We’ve made it to February, and so far there are no new reports of soup lines in the U.S., so I’m feeling pretty confident in my “prediction” that there will be no recession this year. But, don’t believe me, look at people who are putting their money where my mouth is.

No one is more clever, or more bold, than Wilbur Ross when it comes to wealth-making risks. The man who assembled broken remnants of the American steel industry into the nation’s largest producer — and then sold it in a deal that helped to shape the world’s largest steelmaker — is buying up assets in the domestic auto industry.

A few years ago, I heard Ross explain his investment approach: locate essential assets, plants or companies that can’t be replaced, or that can supply something buyers need and will buy regardless of the price. Don’t put your money into gourmet coffee; invest in coal mines, or steel mills, or auto parts.  

Ross takes risks but he knows how he will be rewarded, because he understands what his assets can do. He is confident of his positions, and eager to take advantage of the lack of confidence shown by other investors. There’s a real-time example of this in the automotive components segment this week:

Last April, Marathon Automotive Group bought Contech U.S. L.L.C. — an aluminum diecaster and steel forger — from SPX Corp. for $146 million.  The president of SPX said then his firm “is focused on a strategy of growing businesses that provide solutions for customers in the areas of flow technology, test and measurement, and thermal equipment and services. Given this focus, Contech no longer fits into our long-term strategy."

“Focus,” “solutions,” “long-term strategy,” … all these terms have meanings, but in the nine months since the sale closed Contech that has demonstrated results.

This week, Contech landed a $6.7-million supply contract from American Axle & Manufacturing to deliver critical components that help that manufacturer fulfill a General Motors supply contract.  Contech will supply axle carriers and covers for GM’s Epsilon II platform:  Epsilon II is a line of front-wheel and all-wheel drive cars that will be introduced for the 2009 and 2010 model years. Some examples will be the 2009 Saab 9-5 and 2010 Buick LaCrosse.

Also, Contact will assume a $7.1-million contract left unfulfilled by another contractor, to supply axle carriers, covers, and two disconnect housings used on the GMT- 360/370 platform SUVs (Chevy TrailBlazer, GMC Envoy, and Oldsmobile Bravada); and the adjuster nut housing used on the GMT-900 platform (full-size pick-ups and SUVs.)

All these components are being produced by Contech at its Auburn, IN, and Dowagiac, MI, plant.  Importantly, the company explains it was able to take over existing tooling for these products, modify that tooling for its own equipment, produce samples of all five parts, and receive production approval from AA&M — in less than two weeks.  

"This is an important award for a valued customer as we focus our efforts on expanding our casting presence in the high-integrity aluminum axle market," stated Mark Hunter, Contech president.

There’s a lot to take out of this story, about the direction of the economy and the state of manufacturing. Or, even about Marathon's reward for taking a risk on the future of castings in automotive design and supply. In less than a year, we’ve seen how the difference between risk and reward can be just a matter of outlook.