Strattec Security Corp., like most automotive suppliers, has been on quite the rollercoaster since the onset of the COVID-19 pandemic. The Glendale-based maker of vehicle keys, locks, latches, lift gate systems and other vehicle access…
Strattec Security Corp., like most automotive suppliers, has been on quite the rollercoaster since the onset of the COVID-19 pandemic.
The Glendale-based maker of vehicle keys, locks, latches, lift gate systems and other vehicle access products dealt with the complete shutdown of its Mexican operations through the first part of the pandemic followed by a ramp up in demand that made for the company’s best year since it spun off from Briggs & Stratton in the mid-1990s.
More recently, Strattec has dealt with its customers, automotive giants like Ford, GM and Chrysler parent company Stellantis, shutting down plants amid the global shortage of semiconductors.
Frank Krejci, president and chief executive officer of Strattec, said in February he had a customer tell him the chip issue would be resolved by mid-March.
“Maybe it will be March, but it will be 2022 or 2023, not six weeks from when they were telling me,” he said.
Strattec worked with customers as they’ve navigated the shortages by trying to prioritize popular vehicles and the ones they can get all the parts for, Krejci said, noting the thought in the industry was August would be better than July and September would be better than August.
“Instead of continual improvement we fell off a cliff,” he said, adding that at one point in September GM had 10 of its 16 North American plants shut down.
In some cases, Strattec had products ready to ship only to have a customer call to say the plant they were destined for would be closed the next week.
“You go from going 100 mph to a dead stop,” Krejci said.
The result for Strattec is a quarter that shows the impact of the global supply chain issues. Net sales for the quarter were down 20.5%, a more than $25 million drop to $100.3 million. The company barely reported a profit with net income of $101,000, down from more than $8 million at the same point last year.
Krejci, however, wasn’t overly concerned about the quarterly result.
“Right now, if I really wanted to optimize our earnings, I could lay off a bunch of people, especially in Milwaukee, we’re not doing that,” he said.
lnstead, Krejci is taking a long-term view and he’s encouraged by several things in the market. For starters, automotive dealers have around 20 days of inventory on their lots, down sharply from a more typical level of 77 days. That means there will be plenty of demand from customers for restocking, Krejci said.
Things have also been going better in October, he said, with fewer shutdowns and a gradual ramp up in demand. Strattec also had a number of new business wins in recent years that are now