AUTOMOTIVE components supplier SMR and technology specialist EVRSafe are close to signing a deal that is being described as a "fantastic business model" for small manufacturers to replicate.
The companies are working towards a "turnkey" operations agreement, which will see SMR take care of all the packaging and manufacturing of a new product - a toxic gas detection system - for smaller entity EVRSafe.
The deal could also involve potentially using SMR's international reach and expertise in accessing the global markets that EVRSafe is targeting.
SMR Australia produces automotive components for domestic and international markets, with 78 per cent of its products exported to the US, Europe and Asia.
Both SMR - formerly Visiocorp and now part of the international giant Samvardhana Motherson Group - and marine specialist EVRSafe have felt a direct impact of the global financial crisis in the respective industries they service.
SMR, which employs close to 600 staff at its Lonsdale manufacturing site, says with the automotive industry in decline, the company is in transition and needs to diversify.
The company, which won a $2.3 million grant from the Green Car Fund, is now foraying into the medical and other sectors with its export potential and current contracts under threat.
"We can either crash out or grow. We are not interested in exiting automotive, but need to complement it... need to apply our DNA to other industries," SMR Automotive general manager Paul Sandercock said.
Through it's involvement with the Department of Trade and Economic Development's industry support program, SMR was introduced to EVRSafe.
EVRSafe has focused primarily safety systems for marine and other pleasure crafts, but has had to diversify into the mining and other market segments.
"We are finding new markets for our technology and will look to leverage the expertise of SMR in taking our product - one to start off with - to market," EVRSafe president Shane Faulkhead said.
DTED industry development manager David Viola said: "The potential agreement is a fantastic business model for new companies to partner them with companies like SMR to launch their innovation to the market sooner".
"This is something we hope to replicate with other smaller manufacturers in SA," he said.
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