Crain's Detroit Business - December 20, 2010 - (Page 6)

Page 6 CRAIN’S DETROIT BUSINESS December 20, 2010 TI Automotive sees organic growth, plans to hire Bill Kozyra is a lifelong and streamlined the supDetroiter with a proven plier for a future of talent for streamlining smaller production volbusiness operations. umes. He was hired from ConTI has eliminated an estinental AG before the ecotimated 2,000 jobs and cut nomic collapse in 2008 to more than $130 million in head the troubled Oxford, fixed costs since 2008. England-based fluid storKozyra also completed age supplier TI Automotive a cash-for-equity swap in Ltd. British courts to allow He had served as presithe privately held supplident of Continental’s er to dump debt and take North American operaon new private-equity Bill Kozyra, tions and as a board shareholders, expanding TI Automotive member. Kozyra deits number of owners to Ltd. signed an aggressive plan 20 from a much smaller to dump debt, reduce group. overhead and improve TI’s reputaNow, TI Automotive LLC is a suption with automakers. plier reborn — earning more than Since 2008, Kozyra, president $3 billion in new business since and CEO, has moved TI’s opera- March, including new contracts to tions headquarters to Auburn supply fuel tanks to Volkswagen Hills, unloaded $1.3 billion in debt Group’s European models and with and cut its travel budget in half Daimler AG for most of its Merwith incentives. cedes-Benz models. TI employees traveling to any of TI reported automotive revenue its 126 plants in 27 countries are of $1.69 billion in 2009, down only urged to pass on business class slightly from $2.1 billion in 2008 and fly coach. If they do, they re- thanks to Kozyra’s efforts. TI deceive $1,000. clined to reveal revenue projecThe company also is conducting tions for 2010. some meetings over the Web to Crain’s reporter Dustin Walsh avoid employee travel. talked with Kozyra about TI’s He reduced overhead by reorga- transformation and whether his nizing lines to run multiple plat- decisions will pay off in 2011. forms, eliminated divisional presidents, slashed white collar jobs You came in during troubled times at TI in 2008. You knew you had to make drastic cuts to its structure and operations. How did you prepare for the task? I put together a 100-day plan, which a lot of CEOs do. Part of that plan was to very aggressively go after our cost structure, particularly in North America, where we weren’t making money. You could see, on a global basis, the effect of the collapse of Lehmann Bros. So we took those restructuring initiatives in North America and expanded them to our operations in the rest of the world. We started this in the fourth quarter of 2008. This allowed us to be ahead of the curve when the economy collapsed and allowed us to have cash and survive the crisis. What was the best move you made during the revamp? In North America, we reduced white collar salary positions by 50 percent. That, coupled with two years in a row of global salary freezes, has allowed us to hold our fixed costs (overhead) flat or declining as volumes increased in 2010. That probably has paid the largest dividends to the company. We also reduced our travel expenses by 50 percent. We also reduced our capital spending by half — which was key to preserving the company. If it took $10 per unit capacity to invest in additional capacity, we found a way to do it for $5. We started to look at things differently. The lines were captive to a particular vehicle platform, so we designed lines that were more flexible and could run multiple platforms. Automotive volumes being down helped us do that. Will those white collar jobs be coming back in 2011? Fortunately, we’re growing, so we’ll have to add back a portion of those salary positions that we had to let go. (Kozyra declined to give specific numbers.) We will also be considering wage and salary increases in 2011. We need to respect that our employees have made contributions with their sacrifices. Expecting employees to work for the same salary as in 2008 is just not realistic. What’s TI’s global growth strategy for 2011? We will grow organically based on the successful new business. We will grow at a rate higher than the industry average because of our increased market share for many of our products. We will grow proportionally because most of our platforms are global. We expect 55 percent in Europe, 25 percent in Asia, 20 percent in North America and 5 percent in Latin America. What are the major challenges for TI this coming year? Increasing raw material prices will be one of our big challenges in 2011. We will have increased costs there. The trick is to offset costs by increased productivity. When you have high