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Quality-control firm launches after key player folds

Product Action had targeted auto-industry clients

April 13, 2009

Entrepreneur Steven J. Cage has launched a new quality-control business after the one he built into an industry leader shuttered suddenly.

Cage is the sole owner of Stratosphere Quality in Fishers, which incorporated on Feb. 13—the same day Indianapolis-based Product Action International closed its doors, and put hundreds of people out of work without notice.

Cage founded Product Action Inc. in 1991, but a former employee and a competitor say he later sold the business, perhaps around 2004. That year, a new entity, Product Action International LLC, formed in Indiana and Illinois, the home state of its most recent CEO, Herbert Lichtman.

Product Action sorted and inspected parts for automakers and their suppliers, and at one time, had exclusive contracts with Toyota and General Motors Corp. plants. In the early part of the decade, it was among Indianapolis' fastest-growing companies. Revenue more than doubled from fiscal years 2002 to 2004, growing from $61 million to $132 million.

Product Action would deploy its inspection teams to major manufacturing sites, including Honda in Marysville, Ohio, and Toyota in Huntsville, Ala. The company had at least 19 offices throughout the South and Midwest.

In Indiana, Product Action had phone listings in Columbus, Greensburg, Princeton, Terre Haute and Kokomo. In 2005, the company told IBJ it had a payroll equivalent of 3,363 full-time employees.

Stratosphere Quality appears to be trying to pick up some of Product Action's business. Cage started Stratosphere Quality at 12024 Exit Five Parkway in Fishers, the same building that houses his muscle-car collection.

The company's single-page Web site lists Cage as the sole owner and notes his 29 years of experience. It goes on to boast of  a major automotive contract, and says Stratosphere Quality has a variety of automotive customers and provides "continuous quality improvement in ten states."

At the same time, the new company appears to be trying to diversify away from the embattled auto industry. Stratosphere Quality's Web site mentions experience in military, medical and plumbing-fixtures industries.

Even with diversification, modern justin-time manufacturing makes the qualitycontrol business difficult, said Nancy Mc-Carty, business manager at AccuServe, a family-owned firm in Jenison, Mich. AccuServe was a much smaller competitor to Product Action.

"Ten years ago, we had a warehouse full of parts manufactured way ahead of time," she said.

All of AccuServe's inspectors work on a part-time, flexible basis because customers call for their services on short notice.

"We have lost the ability to forecast," McCarty said.

McCarty said she knew Product Action as the dominant player in quality-control services for automotive customers. She was still shocked to see the company close suddenly.

"That speaks volumes to the depths of auto-industry woes," she said.

The collapsing auto industry might not be the sole reason for Product Action's folding. One former employee said the company's new owners struggled to satisfy the terms of their bank loan.

Former employee Scott Sampson said he went to Product Action's office on Centerpoint Drive on Feb. 13, expecting a normal workday. A supervisor told him the company, which employed a few dozen people at the Indianapolis headquarters, would close at the end of the day.

"We had a ton of jobs going on at the time," Sampson said. "The bank told [the owners] to shut down."

Sampson was soon hired at Stratosphere Quality, where he said he was doing the same job.

Lichtman of Highland Park, Ill. refused to talk about the company, other than to confirm that it had let go its work force. He said, "We're dealing with a number of legal and financial issues."

Cage was chairman of the board at Product Action until at least 2008. It's unclear what role he played recently. He did not return repeated phone calls.

The 56-year-old has donated such a huge sum to his alma mater, Berry College in Rome, Ga., that the school named its new recreation facility the Cage Center.

In a January 2008 press release, Berry described Cage as chairman of the board at Product Action International.

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