Auto-focused companies diversify to 'keep people working'
Thursday, March 28, 2019
From automotive machinery, to equipment that handle tomatoes and even brownies — some local companies are forcing themselves to diversify to help ensure their survival should the auto industry ever go south.
Reko International Group has been operating in Windsor since 1976 — starting out as a mould shop supplying the auto industry.
Within the last year, the technology-driven company has added new industries to its repertoire. Over time they developed a machine-building division, which evolved into an automation division.
This was done, in part, "as a way to keep people working."
Secret to diversification?
"That's the secret to successful diversification is that you have to build upon what the core strengths are of your organization," said CEO Diane Reko. "If you go too far outside that, sometimes it's a big gamble."
Diversifying the business didn't come without some challenges as different endeavours didn't pan out, which forced them to backtrack.
Despite expanding into new industries, automotive is still a significant majority of Reko's overall business.
"We're not trying to scare anybody away," said Reko. "Our growth is not going to come from getting rid of automotive customers and adding different ones. It's going to be adding to it."
In the summer of last year, Reko opened a new $5.7-million automation and innovation facility. It allows them to deliver large-scale automation projects to its customers.
When diversification is a must
Tecumseh technology company Radix also started primarily in automotive, but has since expanded into different sectors such as aerospace, food and beverage, as well as pharmaceutical.
In order to be a healthy business, VP of operations Shelley Fellows said you must diversify.
"In the first downturn in the automotive industry, we looked at each other and said whoa, wait a minute," said Fellows. "If you have all of your eggs in one basket, and there's something wrong in that basket, there's a problem for your business, just like your region."
WETech Alliance is keeping a pulse on how Windsor fits into the technology and automation sectors.
President Yvonne Pilon said one of Windsor's biggest advantages is the new bridge construction and incorporating tech into the $3.8-billion project.
"We have a really unique asset, and I think the province and the feds have recognized that," said Pilon.
"I think that's a big piece of this project is the ability to have a new bridge and make sure that it's connected with the best technology to be ready for autonomous vehicles."
Last year Windsor and London were selected to be the southwestern Ontario hub for autonomous vehicle testing and development. There's a focus on vehicle cybersecurity and cross-border technology.
Level 3 autonomous vehicles are already part of a partnership between Ontario and Michigan to test self-driving cars at border crossing — the two jurisdictions have signed a memorandum of understanding back in July 2018.