U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 29, 2001

                         Commission file number 0-24690


                           CLARION TECHNOLOGIES, INC.
                (Name of registrant as specified in its charter)


        Delaware                                        91-1407411
 (State of Incorporation)                  (I.R.S. Employer Identification No.)

              38 W. Fulton, Suite 400, Grand Rapids, Michigan 49503
                    (Address of principal executive offices)



Issuer's telephone number:  (616) 233-6680


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities and Exchange Act of 1934 during the past 12 months
(or for such  shorter  period  that the  registrant  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. [X] Yes [ ] No



The number of shares outstanding of registrant's  common stock was 23,961,551 as
of November 6, 2001.


                                      -1-

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                   CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (In thousands, except per share data)


                                                Third Quarter Ended                Year to Date Ended
                                           September 29,     September 30,    September 29,      September 30,
                                               2001               2000            2001               2000
                                                                                       
Net sales                                     $ 26,949          $ 31,318         $ 83,474          $ 85,563
Cost of sales                                   26,306            27,738           82,585            72,479
                                           -----------       -----------      -----------       -----------
     Gross profit                                  643             3,580              889            13,084

Selling, general and
administrative expenses                          2,943             3,463            9,629             8,982
Impairment and other nonrecurring charges          123                 -            7,556                 -
                                           -----------       -----------      -----------       -----------
     Operating income (loss)                    (2,423)              117          (16,296)            4,102

Interest expense                                (3,034)           (2,047)          (7,964)           (5,413)
Other income (expense), net                        (47)               17             (145)               93
                                           -----------       -----------      -----------       -----------
Loss before provision for income taxes          (5,504)           (1,913)         (24,405)           (1,218)

Provision for income taxes                           -               175              212               495
                                           -----------       -----------      -----------       -----------
     Net Loss                              $    (5,504)       $   (2,088)      $  (24,617)      $    (1,713)
                                           ============       ==========       ==========       ===========


Net loss                                   $    (5,504)      $    (2,088)      $  (24,617)      $    (1,713)
Preferred stock dividends accrued                 (774)             (554)          (1,793)           (1,650)
                                           -----------       -----------    -------------       -----------
Loss attributable to common
 shareholders                              $    (6,278)       $   (2,642)     $   (26,410)       $   (3,363)
                                          ============       ===========     ============       ===========

Average shares outstanding (basic
and diluted)                                    23,637            22,549           23,572            20,996
                                          ============       ===========    =============       ===========
Loss per share (basic and diluted)        $      (.27)       $     (.12)    $      (1.12)       $     (.16)
                                          ============       ===========    =============       ===========


(  ) Denotes deduction.

See accompanying notes to condensed consolidated financial statements.

                                      -2-

                   CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                                     September 29, 2001     December 30, 2000
                                                                     ------------------     -----------------
                                                                       (UNAUDITED)                (AUDITED)
        ASSETS
        Current assets:
                                                                                           
             Cash and cash equivalents                                    $       931            $    5,252
             Accounts receivable, net                                          13,870                18,643
             Inventories                                                        4,456                 5,375
             Prepaid expenses and other current assets                            156                   549
                                                                          -----------            ----------
                 Total current assets                                          19,413                29,819

        Property, plant and equipment, net                                     45,935                53,626

        Other assets:
             Goodwill, net                                                     25,989                27,341
             Deferred program costs                                             3,075                 2,398
             Deferred financing costs, net                                      1,047                 1,192
             Other                                                                  -                     2
                                                                            ---------            ----------
                                                                             $ 95,459             $ 114,378
                                                                             ========             =========


        LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
        Current liabilities:
             Accounts payable                                              $   19,641             $  21,586
             Accrued liabilities and dividends payable                         11,254                 5,817
             Revolving credit and current portion of long-term debt            39,666                 1,580
                                                                           ----------            ----------
                    Total current liabilities                                  70,561                28,983

        Long-term debt, net of current portion                                 31,675                65,924
        Other liabilities                                                         137                   250
                                                                        -------------            ----------
                 Total liabilities                                            102,373                95,157

        Value of common shares subject to redemption                            2,550                 2,550
        Redeemable preferred stock                                             16,472

        Shareholders' equity (deficit):
             Preferred stock                                                        -                15,702
             Common stock                                                          24                    24
             Additional paid-in capital                                        33,581                33,201
             Accumulated deficit                                              (59,541)              (32,256)
                                                                           ----------             ---------
                 Total shareholders' equity (deficit)                         (25,936)               16,671
                                                                           ----------            ----------
                                                                            $  95,459            $  114,378
                                                                            =========            ==========


(  ) Denotes deduction.

See accompanying notes to condensed consolidated financial statements.

