Superior Industries International, Inc. History

Address:

7800 Woodley Avenue
Van Nuys, California 91406
U.S.A.

Telephone: (818) 781-4973
Fax: (818) 780-3500

Public Company
Incorporated: 1969
Employees: 3,500
Sales: $325.31 million
Stock Exchanges: New York
SICs: 3714 Motor Vehicle Parts and Accessories

Company History:

Founded initially to make radiator bug screens, Superior Industries International, Inc., has grown to be the largest aluminum wheel manufacturer in the world and the principal supplier of cast aluminum wheels to the North American automotive industry. Superior designs, manufactures, and markets automotive products for both the original equipment manufacturer (OEM) market and for the automotive aftermarket, specializing in custom road wheels as well as steering wheel covers, lighting products, and suspension products.

In 1957 Louis L. Borick established Superior Industries International to manufacture and supply popular products for a burgeoning automotive aftermarket. The company set up its headquarters in Van Nuys, California, and Borick, who had become a car fanatic as a teenager after landing a job in a Minnesota auto parts shop, became president and chief executive of Superior.

In 1957 the company debuted its first product, a radiator bug screen, which earned Superior a modest $27,000 in sales its first year. In 1961 the company constructed a new, 25,000-square-foot manufacturing plant in Van Nuys, and the following year it introduced its second major product, safety belts. During the mid-1960s Superior's product line was expanded to include other automotive aftermarket products, such as steering wheel covers, custom steering wheels, and spring and suspension systems.

In 1967 Superior added plating facilities to its manufacturing operations and began producing chrome-plated steel wheels for the automotive aftermarket. Riding on the success of its chrome wheels, Superior became a public corporation in 1969, offering an initial 320,000 shares of common stock, with the proceeds going toward bank debt. Before its first full decade closed, Superior recorded annual sales of more than $2 million.

In 1970 Superior added low-pressure aluminum casting wheels to its aftermarket product line. The following year the company purchased Industrias Universales Unidas De Mexico, S.A., and used the Mexican company's operations to establish an aftermarket road wheels polishing plant in Tijuana. With operations expanding, Superior's annual sales motored upward to $13.7 million in 1971 and $16.5 million in 1972.

In 1973, in its first major strategic acquisition, Superior paid $1.5 million to acquire Ideal Manufacturing Company, an aftermarket producer of recreational vehicle (RV) accessories--including running boards and RV trailers--with production facilities in Iowa and Canada. But Superior's principal focus during its early years as a corporation was on improving its production standards in order to gear up its aluminum wheels for the OEM market, which offered a consistent customer base and improved profitability through volume sales.

Targeting those sales, Superior's senior vice-president, Raymond C. Brown, made numerous trips to Detroit during the early 1970s in an effort to court major auto makers. In 1973 Brown secured Superior's initial purchase order to supply Ford Motor Company with its first cast aluminum wheel, and a year later the company officially entered the OEM market when its aluminum wheels debuted on Ford's Mustang II.

In 1976 Superior constructed a new corporate headquarters and 300,000-square-foot OEM wheel-making facility in Van Nuys. During the mid-1970s rising gas costs and the need for more fuel-efficient automobiles helped accelerate interest in Superior's light-weight aluminum tires, and in 1976 the company began producing aluminum wheels for Chrysler Corporation and General Motors (GM) passenger cars as well as chrome-plated steel wheels for Dodge trucks. By 1979 Superior was producing OEM wheels for seven car models. Looking to expand its manufacturing capabilities for aftermarket automotive accessories, Superior opened a manufacturing facility in 1979 in Arecibo, Puerto Rico, to produce steering wheel covers and seat belts.

In 1980 Superior's drive toward increased sales hit a major bump when demand for its wheels began sliding along with sales of new Ford and Chrysler vehicles. In April of that year, Superior posted its first-ever quarterly loss, of $1.4 million, and the company suspended payment of its regular quarterly dividend. One month after posting the quarterly loss, Superior announced that Borick and his family, controlling approximately 53 percent of the company, had granted Alumax Inc.--a fabricated aluminum products maker--an option to purchase the Borick family's holdings. But Superior shareholders quickly objected to the deal, and in June of 1980 the proposed sale to Alumax was called off.

