Investors park their car biz in ex-Saleen digs
Plan is to be hub for performance
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API's new 183,000-square-foot manufacturing space in Troy contains offices, a showroom and, notably, a “high-bake” vehicle painting system.
Photo: COSTAR GROUP
A group of former auto executives is taking advantage of a real estate deal to create a hub for high-performance vehicle businesses in metro Detroit.
It's an idea from a group of self-proclaimed gearheads to turn their hobby into a viable business, and who last month bought a vacant Saleen Special Vehicles manufacturing facility in Troy.
Automotive Performance Industries LLC was formed in January by a group of three investors, led by Karl Storrie, former CEO of Rochester Hills-based auto supplier Dura Automotive Systems Inc., and Tony Johnson, founder of Minneapolis-based Hidden Creek Industries. The third partner did not want to be named.
In the building, they plan to organize a stable of businesses that create high-performance vehicles, show cars and specialty fleets.
The API investors, through 1225 Maple Road Holdings LLC, paid $3.75 million last month for the 183,000-square-foot manufacturing space at 1225 Maple Road. The building has offices, a showroom and, notably, a "high-bake" vehicle painting system.
Storrie said that 35,000-square-foot painting facility cost $7 million when it was installed a decade ago by Saleen, the building's former owner. Known for its work on the Saleen Mustang and the Ford GT, the firm moved its Troy operations to its headquarters in Irvine, Calif., in 2009.
"We have very clear expansion plans because of the unique capabilities we have with this building -- particularly the high-bake paint system," Storrie said. "One of our partners told me, 'Get us the Saleen building, and we'll triple our business.' "
High-performance vehicle development will be a fast-growing industry as the economy and the auto industry rebound, Storrie said. It's a $28 billion industry, according to the Specialty Equipment Market Association.
Storrie said API had to compete against several bidders over a year to buy the Saleen building out of foreclosure from the original lender, Chicago-based PPM America Inc.
But it's a deal that will give API an advantage, said Stephen Chue, president of Katech Inc., a Clinton Township-based company that builds high-performance motorsports engines.
"Honestly, finding deals like that today is what makes competition very stiff," he said. "Because if somebody is in the body paint business and they have to compete against a company that bought a $7 million machine for a fraction of the price and can charge people at a much discounted rate, how do you compete against that?"
API's plan is to use the building to host other companies in the high-performance, show car and specialty fleet market. Smaller companies can use space and grow in the building.
It's also not the first deal for either Storrie or Johnson. Both have a history of building companies through calculated acquisitions. Between 1991 and 2003, Storrie grew Dura Automotive from $120 million in annual revenue to $2.5 billion, he said. Through Hidden Creek Industries, Johnson oversaw the acquisition of 55 companies through his five portfolio companies between 1989 and 2003.
The API investors plan to take equity stakes in the companies that use the building. They've started by taking an investment in the two anchor companies that have leased space in the building.
Alternative Automotive Technologies LLC moved in last month from its Troy location on Executive Drive. About 50 employees are working in the building, using 75,000 square feet. AAT's 2011 revenue was about $3 million.
Wixom-based Classic Design Concepts Inc., which designs and builds vehicles for TV, movies and charity raffles, is moving in. Its 2011 revenue was about $2.8 million.
API's equity stake will grow over time as the companies increase in value, Storrie said. API's investors also loaned money to the two companies so they could have a minority stake in the building itself.
Through that structure, the goal is draw more companies and create 300 jobs by the end of 2014, with a revenue target of $30 million.
"The immediate goal is to consolidate a couple of companies and substantially grow their business by providing the building space and the management help that these smaller companies might need," Johnson said. "But ultimately it may involve acquiring several other companies that are in high-performance and specialty vehicle markets."