Cooper Standard celebrates global growth spurt

FAIRVIEW, Mich.—Cooper Standard Automotive Inc. is expanding both domestically and overseas on the heels of a strong second quarter.

In July, the firm opened its 90,000-sq.-ft. addition to its operations in Fairview. Then in August, Cooper Standard opened two facilities in China—in Kunshan and in Shenyang.

The firm will invest $6.5 million at Fairview and create 177 jobs. The facility almost exclusively focuses on producing transmission oil cooler lines. Bill Pumphrey, Cooper Standard North American president, said Cooper Standard is the largest supplier of transmission oil cooler lines to Ford Motor Co.

The Fairview plant opened in 1973 and spans 120,000 square feet with 275 employees.

Cooper Standard's expansion is largely because of increased business with Ford across several platforms, including the new F-series of trucks, Pumphrey said. The executive also identified continued growth in automatic transmission use in vehicles worldwide as another reason for the addition.

“Our relationship with Ford goes back many, many years with this kind of product,” the executive said. “The quality and the capability of our team in Fairview have been very strong, and much of the product is shipped all over the world. As global demand for global transmissions grows, so does the need for this kind of product.”

Cooper Standard used the expansion as an opportunity to improve efficiencies and instituted its one-piece-flow manufacturing process, which focuses on building one part at a time throughout a set of steps as opposed to making parts in batches.

Pumphrey said Cooper Standard continues to expand its lean manufacturing initiatives in other plants as well.

“You've got to be able to put in an entire philosophy and strategy on how you establish your equipment, your tooling, teaching your operators on how to do this and why it's important,” he said. “Lean manufacturing doesn't happen overnight, but certainly this team understands it, embraces it and is doing a good job of moving it forward.”

The firm worked closely with the state of Michigan and the Michigan Economic Development Corp. in the expansion effort. Pumphrey said the facility previously underwent smaller expansions, but not one as comprehensive.

“This plant knows how to make this product,” Pumphrey said. “They have a reputation of quality that Ford Motor Co. really respected, wanted and liked. It took a partnership with our government to help keep the jobs in Michigan and make the investment worthwhile. And it helped being close to our corporate headquarters so we could use this showcase for lean manufacturing concepts. This team is a great team of people, and they earned it.”

Cooper Standard's Kunshan facility is the second in the area, which includes a manufacturing and test center dedicated to fluid transfer and fuel and brake delivery systems. Its Shenyang facility will produce sealing systems.

The firm is expected to combine to add more than 500 employees, including about 20 engineers to support development of global platforms designed in Asia. The Kunshan location covers about 270,000 square feet, while the Shenyang location spans nearly 94,000 square feet.

“The Chinese automotive market is expanding at a rapid pace,” Pumphrey said. “It's the largest growth market in the world right now from an automotive perspective. If you're going to be the largest sealing manufacturer in the world, you better have a presence in China, and we're fortunate to be able to do that.”

Cooper Standard said expanding its fluid transfer and fuel and brake delivery systems operation to its second Kunshan location reinforces the company's ability to serve the area where there is a concentration of automotive customers. The firm said the city is a growing satellite city of Shanghai.

The company said its Shenyang sealing facility further solidifies its position as the largest sealing manufacturer in the Chinese market. Earlier in the year it acquired majority ownership of its joint venture with Huayu Automotive Systems Co. Ltd., its domestic Chinese partner.

The firm now operates 11 manufacturing and technical facilities with 5,200 employees in China, all adjacent to major original equipment automotive manufacturers' operations.

“As Cooper Standard continues to grow in China and across the Asia Pacific region, these new facilities will further strengthen our market positions and enable us to better serve our customers,” Chairman and CEO Jeffrey Edwards said in a statement. “The further localization and expansion of our test capabilities is part of our long-term commitment to the Chinese market and is also essential to our profitable growth strategy.”

Edwards said Cooper Standard had its best quarter in three years during a financial presentation on July 31. Net income for the second quarter increased 14.4 percent to $40.9 million compared to $35.7 in 2014. That's excluding a $2.6 million tax related to its Huayu Cooper Standard Sealing Systems acquisition and a $7 million restructuring charge.

Sales in the second quarter remained steady at $860.8 million, a $3.2 million increase. Adjusted earnings before interest, taxes, depreciation and amortization was $97 million for 2015, up 5.7 percent compared to 2014.

For the six month period in 2015, Cooper Standard reported increases in net income at $57.5 million and adjusted EBITDA at $177.7 million, compared to $32.9 million and $172.3 million in 2014. Sales slightly declined to $1.66 billion from $1.7 billion in 2014.

Cooper Standard attributed the year-over-year variance to improvements in operating efficiency, favorable volume and mix, and lower raw material costs. It said these favorable items were partially offset by wage increases, unfavorable price adjustments and a $10 million negative impact from unfavorable foreign currency exchange rates.

“Our second quarter results represent another solid step toward achieving our 2015 objectives. In terms of adjusted EBITDA margin, it was our best quarter in more than three years,” Edwards said in a statement.

“We are particularly pleased with the continued strong performance in our North American operations, the margin improvements we are making within our European operations and our profitable growth in Asia. In addition, our increased focus on cash generation is driving positive change that is enhancing our ability to improve shareholder value going forward.”

Regionally, the firm experienced mixed results. Cooper Standard reported sales increases in the Asia-Pacific and North America segments. Sales jumped 92.1 percent to nearly $112 million in Asia-Pacific, compared to $58.2 million in 2014, largely because of the inclusion of revenue from an acquisition. Sales in North America increased slightly to $452.2 million from $453.5 million.

Sales in Europe and South America both decreased because of unfavorable currency rates, Cooper Standard said. Europe came in at $270.3 million, down from $305.7 million, and South America dropped to $25.1 million from $41.1 million.

Headquartered in Novi, Mich., Cooper Standard Holdings Inc. is the parent company of Cooper Standard, which provides sealing, fuel and brake delivery, fluid transfer, and anti-vibration systems.

The firm employs more than 27,000 in 20 countries.