The automotive manufacturing landscape has undergone seismic shifts in recent years, with small suppliers becoming increasingly reliant on technology to survive and search for new markets.

"Ninety percent of our business has something to do with the automotive industry, mainly interiors," said Doug Fagan, general manager of Labor Aiding Systems Inc., a Jackson-based designer and builder of specialized machinery used to manufacture automotive interiors.

"My end users are Tier I suppliers like Johnson Controls, Lear and Magna," Fagan said. "We build equipment for assembly plants - their operators run our machinery to assemble seats."

Approximately 20 employees work on every phase of the equipment from the ground up, using the tool room, welding, paint, fiberglass and electrical departments. The relatively short-term nature of automotive projects also affects the flow of work.

"What we look at is new model years," Fagan explained. "Every three years or so cars get a facelift, and they come to us to buy new tooling or equipment. Right now we just had a model changeover, so we're really slow."

Being so closely aligned with one particular industry has had a direct and volatile effect on the company's revenues, Fagan acknowledged.

"This year alone we've seen a large drop in sales, because everyone is making cutbacks," he said. "Typically we are around $7 million, but this year we're going to be about $3.5 million. We hired another salesman to look for other markets outside of automotive just to fall back on."

Labor Aiding Systems executives realized a few years ago that one new market presented itself right under their noses.

"Labor Accountable Software is a job shop time-tracking software, using biometrics like fingerprints to clock in and keep track of hours," Fagan explained. "We developed it and had been using it in-house for four or five years when we decided to market it."

Lectronix Inc. is a Lansing firm developing integrated electronics technology that can be used in the auto industry.

The company started in June 2002 with 35 employees, but has grown to 52, with its main office and manufacturing facility in Lansing and engineering offices in Ann Arbor and Grand Rapids.

"Our particular focus at this time is generally in the space of 'infotainment,' which encompasses electronics providing entertainment and information and are typically located in the dashboard of the car," according to Tom Bayerl, vice president of product development.

Bayerl said separate systems such as navigation and driver information consoles are being integrated into the automobile's radio, causing it to more closely resemble a computer.

"The new systems will allow the user to receive satellite radio, play MP3 music, record music into the system, play DVD video for rear-seat passengers and connect their iPods," he explained. "These types of features in turn require that the head unit support USB devices, hard disk drives, bright color displays and advanced operating systems."

Previous attempts to put a "PC in a car" have generally met with failure because complex software architecture needs to be created for the task, he said, but Lectronix has developed software it calls AFrame that packages most of the under-the-hood software components required by such advanced automotive systems.

The software within this framework typically runs on a single microprocessor within the so-called head unit, and ranges from the ordinary (AM/FM radio) to the cutting edge (speech recognition and digital jukebox).

"We are currently working with several Tier I automotive suppliers as well as doing some direct work with the automotive OEMs on advanced or concept car programs," Bayerl said.

Rather than betting his small company's future on one industry, the need for a diverse customer base was apparent to Al McGilvra of Jackson, an electrical engineer who started his firm in 1995 after a 10-year career as electrical engineering department manager at the National Superconducting Cyclotron at Michigan State University.

Most of McGilvra Engineering's work is in circuit design. About 20 percent of his work comes from private developers, and the rest comes from established businesses, McGilvra explained.

The vast majority of his work is in developing testing systems for clients.

"Testing is huge - one way or another it's generated half of our revenue over the life of the business," he said. "It could be testing auto stuff or medical stuff, but it's been a huge chunk of my business."

Only about 20 percent of his business is related to the auto industry, he said, but "it's hard to say, because most of my clients are in Michigan and most of them, sooner or later, are tied to automotive."

McGilvra's automotive client base includes Behr GmbH, Eaton Corp., Ford Motor Co., General Motors Corp., Toyota Motor Corp. and Yazaki North America Inc.

To keep costs down, McGilvra runs a very lean operation out of his home. After outgrowing a basement workshop, McGilvra added on a garage in which he assembles prototypes and circuit boards.

"There's myself and another engineer, and we have an on-call technician when we get really busy," he said. "At one time I had five guys working here, but it got to be too much managing and not enough engineering."

His wife, Lisa, helps keep the books.

"I'll never get rich but I have a decent quality of life," McGilvra said. "My revenues range from $200,000 to $500,000 a year, but some years I've worked for $10 an hour."

After working for several years as a software engineer for other companies that had a habit of going out of business, licensed professional engineer Dan Shangraw of Lansing decided in 2002 to set up his own company, Automated Software Technology, to market his technical skills.

"I'm a one-man shop," Shangraw said. "Using off-the-shelf technology and hardware I can create a custom test and measurement system. Companies used to have to develop their own, and this makes it easier to maintain."

Some of Shangraw's larger clients include Bechtel Corp., Behr GmbH, Dana Corp., Eagle-Picher Industries Inc., Eaton Corp. and Ingersoll-Rand Co. Ltd.

"My customers are primarily automotive, but I try to diversify as much as I can - medical, aerospace, defense, even furniture," he noted.

His projects for auto suppliers have included developing a wireless data acquisition system, a side mirror function test, an in-vehicle data acquisition system to test brake controllers and software to control a crash lab. He also partnered with McGilvra Engineering to test a fan clutch for light trucks.

His market is small to midsized companies in lower Michigan.

"They'll call me once or twice a year to develop tests they need done," he explained. "Engineering is so up and down, for this type of work it's hard to justify having someone on staff full-time. It's kind of project-based, and pretty much all my customers come back when they've got more projects for me."

Shangraw's company is still in start-up mode, with revenues of only $30,000 to $40,000, but he hopes to plateau at around $60,000 a year. Like McGilvra, he works out of his home to keep overhead low.

Shangraw believes that with so much heavy manufacturing now being transplanted overseas, the economic future of Michigan and the nation will depend on specialized technical fields like his.

"America can't compete with high-volume manufacturing, but we will with low-volume, high-skilled stuff," he said. "We have a lot of high-tech R&D talent in the state, and that's where we need to go."

Edward Freundl is a freelance writer living in Michigan Center.

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