companies in the area that then supplied Honda and if something goes wrong with our parts, we had a middle person between us to catch any mistakes. Now this really ups the game in terms of what Honda’s expectation is from us.”
Honda typically doesn’t comment on its suppliers, said Chris Abbruzzese, a spokesman for Honda. However, companies that provide quality products typically have a long relationship with the automaker, he said.
“Honda values the relationships we have with our suppliers and we strive to maintain these relationships,” Abbruzzese said. “Suppliers who continue to provide good quality, cost and delivery at globally competitive level generally keep a business relationship with Honda for many years.”
The news is a significant achievement for the company, said Tom Franzen, Springfield assistant city manager and economic development director. Springfield has a reputation for high-quality manufacturing firms that supply parts to auto firms like Honda and Toyota, he said, as well as several other industries.
“For McGregor, their portion of the Honda business has grown successfully as they have met (Honda’s) strict standards,” Franzen said. “They’ve been able to acquire more work leading to that Tier I designation, which is positive.”
McGregor Metalworking took over production of about 50 new parts it will supply to Honda daily, and the firm might bid to produce about the same number of additional parts later this year, McGregor said.
“As long as we maintain the high quality and delivery expectations that Honda has come to expect, there will be more opportunities,” McGregor said. “It’s just hard to predict when that will happen.”
The automotive industry provides the bulk of the manufacturer’s business, but it also produces parts for the locomotive division of GE, agriculture firms like John Deere and exercise equipment, among other products. The company will continue to serve a broad base of customers to provide stability for workers, McGregor said.
“We don’t want one customer or one industry to be all of our business because there’s high risk that’s associated with that,” he said.
The company had to move quickly to provide assistance to Honda to avoid disruptions in the automaker’s supply chain. McGregor credited the company’s employees with stepping up to make sure Honda’s production schedule wasn’t slowed. Employees worked seven days a week for more than 60 days to take on the new business without slowing Honda’s assembly lines.
“It was really a non-stop effort for two solid months,” McGregor said.
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