Superior Industries International produces about 12.5 million wheels… (Chrysler )
Its squat, 1970s-era headquarters in Van Nuys may not look like much from the outside, but Superior Industries International Inc. is a key figure in the automotive industry.
The company sells aluminum wheels to the major automakers: Ford, General Motors, Chrysler, Toyota, Nissan, BMW, Mitsubishi, Subaru and Volkswagen.
Founded in 1957 in North Hollywood, Superior Industries at first sold wind deflectors, seat belts and a popular steering wheel cover called Sport Grip. In the 1960s, the company starting making aluminum wheels. It went public in 1969.
Its breakthrough came in 1974 when it reached a deal with Ford Motor Co. to produce aluminum wheels for its 1975 Mustang II. Today, Ford is the company's top customer.
"At that time, Ford wanted to start getting savings on weight because the cost of fuel was going up," Steven J. Borick, the company's chief executive and son of founder Louis Borick, told The Times in 2011.
Superior Industries produces about 12.5 million wheels a year at five manufacturing plants in Arkansas and Mexico. No production takes place in Van Nuys, where the company maintains administrative offices in a single-story building on Woodley Avenue.
Superior plans to break ground this year on a new manufacturing facility in Chihuahua, Mexico, a move that will increase its wheel production capabilities 15% to 20%, Borick said recently in a news release about the company's first-quarter performance.
"We are confident these investments will enable us to pursue the growth opportunities afforded by the strengthened automotive sector and to achieve our ongoing goal of enhancing shareholder value," Borick said. He declined to comment for this article.
The plant will cost the company $125 million to $135 million and be able to produce as many as 2.5 million wheels a year.
Construction will take about two years, the company said.
Superior Industries has been at the forefront of the auto industry's shift to aluminum wheels.
About 70% of U.S. autos sold last year had aluminum wheels, compared with about 10% in the 1980s, according to Ward's Automotive Group, an auto industry research firm.
Superior nearly doubled its revenue to $822 million in 2011 from 2009, one of the worst years ever for the auto industry. Last year, the company reported $821 million in sales.
Superior's net income of $4.9 million for the first quarter was 27% lower than a year earlier. The company said it spent more on labor and operating supplies — "especially at the company's largest and oldest U.S. facility" — than it did in the year-earlier quarter.
The company also is being squeezed by lower-priced competitors overseas.
"We continue to focus on programs to reduce costs overall through improved operational and procurement practices," the company said in its annual report this year. "However, it is possible that global pricing pressures may continue at a rate faster than our ability to achieve cost reductions."
In a conference call with analysts in May, Borick said "margins in the United States continue to be a difficult task." That's one reason the company decided to build manufacturing space in Mexico instead of in the United States, he said.
"It makes a lot more sense economically to build new capacity in Mexico, where we know we have greater margin opportunities," Borick said.
Investors have not been impressed. Superior Industries' stock is down 11% so far this year, while the Standard & Poor's 500 index is up 14%.
One analyst recommends buying the stock, three suggest holding it, and one rates it a sell. They have an average 12-month target price for the stock of $17.67.