                                      -3-

                   CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (In thousands)


                                                                               Year to Date Ended
                                                                    September 29, 2001   September 30, 2000

        OPERATING ACTIVITIES:
                                                                                            
             Net loss                                                     $    (24,617)           $   (1,713)
             Depreciation and amortization                                       6,045                 4,790
             Impairment and other nonrecurring charges                           7,433                     -
             Changes in operating assets and liabilities                         5,970                (6,284)
             Other, net                                                            (19)                    6
                                                                           -----------            ----------
                 Cash used in operating activities                              (5,188)               (3,201)

        INVESTING ACTIVITIES:
             Capital expenditures                                               (1,709)               (3,438)
             Business acquisitions, net of cash acquired                             -               (30,796)
             Other                                                                  14                    38
                                                                           -----------            ----------
                  Cash used in investing activities                             (1,695)              (34,196)

        FINANCING ACTIVITIES:
             Net change in short-term debt                                           -                (3,587)
             Proceeds from long-term borrowings                                  9,300                87,400
             Payment of deferred financing costs                                  (913)                    -
             Repayments of long-term debt                                       (5,909)              (50,430)
             Proceeds from issuance of capital stock                                84                   113
             Preferred stock dividends paid                                          -                (1,521)
                                                                           -----------           -----------
                 Cash provided by financing activities                           2,562                31,975
                                                                           -----------            ----------

        NET DECREASE IN CASH AND CASH EQUIVALENTS                               (4,321)               (5,422)

        CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             5,252                 6,560
                                                                            ----------            ----------

        CASH AND CASH EQUIVALENTS, END OF PERIOD                            $      931            $    1,138
                                                                            ==========            ==========


( ) Denotes reduction in cash and cash equivalents.

See accompanying notes to condensed consolidated financial statements.

                                      -4-

                   CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.  BASIS OF PRESENTATION

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Clarion  Technologies,  Inc.  and  Subsidiaries  (collectively  referred  to  as
"Clarion"  or the  "Company")  include  all  adjustments,  consisting  of normal
recurring   accruals,   which  the  Company  considers   necessary  for  a  fair
presentation  of the results of operations for the periods shown.  The financial
statements have been prepared in accordance  with the  instructions to Form 10-Q
and,  therefore,  do not include all information  and footnotes  necessary for a
fair presentation of consolidated financial position,  results of operations and
cash flows in conformity with accounting  principles  generally  accepted in the
United States.  For further  information,  refer to the  consolidated  financial
statements  and notes thereto  included in the  Company's  annual report on Form
10-KSB for the fiscal year ended December 30, 2000.

In July 2001, the FASB issued  Statement No. 141,  "Business  Combinations"  and
Statement No. 142,  "Goodwill and Other  Intangible  Assets".  Statement No. 141
eliminates   the  pooling  of  interests   method  of  accounting  for  business
acquisitions  and Statement No. 142 eliminates the  amortization of goodwill and
requires the Company to evaluate goodwill for impairment on an annual basis. Any
impairment of goodwill  must be recognized  currently as a charge to earnings in
the financial  statements.  The Company will be required to apply the provisions
of Statement No. 141 to all business combinations  initiated after June 30, 2001
and the  provisions  of Statement No. 142 to all goodwill and  indefinite  lived
intangible  assets  beginning  with its fiscal year starting  December 30, 2001.
Application  of the  nonamortization  provisions  of Statement No. 142 in fiscal
2002 is expected to reduce intangibles amortization and increase net earnings by
approximately  $0.7 million  ($0.03 per share).  During  2002,  the Company will
perform the initial impairment tests of goodwill and indefinite lived intangible
assets as of the  beginning of fiscal 2002.  The Company has not yet  determined
what effect these tests will have on its  consolidated  results of operations or
financial position.

The Company has classified checks disbursed but not yet presented for payment as
accounts  payable.  The amounts at September 29, 2001 and December 30, 2000 were
$1,391,000 and $573,000 respectively.

2.  INVENTORIES

Inventories are stated at the lower of first-in,  first-out cost or market.  The
components of inventories are as follows (in thousands):

                                               September 29,            December 30,
                                                   2001                     2000
                                           ----------------------   ---------------------
                                                                            
Raw materials                                             $3,236                  $3,222
Work in progress                                             394                   1,152
Finished goods                                               826                   1,001
                                           ----------------------   ---------------------
                                                          $4,456                  $5,375
                                           ======================   =====================


3.  BUSINESS ACQUISITIONS

On February 1, 2000,  the Company  acquired  substantially  all of the assets of
Drake Products Corporation ("Drake"),  a plastic  injection-molding firm serving
consumer products and automotive  original  equipment  manufacturers  (OEMs) and
tier-one suppliers.  Consideration for the acquisition included 2,000,000 shares
of Clarion common stock with a fair value of $3.8 million, $25.6 million in cash
and the issuance of two subordinated promissory notes totaling $5.1 million. The
Company also assumed $6.9 million of liabilities.  In related transactions,  the
Company  acquired the real  property  used by Drake for $2.6 million in cash and
the issuance of a $1.0 million promissory note.

