Retooling Auto Suppliers For The New Economy: A Q&A with Elizabeth Ardisana

This is Detroit. We make things. And Lizabeth Ardisana wants us to keep making things, whether or not the automotive industry is in crisis.

The CEO of automotive supplier ASG Renaissance is also the chief evangelist for diversifying the client base of Metro Detroit's auto suppliers. She believes Michigan can help staunch much of its job losses by helping automotive suppliers, which are hemorrhaging jobs at a frightening rate, to keep their shop floors running. 

That, of course, takes more business, which the auto industry isn't exactly overflowing with right now. Ardisana, however, sees waves of business ready to wash over auto suppliers from emerging sectors like aerospace, defense and alternative energy.

"People will look back and say this is a defining moment for us," Ardisana says.

But making such a transition isn't as easy as retooling stamping bumper presses to make wind turbine blades. There are dozens of little secrets to helping these manufacturers and service providers bid on contracts, make new parts and turn a profit.

It's why Ardisana is working closely with the New Economy Initiative and the Kauffman Foundation to help guide Metro Detroit's automotive suppliers, especially it's minority-owned ones, through this much-needed transition. She hopes these efforts will help not only save jobs here, but help create a few more.

"We're looking at companies that employ thousands and thousands of people," Ardisana says. "That's people keeping their jobs for now."

Do you think these emerging sectors really have the potential to replace many of the automotive jobs that have vanished over the last few years?

Yes, my ideal picture is for automotive suppliers to still be automotive suppliers but to diversify so automotive isn't 100 percent of their business. As a service supplier, a couple of years ago 65 percent of my business was one automotive company. The rest was the other automotive companies. Today, 15 percent of my business has replaced that 65 percent, so 15 percent of my business is automotive. The rest is military, medical, energy. I am still an automotive supplier but now I work in a lot of different areas, so I managed to keep my total revenue the same but changed the content of my business.

For a service supplier, that isn't easy. Manufacturers have a little bit tougher of a transformation. I was speaking a few minutes ago about an MRI machine. I took a group of suppliers to look at the production of MRI machines. If you have ever seen an MRI machine you know it's like a really expensive car, and you can begin to see how we can do that. An MRI machine has a passenger. It has plastic trim and side panels. It has electronic mechanisms and all of those same things they have in cars. Our quality standards are more difficult to meet than the medical device industry. We have better quality. We have better technology. We have more innovation. The automotive industry is a very efficient industry and we need to apply it to things like medical devices, alternative fuels, alternative energy. Once we see the change in businesses, each individual company will be much more diversified. Some companies can completely change to a new industry.

How difficult is it for suppliers to make that transformation to diversification?

The reason we want help to do this is because without help it is difficult. First of all, we are used to making hundreds of thousands of components. In these other industries, maybe thousands of components. Maybe I am used to making 2 million of something and now I have to make 20,000 of it. That takes different processes and a different financial model. Somebody has to help us get there. They may have different quality standards. Not harder quality standards but different quality standards. So someone has to help us make that transformation. They're all changes that we have to make. We can make them, in time, but we need to accelerate that. We need help. We need resources to help us move through that process.

How quickly can this transformation take place?

Some companies are already doing it. We just need to accelerate it. ...I think the answer to your question varies by company. Some companies can change very quickly. I am a service supplier so I can change my offerings very quickly. It's really a case of how do I find a new customer so I can do that. That can take some time. Manufacturers can take a little bit more time. I think our challenge --it's why we assembled this team including Kaufman development-- [is that] we need to figure out the answer to that question. We need to start now and we need to move it forward as fast as we can.

Job creation is the big buzzword these days with regard to moving Michigan's economy forward. But what's being proposed here is more along the lines of job preservation.

There are two components. Job preservation is one. My personal philosophy is that if I can save a company that already employs people, that's better than trying to replace it with a new company. I think we need combination of preserving jobs and creating new ones. This program is broadly entrepreneurial. It covers everything from new start-ups to small businesses to medium-sized businesses to the larger ones. There is nothing that we are going to do in our region that is one single action.

So how important is this piece of the puzzle to moving Michigan's economy forward?

I think it's very important in all aspects of it. When you look at the impact of the potential loss of 50 percent of the automotive suppliers, then job preservation is critical. Equally critical is that there is a tremendous amount of talent that is no longer working in the auto industry, from senior people to relatively young engineers. When you look at what all of that talent can do in an entrepreneurial setting, it's unbelievable. All of that talentout there can help businesses make this transformation and help start new businesses. I think it's going to be exciting.