MSX International reaps the benefits of outsourcing boom.
MSX International Inc. (MSXI) — which, through an August acquisition, became one of the largest independent global contract staffing management companies — expects to reach $500 million in revenue as it closes out this year.
That's up 11 percent from $450 million last year and 48 percent from 2010 revenue — a jump that helped land MSXI at No. 41 on Crain's 2014 Fast 50 list of the fastest-growing companies in metro Detroit.
Demand for both the managed service provider business, which oversees contract staffing contracts for clients, and its automotive dealer training and services is spurring revenue increases for the privately held company, President and CEO Fred Minturn said.
MSXI — owned by Court Square Capital Partners, Prudential Financial Inc., Ardian and Falcon Investment Advisors — has seen double-digit revenue growth every year since 2009.
"The outsourcing industry is just exploding" since the recession, when companies found themselves saddled with high levels of overhead, Minturn said. "We are getting a really nice pickup from that."
Minturn projects revenue will reach $550 million to $600 million next year with the addition of the managed service provider division of IQNavigator, a Denver-based provider of vendor management software that MSXI bought in August for an undisclosed amount.
MSXI's business model got a vote of confidence in late August when it was able to raise $260 million of senior secured credit facilities in a syndicated financing led by RBC Capital Markets and SunTrust Robinson Humphrey Inc. to refinance outstanding debt.
The refinancing reduced MSXI's annual debt interest costs more than 50 percent and provided a $40 million revolving credit facility from a group of lenders including Fifth Third Bank, FirstMerit Bank N.A., Hitachi Capital America Corp. and J.P. Morgan Chase Bank N.A..
MSXI launched in 1996 as a spinoff from what was then MascoTech Inc. At the time, it was the largest global automotive engineering company, said Minturn, who was vice president and automotive controller at MascoTech for three years before new company as executive vice president and CFO.
But the company has evolved.
Today, MSXI provides only a fraction of the engineering and technical staffing it once did. That unit accounts for just 10 percent of total earnings, Minturn said.
In 1997, MSXI bought Geometric Results Inc., a Ford Motor Co. subsidiary that operated noncore operations for the automaker.
The two primary businesses that MSXI operates today — both its managed service provider and dealer training and network business under the Retail Network Solutions banner — were part of Geometrics. They account for 30 percent and 60 percent of earnings, respectively, Minturn said.
In August, after its purchase of the managed service provider division of IQNavigator, MSXI revived the Geometrics name, creating a wholly owned managed service provider subsidiary that operates as Geometric Results Inc.
The new subsidiary oversees $4 billion in contract staffing spending — double the amount MSXI oversaw before the acquisition — for clients in the automotive and transportation, finance, insurance, energy, defense, industrial, telecommunications, technology and finance sectors. Clients include Ford, Apple Inc., Schlumberger Technology Corp., Gap and Kohl's.
Geometrics' "independent" status comes by virtue of being separate from the MSXI staffing business, Johnson said… The managed service provider business is growing at 20 percent annually now, Minturn said, pointing to forecasts from Staffing Industry Analysts — which, like Crain's Detroit Business, is owned by Crain Communications Inc.
"We're in a great position to take advantage of that," Minturn said.
Following its IQNavigator acquisition, MSXI is among the larger independent MSPs in the world, said Craig Johnson, managing editor of Staffing Industry Analysts.
The IQNavigator acquisition opened nonautomotive markets with some brand-name clients, something that will help MSXI gain a foothold with other clients in those industries, Minturn said.
This month, Geometrics expects to complete a new $50 million to $100 million managed service provider contract with a Texas-based mar-keting company to launch in January, he said.
The managed service provider industry as a whole is growing, said David Barfield, chairman, president and CEO of the Southfield-based Bartech Group Inc.
Bartech, which has been active in the service provider industry since the late 1990s, managed about $3 billion in contract staffing spending last year. This year, it's north of that amount, he said.
Bartech will finish 2014 with about $230 million in revenue, and it projects total revenue will increase 15 percent next year.
"The MSP division is the fastest-growing piece of our business," Bartech said.
More than half of MSXI earnings stem from its dealer services and training division, Minturn said. That business, Retail Network Solutions, provides outsourced business process services to automakers for their dealer networks.
The business provides training and other services to automotive dealers. Those services include service lane customer service training, something MSXI provides for more than two-thirds of the automakers operating dealerships in North America, Minturn said.
Among other programs, MSXI also helps dealers sell wholesale parts to independent repair shops, and provides a technical help desk for service repair on Ford vehicles, warranty approval prior to repairs and training to equip dealership personnel to teach consumers about the technologies in their new vehicles.
After exiting the project engineering business in 2008, MSXI continued to provide engineering, product development, information technology and other white-collar administrative staff only upon customer request for contracts in North America and Brazil, Minturn said, MSXI's staffing business is now completely separate from the Geometrics managed service provider business to avoid conflicts of interest, he said.
The MSXI staffing division will compete like everybody else on contracts Geometrics oversees, Minturn said.
To accommodate its growth, MSXI expects to be hunting for a new site in the Southfield area during the second half of 2015, Minturn said. The company, which moved its global headquarters and 20 executive team members to downtown Detroit from Warren this fall, plans to move 250 employees from its Warren location to a new site.
Besides its Detroit and Warren sites, the company operates Michigan offices in Madison Heights, Dearborn and Flint. It employs 5,500 in 80 countries, after adding business in 10 countries through the IQNavigator deal. Just under a fifth of them are in North America and about 500 are in Michigan, Minturn said.
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