While Superior's losses for the year were mounting, in August of 1980 the Canadian government cited the company for dumping--selling goods on an export market at prices below those prevailing in their country of origin--and announced it would impose anti-dumping levies on future imports of Superior's custom steel wheel rims. One month later, in September of 1980, Superior sold Ideal Manufacturing's Canadian interests.

For the first time since going public, Superior posted an annual loss for 1980 of $5.2 million. Automobile production remained in low gear in 1981 and Superior logged its second consecutive annual deficit, with combined losses for the two-year period reaching nearly $10 million. Superior's financial troubles were further complicated in April of 1982, when the company technically defaulted on a provision of its $8.5 million long-term debt coverage loan with Bank of America, which required the company to maintain a certain ratio of debts to assets.

In October of 1982 Superior replaced Bank of America as its primary lender and secured a $20 million, four-year credit arrangement with BT Commercial Corporation. The new agreement supplanted Superior's $5 million credit line and $8.5 million long-term debt coverage with Bank of America and did not carry balance sheet stipulations. By the end of year Superior had reduced its inventories nearly 50 percent and sliced its debt from $17 million to just under $6 million.

Superior's lightened debt load, along with new contracts for 1982 vehicle models, helped the company roll back in the black in 1982 as it earned $2.1 million on sales of nearly $70 million. One of the company's new contracts, with Ford, guaranteed Superior at least 50 percent of the automaker's aluminum wheel production needs, making Superior the largest aluminum wheel supplier for Ford.

With an improved economy and production orders rising, in 1983 Superior purchased an aftermarket plant in Toronto and an OEM aluminum wheel plant in Newmarket, Ontario. On the road to financial recovery, the company resumed payment of stock dividends. The following year sales exceeded $100 million for the first time.

Superior's OEM business continued to expand during the mid-1980s, as the company landed contracts to produce standard equipment wheels for Ford and General Motors cars. Superior's turn toward the profitable OEM market was accelerated by an overall expansion of the aluminum wheel market in the 1980s, when a growing number of car and light truck manufacturers abandoned steel wheels and adopted aluminum wheels as standard equipment.

In 1985 Superior received its first multi-year production contract of any kind, for wheels on 1986, 1987, and 1988 Cadillac vehicles. By the end of 1985, the company that was founded to produce aftermarket products was making nearly three-quarters of its sales to the OEM market.

On the road to its second consecutive year of record sales, in 1986 Superior acquired NT&M Corporation, a privately owned Toronto-based company producing mirrors and taillights, primarily under the Do-Ray label, for the Canadian automotive aftermarket. That same year, Superior acquired a cast-aluminum wheel plant in Fayetteville, Arkansas, which began shipping wheels the following year. Despite a two-month strike at its Iowa RV accessories plant--by a union that covered less than 100 of the company's then-2,000 employees--Superior's earnings rose in 1986 to $8.5 million on sales of nearly $149 million.

Superior's sales rose consistently during the late 1980s, moving from $169.4 million in 1987, to $200.1 million in 1988, to $246.1 million in 1989. Earnings during that time climbed from $9.4 million in 1987 to $16.1 million at the close of the decade. Also during the latter part of the decade, Superior expanded its manufacturing operations and improved the production quality of its wheels in the eyes of key automobile manufacturers. In 1988 Superior earned Ford's top Q-1 quality award. The following year Superior opened a new 200,000-square-feet OEM wheel plant in Rogers, Arkansas, installed state-of-the-art paint room robots in its plants, and earned General Motors Mark of Excellence Award. In 1989 Superior, as a result of newly-secured production contracts, became General Motors largest aluminum wheel supplier.

While Superior's relationship with Ford and General Motors was flourishing in the 1980s, Superior was faced with a demand for aluminum wheels that outstripped supply at a time when Chrysler began seeking price concessions. Superior decided to focus on accommodating Ford and General Motors, and Chrysler's production orders finally slowed to a halt in 1989.