                                      -5-

The  following  unaudited  pro forma  consolidated  results  of  operations  are
presented as if the  acquisition  of Drake had been made at the beginning of the
earliest period presented (in thousands, except per share data).

                                                                                          Year to Date Ended
                                                                                          September 30, 2000
                                                                                          ------------------
                                                                                               
        Net sales                                                                              $   89,510
        Net loss attributable to common shareholders                                               (1,785)
        Loss attributable to common shareholders per share
        (basic and diluted)                                                                          (.16)


The unaudited pro forma information is not necessarily indicative of the results
of  operations  that  would have  occurred  had the  purchases  been made at the
beginning  of the  period  presented  or of the future  results of the  combined
operations.

4.  GEOGRAPHIC AND SEGMENT DATA

The Company operates in a single geographic  location,  North America,  and in a
single reportable  business segment,  plastic injection molding.  The accounting
policies of this reportable  business segment are the same as those described in
the summary of significant accounting policies in the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 30, 2000.

5.  IMPAIRMENT AND OTHER NONRECURRING CHARGES

During the fourth quarter of 2000 and the first three quarters of 2001, the U.S.
economy experienced a slowdown in manufacturing activity. In particular, several
of the  industries  served by the Company,  such as the domestic  automotive and
heavy truck markets,  are currently enduring dramatic  reductions in orders. The
Company  has  already  felt  the  impact  of this  downturn  and  expects  these
conditions  to  continue  in the near term.  In  response  to these  conditions,
management has taken aggressive actions to consolidate existing operations,  cut
overhead  costs and reduce excess  capacity.  These actions have resulted in the
need to write-down  the value of certain  assets and to recognize  various costs
anticipated to execute these actions.

At the start of 2001, the Company had two  manufacturing  operations  located in
Greenville,  Michigan.  On March 16, 2001, the Company  announced the closing of
one of these facilities. The plant closing resulted in the transfer of employees
and related  production  to other  Company  facilities,  including the remaining
facility in Greenville  and the Company's  other  facilities  located in Western
Michigan.  Management  accrued a  nonrecurring  pre-tax  charge of $1.5  million
related  to  the  closing  to  cover  various  exit  costs  ($0.7  million)  and
anticipated  non-cash  losses on the sale of the  property,  plant  and  certain
equipment ($0.8 million) in the first quarter of 2001. At the end of July, 2001,
the closing activities were substantially  completed. As of the end of the third
quarter,  $40,000  of exit  cost  payments  were  charged  against  the  related
liability.

During the  second  quarter of 2001,  the  Company  announced  its  decision  to
relocate  certain  functions  previously  located in its Technical Center and to
outsource the manufacture of tooling.  Specifically,  these actions included the
relocation  of  engineering,  program  management  and  sales  personnel  to the
Company's manufacturing facilities in order to provide integrated support to the
manufacturing  operations.  In addition,  many of the tool makers and  equipment
previously  used in the manufacture of tooling have been moved directly into the
manufacturing  facilities  to provide more  efficient  and cost  effective  tool
maintenance support to the Company's manufacturing operations.  The Company will
continue  to program  manage new tooling  programs  for its  customers  but will
outsource  the actual  tool  manufacturing.  Management  accrued a  nonrecurring
pre-tax  charge of $0.9 million  related to these  actions to cover various exit
costs ($0.4  million) and  anticipated  non-cash  losses on the  disposition  of
certain  furniture,  fixtures and equipment ($0.5 million) in the second quarter
of 2001. At the end of the third quarter, $0.1 million of exit cost payments and
$0.5  million of losses on property  disposals  have been  recorded  against the
related reserves.  Other nonrecurring moving costs of approximately  $12,000 and
$0.1 million were  incurred and expensed  during the second and third  quarters,
respectively.

                                      -6-

Given current  operating and industry  conditions,  the Company has performed an
analysis  of  the  expected  future  cashflows   related  to  its  manufacturing
facilities and determined that an asset impairment  charge in the amount of $5.0
million is required to adjust the net carrying value of the assets of one of its
facilities,  including goodwill, to fair value under the provisions of Statement
of Financial  Accounting  Standards No. 121.  This non-cash  charge was recorded
during the second quarter of 2001.

