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CORRESP
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filename1.htm

[CLARION TECHNOLOGIES,
INC. LETTERHEAD]

June 28, 2005

Via EDGAR

Mr. David R. Humphrey
Branch
Chief
Securities and Exchange
Commission
Washington, D.C. 20549

Subject:
Clarion Technologies, Inc.

Form 10-K for the fiscal year ended December 25, 2004

Form 10-Q for the period ended April
2, 2005
File No. 0-24690

Dear Mr. Humphrey:

        Clarion
Technologies, Inc., a Michigan corporation (the “Company”), pursuant to the
applicable provisions of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, submits this letter in response to your
letter to the Company dated June 15, 2005 (the “Comment Letter”).

        The
following responses have been numbered to correspond to the numbered comments contained in
the Comment Letter.

     **********

Item 1. Description of
Business

         1.
          Supplementally explain your basis in GAAP for capitalizing deferred and accrued
          interest. We may have further comment on your response. Assuming a satisfactory
          response, the notes to the financial statements should contain the accounting
          policy describing this treatment, including the amount capitalized in each
          period.

        Response:
The word “capitalized” was incorrectly used in our disclosure. Deferred and
accrued interest is expensed and classified based on our debt agreements. This will be
clarified in future filings.

Mr. David R. Humphrey
June 28, 2005
Page
2

Item 7. Management’s
Discussion and Analysis

Liquidity and Capital
Resources, page 15

         2.
          We note from the tabular presentations in Item 6 on page 11 that, for the past
          five years, you have had negative working capital. We also note that you briefly
          discuss this fact as an introduction to your Liquidity and Capital Resources
          section on page 15. Please expand this discussion to include how your situation
          compares to the industry norm. This disclosure should adhere to the standards
          set forth for discussions of known trends in section III.B.3 of the December
          2003 Interpretation of Commission Guidance Regarding Management’s
          Discussion and Analysis of Financial Condition and Results of Operations,
          which can be found on www.sec.gov.

        Response:
        In future filings, we will provide the appropriate disclosures as you suggest
above.

Table of Contractual
Obligations, page 16

         3.
          We note that you have included footnotes to your table of contractual
          obligations detailing the specific terms of your credit facilities. Because the
          table is aimed at increasing transparency of cash flow, we believe you should
          include scheduled interest payments in the table. To the extent interest rates
          are variable and unknown, you can use judgment in determining the appropriate
          methodology and estimated amounts of future interest payments. For example, you
          could apply the currently applicable interest rate to determine the value of
          future payments. In the alternative, the footnote to the table should provide
          appropriate disclosure to clarify the action taken if interest payments are
          excluded. In addition, the note should supplement the table by including
          additional information material to an understanding of your cash requirements
          (e.g. the amount of interest to be incurred in each of the next five years).
          Your preferred stock presentation should be similarly revised.

        Response:
        In future filings, we will provide the appropriate disclosures as you suggest
above.

Note 1 – Goodwill,
page 28

         4.
          In view of the significant amount of goodwill relative to total assets and the
          operating conditions and liquidity constraints discussed in note 13, your
          current disclosure is too general. In this regard, we believe you should expand
          the accounting policy to describe how an assessment for impairment is done.
          Among other items that may require disclosure, you should address the
          methodology for determining the fair value of the reporting unit, including how
          such amounts are measured and the amount of reporting units used in your
          impairment. Refer to the guidance in paragraphs 18, 23 and 30 of SFAS No. 142.

Mr. David R. Humphrey
June 28, 2005
Page
3

        Response:
        In future filings, we will provide the appropriate disclosures as you suggest
above.

Note 4 – Income
Taxes, page 36

         5.
          We note from your disclosure on page 18 that you currently have deferred income
          tax assets that are fully reserved because their realization is in doubt. We
          also note that your gross deferred tax asset is $23,549,000 and your valuation
          allowance is $17,192, leaving a deferred tax asset of $6,357 if considered
          separately from your deferred tax liability of $6,357. Supplementally explain to
          us how you have independently considered each source of your deferred tax asset
          and future taxable income in determining that a full valuation allowance on your
          gross deferred tax asset or, at a minimum, to the fullest extent of the net
          operating loss carryforwards at $20.8 million was unnecessary. As a related
          matter, please revise your disclosure on page 18 to reflect your actual
          valuation allowance position.

