Building better products and diversifying beyond the auto industry is enabling Noble International Ltd. to thrive in a volatile marketplace
By Ian Armitage
For the last several years, the auto industry in North America has struggled to keep foreign rivals at bay.
While the most recent news coming out of Detroit is relatively positive — both Ford and GM posted better-than-expected quarterly profits through June 30 — companies that supply materials and parts to domestic automakers would do well to diversify.
That’s the strategy at Noble International Ltd., a Warren, Mich.-based provider of laser-welded steel products to the North American auto industry.
Noble currently has two types of products that it supplies primarily to automakers such as DaimlerChrysler, General Motors and Ford, as well as auto industry suppliers.
Laser-welded blanks (LWBs) are two or more sheets of metal that are welded together in one “blank,” which is then used to make an auto part (A blank is stamped into its final shape to become part of a vehicle’s structural component). Automakers and suppliers use blanks in automobile body components such as doors, fenders and body side panels.
What sets LWBs apart from other blanks is that — due to advanced laser welding technology — a single blank can contain different kinds of steel, enabling automakers to reduce vehicle weight, eliminate reinforcement parts, reduce steel usage, reduce capital expenses for spot-welding equipment and ultimately reduce total costs (Noble estimates that it can potentially save North American automakers $2 billion annually). Using one LWB rather than several parts that are spot-welded together also reduces a vehicle’s noise and vibration.
Noble also manufactures tubular products by roll-forming flat steel into a tube and then welding the seam with a laser. The tubular products are also used by automakers and industry suppliers in structural components.
To make both its LWB and tubular products, Noble uses rolled and coated steel, as well as argon, carbon dioxide and helium gases.
Noble currently has seven locations in North America including its engineering and research-focused Technical Center located at company headquarters. The company has approximately 35 percent of the $1 billion-plus North American market for LWBs and tubular products, and has among its competitors PowerLasers Ltd., Shiloh Industries Inc., and TWB Co.
To differentiate itself from competitors, Noble builds its own laser welding equipment, allowing the company to customize its production equipment to fit its own production processes. This approach enables Noble to maximize its output while at the same time minimizing its capital investments.
The development of new car models or the redesign of existing models usually starts two- to-five years prior a model appearing in a showroom.
Consequently, Noble’s engineering staff works with engineers at automakers and suppliers early in the development phase to design automotive body components for new or redesigned models.
Engineers at Noble’s Technical Center collaborate with auto-makers to develop new LWB applications, enabling the company to innovate relevant products.
For example, the company first conceived of — and now produces — the industry’s first exposed blanks that combine structural LWBs (with either an exposed or semi-exposed surface) together with an exposed surface. The Ford F-150’s body sides are made using exposed blanks; according to Noble, exposed blanks build on the weight and cost benefits of LWBs by also eliminating separate structural and exposed body side surfaces.
Since its incorporation in 1993, Noble has expanded its market presence through acquisition. In 2006, Noble acquired Pullman Industries, a manufacturer of tubing and structural products using roll forming and other processes. Pullman’s products include impact beams, bumpers, and door and window components for automotive applications.
Noble was motivated to buy Pullman, in part, because it sees its expertise as an “enabling technology,” which enables Noble to create more advanced tubular, shaped and enclosed form structures. Combining laser-welded and roll-formed techniques enables Noble to create more complex products – products that the company hopes will meet the future needs of the automotive industry.
“Acquiring Pullman means that Noble can offer a wide range of technologies and higher value solutions to our customers than ever before,” says CEO Thomas L. Saeli in a press release. “We have previously identified tubular structural products as an important area of growth for Noble, and Pullman provides us with an immediate leadership position.”
Another motivation for Noble was Pullman’s office furniture operations.
By applying its LWB technology to industries beyond automaking, Noble can grow and diversify its business.
Noble’s strategy seems to be paying off. In the second quarter of 2007, revenue increased to $182.7 million from $109.6 million during the same period in 2006. Sales from the Pullman acquisition and new laser welding initiatives also offset a 4.4 percent decline in North American light vehicle production in the second quarter of 2007 compared to the same period of 2006.
“Over the last few months, Noble continued to make strides toward becoming the world’s largest laser-welder and a global provider of automotive structural solutions,” said Saeli in a statement.
Within the next few months, Noble expects to further its global presence. In March, the company signed a share purchase agreement with Arcelor Mittal to combine its laser welding operations into Noble. When the deal is completed (which is currently in the works), Noble will operate a total of 22 manufacturing facilities around the world.
It’s a move that should resonate with automakers.
To reduce development costs, automakers are producing vehicles with similar platforms worldwide. In response, the industry is increasingly looking to global suppliers.
“With the completion of this transaction,” Saeli says in a statement, “we will not only increase our size but also our capabilities and geographic reach.”