The constant hum of heavy machinery fills the air at THE 125,000-square-foot plant where nearly 350 employees are hard at work. In two shifts, the team will assemble nearly 1,200 seats for the Ford Focus and 300 for the Cadillac DTS and Buick Lucerne. It takes only 12 minutes for the quick, efficient crews to complete a set of seats for the Focus, and 20 minutes for the more complex Cadillac.
Nearly 75% of the process is automated: Large robotic machines meticulously assemble, scan, test, and move components on to the next stage of production.
Business has picked up for Bridgewater Interiors L.L.C. (No. 2 on the be industrial/service companies list with $1.6 billion in revenues). The 12-year-old Detroit-based assembler of automotive interiors has returned to profitability, thanks to increasing demand for parts from its customers: Ford, General Motors, Chrysler, and Honda.
Bridgewater Interiors was formed as a joint venture between Johnson Controls Inc., a $34 billion automotive supplier, and Epsilon L.L.C., a holding company controlled by Bridgewater CEO Ronald E. Hall Sr. Epsilon, whose major shareholders are African American, owns 51%.
In little more than a decade, Bridgewater went from being a startup with one customer to a billion-dollar business with four manufacturing facilities that serve nearly every major automaker. At the center of it all is Hall, who went from heading a nonprofit that provided procurement opportunities for minority businesses in Detroit, to employing 1,500 people as founder of the nation’s second largest African American—owned enterprise. For creating a sustainable, scalable business that weathered the worst the economy could throw at it and returning to greater profitability and revenue growth, Black Enterprise has named Bridgewater Interiors its 2011 Industrial/Service Company of the Year.
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Restaurateur to Small Business Advocate
Hall, who is 67, has pursued several vocations over the years. The Western Michigan University graduate worked as a computer analyst–or, as Hall puts it, a “computer geek‖for Ford Motor Co. before the entrepreneurial bug bit him. “I was introduced to a fellow who had the franchise rights to Michigan for a Bonanza restaurant. So, after a lot of scurrying to raise the money, I started a Bonanza franchise in 1980,†he recalls.
Located on the border of Dearborn and Detroit, the restaurant flourished. A second location in Detroit proper followed two years later. The food was budget-friendly and plentiful: A 5-ounce rib eye with a baked potato, Texas toast, and all the salad you could eat cost just $2.99. Serving nearly 2,000 diners a week, with patrons queuing up outside the doors on weekends, Hall’s restaurants thrived. Then the growing popularity of poultry and fish as healthier alternatives to red meat stole the franchises’ thunder. “People still liked steak,†says Hall, “but instead of going to one of the restaurants three or four times a month they would come in once every other month, on special occasions. It’s a volume business, so I couldn’t hang on.â€
To support his family of six, Hall took a position in the late 1980s as vice president of minority economic development for New Detroit, a nonprofit organization focused on tackling the city’s social and economic issues. Hall was recruited in 1990 to be president of the Michigan Minority Business Development Council (now the Michigan Minority Supplier Development Council) where he often spoke to large corporations about supporting employment and entrepreneurial growth in the Motor City. His efforts led to the then vice president of worldwide purchasing at GM, Harold Kutner, becoming the organization’s chairman. Kutner, in turn, recommended that Hall meet John Barth, then president and CEO of JCI, to gauge whether he would be a fit for the vacant vice chairman post.
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A Partnership Is Formed
Automotive interior companies bid on new business three years or so before vehicles come to market. In the late 1990s, JCI competed with Lear Corp. and Magna International for a new Cadillac DeVille model that would be built in nearby Hamtramck, Michigan. JCI knew of GM’s support of diversity, and its management believed that the likelihood of landing the business would increase if it partnered with a strong minority-owned business. “Ron Hall Sr. was a great partner who provided a differentiated advantage,†says Jeff Williams, JCI’s group vice president who also serves on Bridgewater’s board of directors.