volume, your challenge is easier. With volumes being low, this gives us a double-dimension challenge. We continue to have internal initiatives designed to increase the level of productivity — making sure, as volumes come back, we do it efficiently. The challenge is to make sure that we’ve got capacity in place, that will likely be a 4.5 percent to 5 percent market growth in North America and 8 percent globally. A lot of suppliers would have challenges if they have to handle another million units next year. Our strategy is to handle that and handle it on a very efficient basis. Do you see TI as a public company in the future? Anything is possible. Nearly completed Pontiac film studio sends message, backers say BY DANIEL DUGGAN CRAIN’S DETROIT BUSINESS If there were any doubts of a film studio being built in Pontiac, they were dispelled last week when the nearly completed structures were unveiled to several hundred people at an open house. On what was once a parking lot for a General Motors Corp. office building now stand empty structures that provide the shell for nine sound stages outfitted for bigbudget films. With an expected opening date of early 2011, Linden Nelson, CEO of Raleigh Michigan Studios, said the project sends a strong message. “This project speaks to the will of the people involved to get this project done,” he said during an event showcasing the construction that has been completed. That message is being heard in California as well, said Chris Baum, senior vice president of the Detroit Metro Convention and Visitors Bureau and its Film Detroit division, which was created three years ago to promote Southeast Michigan to decision makers in Hollywood. Baum, who was in Los Angeles recently, said production companies respect the Hollywood-based Raleigh Studios and are talking about the Pontiac project. “People who didn’t know about this studio now know about it, and people who knew before are impressed,” he said. “This is a credibility issue now, and it puts us on the map as a permanent stop for movie location scouts, rather than DAVID DALTON In an open-air section of Raleigh Michigan Studios, CEO Linden Nelson (right) stands with (from left) Anthony Wenson, director of studio operations; Rick Nelson, executive VP of studio operations; and Mark Corey, Walbridge project manager. “ People who didn’t know about this studio now know about it, and people who knew before are impressed. Chris Baum, Detroit Metro Convention and Visitors Bureau ” an ad hoc location.” The complex encompasses 620,000 square feet, with 270,000 square feet for sound stages. The remainder is office space that has been renovated and will be used by people working on film projects. Raleigh Michigan Studios was announced by Gov. Jennifer Granholm in her State of the State address at the beginning of 2009, but doubts emerged when construction was slow to start. Delays were attributed to the fact that the financial structure of the project is one that has never been attempted before, John Rakolta Jr., an investor in the project and CEO of Detroit-based Walbridge, the construction company building the fa- cility, has said in past interviews. “We’re creating the path to a closing on a project like this,” he said in March. “From now on, other projects will be able to look at how we have done this.” Also invested in the project is A. Alfred Taubman, founder of Bloomfield Hills-based Taubman Centers Inc., as well as Ari Emanuel, brother of former White House Chief of Staff Rahm Emanuel. Additionally, a large investor in the project are Michigan taxpayers. The project is heavily financed with public money through a wide range of programs. In addition to bonds issued by Oakland County, the financing also includes $5 million from the investors, $3.8 million of Infrastructure Recovery for the city of Pontiac, $15 million in federal New Markets tax credits and $11.1 million in Michigan Film Infrastructure tax credits. Nelson also confirmed that there are negotiations with prospective users for the facilities, but he would not give specifics. Baum said he is aware that discussions are in the works between the Raleigh executives and “major players in the industry, discussing specific projects,” but could not elaborate. “But it’s just a matter of time,” Baum said. “Having a purpose-built studio with all the accoutrements puts us on the top of the heap for a number of films that any city in America would be thrilled to have.” Daniel Duggan: (313) 446-0414, dduggan@crain.com

Table of Contents for the Digital Edition of Crain's Detroit Business - December 20, 2010

Crain's Detroit Business - December 20, 2010
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Crain's Detroit Business - December 20, 2010