How a Detroit machine maker wound up in Chinese hands

DETROIT — So how does a company with roots in suburban Detroit end up with Chinese owners?In the case of VGage, it was more about the demands of automakers in 2006 than decades of corporate twists and turns that pulled the company through a line of owners that included Digital Techniques, Valeron, Cincinnati Milacron, GTE and Sweden's Sandvik.To hear John Malane tell it: "From day one, all the major customers were very concerned about our presence in China."Detroit tiesIt's not always about the U.S. market. For one Detroit business owner, a joint venture meant access to China.Day one, in his case, was 2006. And the concern was VGage's lack of any presence in China.Malane, now 56, had been hired by Sandvik to run its Valenite Gaging Systems unit in Oak Park, Mich., and prepare it for sale. He ended up buying it himself.He quickly found out that he was at a disadvantage. Automakers building engines and transmissions across the globe favored suppliers that had some international chops. Especially in the nation that was on its way to becoming the world's biggest auto producer, China.Those expectations even applied to specialists such as VGage, which builds custom machinery that measures with exacting precision the valves, pistons, gears and other parts that go into engines, transmissions and braking systems.So Malane went to China.There, he connected with two sales representatives, Sam Jia and Kelly Wu. Together, in 2009, they formed VGage Wuxi, a 50-50 joint venture. The Chinese-American combination gave VGage a foothold in the world's two biggest auto markets."You can't get on the bid list until you prove you have a global footprint," Malane explained. "It made us stand out versus smaller gauging companies."Bridging the PacificLanguage: About 5 VGage employees in Oak Park, Mich., speak Chinese. In Wuxi, China, it's much easier to find engineering students who have some command of English. Hiring translators who don't have technical expertise hasn't worked.Travel: General Manager Sam Jia spends a week each month in Oak Park. U.S. leaders go to China less frequently. At any given time, there typically will be a few Oak Park engineers in Wuxi for visits of up to 8 weeks.Culture: Cultural immersion is considered important, but there's no attempt to mix cultures. "You shouldn't manage China from the U.S.," said former owner John Malane. He says he learned how not to operate by watching other U.S. companies.Communication: Early on, the iPhone was embraced as a company-funded tool that could bridge cultures and a 12-hour time difference. Policy dictates that colleagues' emails get a response within 24 hours. Said Malane: "It's been critical for communications."VGage produces pricey, software-intensive equipment that has become more critical over the years amid the industry's push for quality. Malane says his typical order tops $200,000. Some units can go for $1 million.Today, about 60 percent of VGage's business is automotive. That's up from about 50 percent during the Great Recession. Key to its success in the U.S. has been a culture of support.Customers are encouraged to call around the clock when problems arise. In the U.S., most of the calls go directly to Malane or U.S. CEO Jim Nantais.One recent Sunday, Nantais fielded a call from an American Axle plant in Bluffton, Ind. A mistake had been made. A gauge was out of order. Nantais immediately dispatched a colleague to travel from Michigan to Indiana, where a software fix was made the next day.Malane says his Chinese counterparts in Wuxi initially struggled with such a customer-first philosophy but eventually embraced it. Changing tides

How a Detroit machine maker wound up in Chinese hands

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