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Accuride Says it's Nearly Done Fixing; Ready to Grow

January 21, 2013

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LAS VEGAS -- When Rick Dauch arrived as the president and CEO of a struggling Accuride in February 2011, the latest in a string of top executives, he was able to convince the board that they needed to make serious investments in fixing problems before they could embark on a global growth strategy. Two years later, most of the fixing in the "Fix and Grow" strategy has been completed.
Accuride has not only increased its capacity to make aluminum wheels, but also wide-base aluminum wheels.
Accuride has not only increased its capacity to make aluminum wheels, but also wide-base aluminum wheels.


"We've got the basic fundamental operations of the business running correctly now," said the former U.S. Army officer, who spent 13 years with American Axle and Manufacturing, during a press briefing Monday before the Heavy Duty Aftermarket Week in Las Vegas.

Dauch admitted that Accuride and Gunite, which it had purchased, both had lost the confidence of customers for a variety of reasons, including not being able to deliver product to customers, whether OE or aftermarket, on time.

"One thing I heard very clearly from customers is that at the market peak in 2006, Accuride didn't have enough aluminum wheel capacity," Dauch said. That kind of situation should not happen again.

However, the changes the company has made have resulted in the company securing new long-term agreements for steel and aluminum wheels. Accuride also secured new aluminum wheel business of up to $30 million annually that it will serve using its newly expanded aluminum capacity.

Fixing First

In 2011, Accuride launched a two-year, $150 million investment program to restructure and expand its core wheel and wheel-end component operations, and upgrade the capabilities of each of its four business units.

The company added engineers but cut bureaucracy. It downsized its sales team, but went to a regional alignment that doubled the amount of time spent with customers. Salespeople are spending a lot more time with fleets than before.

A distributor advisory council filled in Accuride execs on problems ranging from an outdated website to distributors who felt taken for granted.

Supply chain functions were beefed up to help ensure timely deliveries.

Underperforming divisions and factories were closed or sold.

"I said when I got here, 'If you can't make money or you don't have a plan to, you won't be part of our company -- you'll be sold or you'll be closed," Dauch said.

The company poured money into repairing and updating the remaining facilties.

"I convinced the board we had to go out and spend $150 million in capital investments in core operations," Dauch said. $21 million of that, he says, was simply catching up on overdue repairs, such as roofs, air handling systems and water retention ponds -- investments he characterized as basic things you should do to make sure you have a safe, compliant working environment. "It's just a cost of doing business."

The company also spent:
- $55 million to double its aluminum wheel capacity, including doubling its capacity for wide-base aluminum wheels
- $35 million to restructure and upgrade its Gunite business
- $12 million to upgrade IT infrastructure and convert to a common ERP system
- $2 million for research and development

Another $30 million will be invested in the steel wheel operations over the next two years.

Gunite has been designated as a preferred aftermarket source by a key OEM and removed from new-business hold by all of its OEM customers, allowing fleets to specify Gunite products when ordering vehicles. Cast, machined and assembled in the USA, Gunite components are competitively priced to both domestic and off-shore alternatives, and are available at the industry's shortest lead-times on popular models, according to the company.

Related Stories:

10/12/2012 Accuride Announces Cost-Cutting, Lower Earnings Expectations

7/26/2012 Gunite Corp. to Consolidate North American Operations

1/26/2012 Accuride Restructures, Announces Major Investments in NAFTA Capacity and Capability

2/2/2011 - Rick Dauch Named Accuride President & CEO


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