As a black-owned entity that owns the majority stake in the joint venture, Bridgewater qualifies as a minority-owned enterprise. “In my opinion, the minority designation was the tiebreaker,†says Hall. With an initial five-year, $900 million contract to be the exclusive provider of seats for Cadillac DeVille, and a publicly traded global giant in their corner, Bridgewater secured financing to construct a 125,000-square-foot assembly plant in Detroit’s Empowerment Zone–an area targeted for federally supported urban revitalization. “We extended the line of credit to cover our startup costs,†he recalls. “But, were it not for our 49% partner in Johnson Controls … I won’t say we wouldn’t get it, but it certainly made the terms a lot better.â€
Bridgewater is what’s known as a just-in-time supplier. So it must locate its plants near, meaning within 30 miles of, the manufacturing facilities of its automotive clients in order to deliver product in a matter of hours–”just in time†for the components to be installed in a vehicle. As its business grew, Bridgewater opened plants in Oxford, Alabama, in 2003; Warren, Michigan, in 2004; and Lansing, Michigan, in 2006.
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By 2007, the company had reached a milestone few black-owned enterprises achieve: the billion-dollar revenue mark. With sales of $1.3 billion, 1,100 employees in four assembly plants, and a strong product mix with foreign and domestic automakers as customers, Bridgewater was ranked the fourth largest black-owned business in the U.S. Three of Hall’s four sons work for the company: Roman, in Detroit; Erik, in Warren, Michigan; and Ronald Jr., who is known as Ron and serves as vice president and general counsel, also in Warren. Hall’s youngest son, Kahn, works at JCI’s design studio.
An Industry in Crisis
Business was good–until
For the company, it was a challenging time. “Before the crisis we had foreseen that Bridgewater needed to move away from its emphasis in manufacturing for light trucks to a portfolio that was more balanced between light trucks and small passenger cars,†says Ron. “We had begun to do some of that. The question in our minds was, had we done enough? Had we done it fast enough? Were the light truck sales going to hold? Were all the programs going to survive?â€
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To make matters worse, in 2007 doctors had discovered a brain tumor attached to the nerve ending of Hall’s right eye. Although it was benign, the CEO spent six months out of the office recovering, leaving Ron, who had joined the company two weeks after his father’s surgery, to keep the ship afloat. “It was a little bit more of a trial by fire in those initial months than I’d anticipated, because he wasn’t here to help shepherd my entrance,†Ron recalls. “Fortunately, I have a solid, collaborative relationship with Chief Operating Officer Barima Opong-Owusu, and between the two of us, with the support of all the executive management at JCI and Bridgewater’s board of managers, we were able to get through it, I think, pretty successfully.â€
The lower volume in the auto industry and devastating impact on the supply chain forced Bridgewater’s management to make tough choices and to restructure. Those choices included making temporary shift reductions at several plant locations that reflected customer schedules. “We adjusted our shifts to meet our customer requirements,†says Opong-Owusu. “Because we are just-in-time suppliers, if our customer cuts
down to just one shift, we go down to one shift. We must be in sequence.†The company also reduced its discretionary spending, such as for travel and entertainment; eliminated the printing of color copies; and ensured that all printouts were double-sided to reduce paper consumption.As gas prices fell in 2008, Bridgewater’s management team cautiously forecast that demand for light trucks and SUVs would return. GM and Chrysler’s emergence from bankruptcy, the subsequent increase in auto sales, and Bridgewater’s customers bringing new products to market gave Hall & Co. another boost. “Slowly that gave us confidence that we would be OK. We didn’t project returning to profitability until fiscal year 2010, but we did it after one year,†says Ron. “The volume recovery combined with the aggressive cost management that we had implemented at the outset of the crisis really stabilized us in that second year.â€
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Two Healthy Recoveries
As the company recovered, so did the elder Hall. The delicate surgery did leave a lasting effect, however. Hall’s right eyelid no longer opens. “When they pulled the tumor off, it damaged the nerve that operates the eyelid, so now I look out of one eye. But I don’t have any pity parties over it,†he reflects. “It could have been so much worse. No slurred speech. No paralysis. None of that.â€
Profitable again, the company will continue to focus on automotive interiors: seating, overhead systems, and center consoles. “The focus is on keeping the plants full of interiors programs, vigilantly managing our cost structure, and, especially, keeping our customers happy with high quality performance,†says Ron.
JCI’s Williams remains positive about the joint venture’s future. “Our engagement, my personal engagement, is all about how we make this better, how we make it stronger, and how we continue to innovate both product and business processes aimed at delivering incremental value to Bridgewater’s customers.†He says, as the company enters its 12th year, “We are very pleased with the sustainability of our business evidenced by a strong backlog. We have new business committed to our joint venture and look forward to serving our customers.â€