Looking to expand its technology base, Superior entered a joint venture with Alumax Inc.--the company that once had a short-lived option to buy Superior&mdashø use Alumax's patented semi-solid metal technology in the production of aluminum wheels. In 1989 Mazda was added to Superior's customer base after Superior teamed up with Japan's largest wheel producer, Topy Industries, Limited, to supply cast aluminum road wheels for a Mazda light-weight truck. One year later, in an effort to move beyond the status of a domestic wheel manufacturer, Superior's relationship with Topy was extended to an ongoing 50-50 joint venture designed to market and sell Superior-made cast aluminum wheels to Japanese OEM customers in Japan and the United States.

Superior entered the 1990s in a restructuring mode and in 1990 closed its OEM plant in Newmarket, Canada. The Newmarket facility was Superior's oldest and least efficient wheel plant, manufacturing just two of the more than 50 wheel models Superior was producing at the time. The company also took steps in 1990 to rev up the profitability of its aftermarket operations by discontinuing production on several lines where sales and profits had been falling. Superior eliminated its RV/light truck accessory line, and as a result, closed its Oskaloosa, Iowa, plant where those items had been produced. The Oskaloosa facility--the site of a 1986 strike by the company's only union workers--had also been the source of bad publicity. In 1988, as a result of labor strife, the AFL-CIO had placed Superior on its "dishonor roll," as noted in a 1988 Los Angles Times article.

Between 1981 and 1990 overall cast aluminum wheel use in the United States increased by more than 500 percent. During the same period Superior continued to capitalize on the growing acceptance of cast aluminum wheels by OEMs, and by 1990 OEM revenues represented 87 percent of the company's business. By 1991 the company was producing wheels for 79 passenger car and light truck models--compared to seven models at the close of the 1970s--while supplying nearly 40 percent of the domestic market for aluminium road wheels through its relationships with Ford and General Motors. In late 1991 Superior paved the way for future sales and secured a six-year deal with General Motors valued at more than $35 million annually.

Gearing up for future production orders, in 1990 Superior completed its fourth OEM wheel plant in Pittsburgh, Kansas. Spanning more than 400,000 square feet, the Pittsburgh plant was billed as the world's largest cast-aluminum road wheel manufacturing facility in the world. In 1991 Superior also opened a new aftermarket plant in West Memphis, Arkansas, which began producing chrome-plated aluminium wheels that same year. In 1992 Superior completed a fifth OEM plant in Johnson City, Tennessee. The 200,000-square-foot facility, which the company labeled as the most technologically advanced wheel plant in the world, cost more than $40 million to construct and represented the first plant Superior built with internally generated funds.

As a result of its increased penetration into Japanese and North American OEM markets, in 1992 Superior's sales grew by more than $50 million and rose to well above $300 million for the first time. Net income increased more than 50 percent in 1992, to $28.6 million, up from $18.2 million a year earlier.

Superior entered 1993 with plans to construct a sixth OEM plant in Chihuahua, Mexico, to serve major automobile manufacturers courting the growing Mexican automobile market. The plant was expected to be operational by 1994. Superior's strategic plans included increased penetration into North American and overseas markets. Through its joint venture with Topy, the company expected to expand its Japanese OEM customer base and possibly extend its joint venture operations into European markets. Superior also appeared well positioned for expansion in North America, where it had been courting the return of Chrysler business since 1990. And through its ongoing work with chrome-plating technology, the company hoped to begin selling OEMs chrome-plated aluminum wheels, which in the past had only been available on the aftermarket because of their low quality and poor durability. Such potential technological innovations, coupled with the fast-paced and growing acceptance and use of aluminum wheels as standard equipment on new vehicles, appeared to suggest that there was much open road ahead for Superior in its drive towards increased profitability.

Principal Subsidiaries: Industrias Universales Unidas de Mexico, S.A. (Mexico); Superior Industries International-P.R., Inc.

Superior Industries International, Inc. History

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