Auto parts maker looks to new sectors as tariffs loom

Dave Johnson and his team were very focused on turning around Ursa Manufacturing as it emerged from the economic impact of COVID.

The auto parts maker in London, Ontario, got more efficient in every department, vastly improved financial performance, paid off debt and eliminated non-profitable products.

Ursa became profitable three years ago and has been so ever since. “We worked very hard and have been putting money to the bottom line every month,” Johnson says.

But all that is now at risk from threatened U.S. tariffs. Coming months could see tariffs of up to 50% on auto parts. “That jeopardizes our entire future,” Johnson says.

Looking into new sectors

To reduce the impact of potential tariffs, Johnson wants to pivot to non-automotive customers in Canada and overseas. 

Increasing non-automotive sales has the benefit of not only increasing diversification, but also potentially earning better margins. 

Johnson was intrigued by BDC’s “Trade Resilience” program being offered to current automotive suppliers. BDC’s Trade Resilience experts met him and his team and assessed their company’s finances, operations and potential opportunities.

The assessment showed that Ursa’s recent work to improve the company’s financial performance put it in an ideal position to weather the storm and invest in diversifying its business.

BDC’s advisors produced a report listing the highest-potential opportunities and an action plan with steps needed to pursue them.

Company is rebooting its website

This included renewing the company’s long-neglected website—an important way to market to potential new customers.

The team got to work on a website update (launching soon) and implementing the other action plan items. He has attended trade shows and symposiums, made cold calls and explored possible non-automotive product lines to add.

“We’re putting our name out there,” he says. “We’ve been hosting events and tours of the business whenever we can.”

Exploring new sectors

The uncertain business climate and tariff landscape has made it a challenging time for Ursa to be looking for new customers and markets and contemplating new products. “Nobody knows what’s going to happen,” Johnson says. “Everybody is in wait-and-see mode.”

BDC’s advice and talking to prospects has given Johnson valuable intelligence about where to focus his efforts. He believes the company could have opportunities in making components for manufacturers of heavy equipment, renewable energy equipment and appliances in Canada and overseas.

“They have similar requirements to some of the products we already make,” he says. “If you make a dump truck or large earth mover or loader, you need door hinges. Well, guess what? I make door hinges. You need door strikers. I make those too.”

Defence may be of interest

Defence could be another market for Ursa. Getting into the highly regulated defence sector can be difficult and time-consuming given its strict certification and security requirements.

Defence also may not be the best fit for Ursa because it is likely to involve relatively small product volumes. “Automotive tends to be higher volume and repeatable,” Johnson says. “You automate everything. But if you only need 500 items, I can bang that off in an hour. That’s not a year’s worth of work for us.”

Nonetheless, Johnson is exploring the possibility of supplying components to subcontractors further down in the defence supply chain. The requirements in this case can be less onerous, while the work may still provide a worthwhile source of new business.

Company lays groundwork

Breaking into new markets takes time and investment in opening doors and building awareness and relationships. Johnson is laying the groundwork with his efforts. “It isn’t easy to break in,” he says.

He says BDC’s advice has been very helpful in supporting the company’s journey to diversify to other markets.

“I have had incredibly good fortune with BDC,” he says. “It was very, very productive and helped a lot. For the return on investment, it was certainly worth the money we spent. It added a lot of clarity.”

“Fantastic follow-up”

After the advisory mandate was completed, BDC’s consultants continued to follow up with Johnson to help him implement the action plan and put him in touch with useful resources and contacts.

“We got a lot of fantastic follow-up,” Johnson says. “If I don’t know who to talk to, I can call up the consultant or our local BDC reps and say, ‘Hey guys, I’m looking for someone who does this. Do you know anyone?’ And, even if they don’t, they’ll go find it. That as a resource is incredibly helpful.”

And when one of those prospects does develop into sales, Johnson is already considering applying for BDC financing to invest in equipment. “If some of these projects come through, BDC is certainly a great opportunity to have that safety net.”

What’s next

Get the insight, advice and information you need to help your business diversify and remain competitive with BDC’s Trade Resilience solutions.