        Response:
Because of the Company’s cumulative losses in recent years, we believe that it is
more likely than not, that not all of the deferred tax assets, primarily the net operating
loss carryforwards will be realized and that a valuation allowance is needed. We referred
to the guidance in SFAS No. 109, paragraph 21, in assessing the realization of the
deferred tax assets and the determination of the valuation allowance. $3,027 of the net
deferred tax asset will be realized through the future reversal of the existing taxable
temporary difference related to the accumulated depreciation, leaving a net deferred tax
asset of $3,330. We have not considered the future reversal of the deferred tax liability
related to the tax deductible goodwill in our analysis. However, the full amount of the
NOLs was not reserved based on the lengthy carryforward period (the NOLs do not begin to
expire until 2019) and our belief that the Company will generate sufficient future taxable
income due to ongoing restructuring and cost cutting measures and significant new business
opportunities. Given the subjective nature of the determination of the valuation
allowance, we believe it to be prudent at this time to have recorded net deferred taxes of
zero. The Company continues to monitor its deferred tax assets and the need for any
further valuation allowances or reduction of valuation allowance on a quarterly basis.

        In
future filings, we will revise our disclosure on Page 18 to reflect our actual valuation
allowance position.

Schedule II –
Valuation and Qualifying Accounts, page 45

         6.
          We note from your disclosure within Critical Accounting Policies on page 18 that
          you have identified your inventory obsolescence policy as a critical accounting
          policy. Please supplementally provide to us and revise your Schedule II
          presentation to include a roll forward of your inventory obsolescence reserve,
          presented in accordance with Rule 12-09 of Regulation S-X, as required
          under Rule 5-04. In addition, Schedule II should also include the deferred tax
          valuation allowance, as a valuation and qualifying account.

Mr. David R. Humphrey
June 28, 2005
Page
4

      Response:

SCHEDULE II

CLARION TECHNOLOGIES,
INC. AND SUBSIDIARIES

VALUATION AND
QUALIFYING ACCOUNTS

     COLUMN A
     COLUMN B

     COLUMN C

     COLUMN D
      COLUMN E

     DESCRIPTION
       BALANCE AT

 BEGINNING OF

     YEAR

      CHARGED TO

  COSTS AND

  EXPENSES

      CHARGED TO OTHER

    ACCOUNTS(A)

      DEDUCTIONS(B)
        BALANCE AT

  END OF YEAR

     ALLOWANCE FOR
 DOUBTFUL ACCOUNTS:

Year Ended December 25, 2004

     $     160,000

     -

     -

     -

     $     160,000

     Year Ended December 27, 2003
     $     170,000

     $  66,000

     -

     $     76,000

     $     160,000

     Year Ended December 28, 2002
     $     559,000

     $  32,000

     -

     $   421,000

     $     170,000

     INVENTORY OBSOLESCENCE RESERVE:

     Year Ended December 25, 2004
     $     114,000

     $166,000

     -

     $   123,000

     $     157,000

     Year Ended December 27, 2003
     $     189,000

     $102,000

     -

     $   177,000

     $     114,000

     Year Ended December 28, 2002
     $     295,000

     $175,000

     -

     $   281,000

     $     189,000

     DEFERRED TAX VALUATION ALLOWANCE:

     Year Ended December 25, 2004
     $15,981,000

     -

     $1,314,000

     $   103,000

     $17,192,000

     Year Ended December 27, 2003
     $22,696,000

     -

     -

     $6,715,000

     $15,981,000

     Year Ended December 28, 2002
     $22,120,000

     -

     $3,957,000

     $3,381,000

     $22,696,000

     (A)     Represents
          the effects of additional net losses and additional deferred tax assets.

     (B)
          Represents the write-off of uncollectible accounts as it relates to the
          allowance for doubtful accounts, the write-off of obsolete inventory as it
          relates to the inventory obsolescence reserve, and the effects the realization
          of deferred tax benefits, reductions in net losses, and reductions in deferred
          tax assets as it relates to the deferred tax valuation allowance.

In future filings, Schedule II
will be revised to conform to the above presentation.

Mr. David R. Humphrey
June 28, 2005
Page
5

Other

         7.
          From a description of your products in the Business section, we note that you
          manufacture only custom parts based on customer-specifications. It is unclear if
          you provide a product warranty under the contracts with your customers. Please
          expand the business section to address whether a warranty is provided for your
          products. In addition, if product warranty is applicable, please provide
          disclosures required by paragraph 14(a)-(b) of FASB Interpretation No. 45.

        Response:
We do not provide product warranties to our customers. In future filings, we will
revise our disclosure to clarify our warranty policy.

     **********

        In
responding to the Comment Letter, the Company hereby acknowledges that: the Company is
responsible for the adequacy and accuracy of the disclosure in the filings; staff comments
or changes to disclosure in response to staff comments in the filings reviewed by the
staff do not foreclose the Commission from taking any action with respect to the filings;
and the Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

        We
hope the foregoing are sufficiently responsive to your comments. Please do not hesitate to
contact me by telephone at (616) 233-8494 or facsimile (616) 459-9317. We look forward to
hearing from you.

Sincerely,

/s/ Edmund Walsh

Edmund Walsh
Chief Financial Officer

cc:
 BDO Seidman, LLP

Varnum, Riddering, Schmidt & Howlett LLP