Metro Detroit is full of excellent $10M to $80M suppliers with a risk profile nobody chose on purpose: two customers, three programs, 70% of revenue. It happens the honest way. You win a program, you staff and tool for it, you perform, the OEM or Tier 1 gives you more. Saying yes to good work from a good customer is correct every single time, and after a decade of correct decisions the business is a monoculture.
The work is real and the margins can be fine. The problem is what concentration does to risk, and to two specific numbers: your resilience in a downturn, and your multiple in a sale.
What concentration actually costs
In operations: a program cancellation, a re-source at renewal, or a customer's own slowdown arrives as a 30% revenue event you cannot offset quickly, in an industry where programs turn over on their own schedule, not yours. Every Detroit supplier over 40 knows a shop that was excellent right up until one sourcing decision in Auburn Hills ended it.
In a sale: buyers price concentration mechanically. Customers over 15 to 20% of revenue trigger discounts, earnouts tied to renewals you cannot control, or passes. Two suppliers with identical EBITDA, one spread across twelve accounts and one across three, can trade a full turn of multiple apart. On $4M of EBITDA, that is $4M.
Measure it like a buyer would
Three numbers, updated quarterly:
- Revenue share by customer and by program, because two customers can hide six programs with different lives and renewal dates. Program-level is the honest view.
- Contribution margin by program, fully loaded with the tooling amortization, the dedicated lines, the expedites, the engineering support. Concentrated customers are usually your most demanding, and the blended margin hides what serving them really costs.
- The renewal calendar. Program end dates and re-source windows, laid out like debt maturities. A wall of renewals in the same eighteen months is the same problem as a debt wall, and it deserves the same advance management.
Reduce it without firing your best customer
The false exit is "diversify," chasing any non-automotive work at any margin, which usually means buying revenue that subtracts value. The disciplined version:
Price the risk in. Concentrated, demanding programs should carry margins that compensate for the risk they concentrate. If a program cannot support that margin, that is information.
Diversify along your capabilities, not away from them. The same stamping, machining, or coating that serves automotive serves adjacent industrial markets: defense, agriculture, heavy truck, energy. The goal is new decision-makers, not new competencies learned at your expense.
Let the strong programs fund the spread. Deliberately route a share of the cash the concentrated work throws off into winning the fourth, fifth, and sixth accounts, with sales targets set by geography and capability fit, not hope.
Build the balance-sheet buffer. Concentrated businesses need more liquidity headroom than diversified ones: a 13-week cash discipline and a working-capital cushion sized to survive the program transition you know is eventually coming.
Detroit is home ground for us, and this exact profile, an operations-heavy family business with concentration it earned honestly, is who we built our manufacturing practice around. If the renewal calendar keeps you up at night, start a conversation. The time to widen the base is while the anchor programs are still strong.