6.  LONG-TERM DEBT

Effective  April 17,  2001,  the Company  negotiated  an amendment to the senior
credit facility that provides for the following:

-    The maturity of the  facility  has been  amended from  February 28, 2003 to
     April 30, 2002.

-    The term loan portion of the credit facility, prior to amendment,  provided
     for  principal  payments of $0.3 million per month until  February 28, 2002
     and $0.4 million monthly  thereafter.  The amendment provides for principal
     payments  at various  times  between  July 1, 2001 and  December  31,  2001
     totaling $0.3 million,  with remaining outstanding balances due at maturity
     of the facility.

-    Interest rate margins have been  increased by 0.25% and 0.75% for borrowing
     under  the  prime  rate  option  for  revolving   credit  and  term  loans,
     respectively, and by 1.0% for term loan borrowings under the LIBOR option.

-    The banks have provided an  additional  $1.0 million term loan that will be
     due in full at maturity of the credit facility on April 30, 2002. This term
     loan provides  immediate  additional  liquidity and is guaranteed by one of
     the Company's  Directors.  A warrant to purchase  225,000  shares of common
     stock was issued to the Director in consideration for this guarantee.

-    The revolving  credit limit has been  increased from $15.0 million to $17.0
     million,  subject to an asset-based  borrowing  calculation.  This increase
     provides up to $2.0 million of additional  liquidity depending on inventory
     and accounts receivable levels.

-    All prior  covenant  violations  and default  remedies were waived  through
     April 30, 2002,  and covenants  were reset for the remainder of the term of
     the credit facility.

On April 17, 2001, the Company also negotiated an amendment to its  subordinated
credit facility that provides for the following:

-    Interest payments from March 31, 2001 will accrue, but not be paid prior to
     the maturity of the senior credit facility on April 30, 2002. This deferred
     interest will remain a future obligation of the Company.  During the period
     of  interest  deferral,  the  interest  rate will  increase  to 15.0%.  The
     interest rate will return to 12.0% upon payment of the deferred interest.

-    An  additional   $3.0  million  of  capital  was  funded  by  the  original
     subordinated  lender and certain Company  Directors and executive  officers
     through  this  amended  credit  facility.  In addition to cash  interest as
     provided under the  subordinated  credit  agreement,  the providers of this
     capital received a warrant to purchase 3.0 million shares of Clarion common
     stock for $.0001 per share.  The warrant  expires 10 years from the date of
     issuance.

-    All prior covenant  violations and default remedies were permanently waived
     and  covenants  were  reset  for the  remainder  of the term of the  credit
     facility.

At September  29,  2001,  the Company was in violation of certain of its revised
covenants in its senior  credit  agreement  and was in technical  default of the
agreement.  In the event (i) these  violations  are not  remedied,  and (ii) the
senior  lenders elect to  accelerate  the senior debt, an event of default would
exist  under  the  Company's   subordinated  credit  facility  and  the  related
subordinated debt would be callable at that time. The Company does not currently
anticipate these events occurring.

                                      -7-

Effective  August 1, 2001,  the Company  received  funding in the form of a $5.0
million subordinated term note (the "Note"). Proceeds from the Note were used to
repay $3.6 million of revolving  debt with the  remaining  $1.4 million used for
operations.  The Note requires monthly payments of principal and interest,  at a
rate of 8% per annum, beginning November 1, 2001, with a maturity date of May 1,
2002. The Note is secured by certain  assets of the Company and is  subordinated
to the Company's senior bank debt.

Also effective August 1, 2001, the Company received an additional  investment of
$1.3  million  from one of its  directors  to be used in the  operations  of the
Company.  This  investment  is  intended  to be in  the  form  of a  short  term
subordinated  term note and as a result is recorded  in the  current  portion of
long  term debt as of  September  29,  2001.  As part of this  transaction,  the
Company  expects to issue  warrants to purchase  shares of the Company's  common
stock with a nominal exercise price.


7.  PREFERRED STOCK

Effective April 6, 2001, the terms of the Company's  convertible preferred stock
were amended. The dividend rate on the outstanding stock has been reduced to 12%
from 14% of the liquidation  value and dividends,  at the option of the Company,
and may be paid in either common stock or cash. The  liquidation  value was also
increased from $8.00 to $10.00.  The dividend rate will increase back to 14% and
then 16% if the preferred stock is not redeemed by certain  specified  dates. In
addition,  the conversion features of the preferred stock were changed such that
it is  convertible  at the option of the holder at any time,  unless  previously
redeemed,  into shares of common  stock of the Company at a  conversion  rate of
3.33 shares of common stock for each share of preferred  stock through March 31,
2002,  at which time the  conversion  rate  becomes 5 shares of common stock per
share of preferred stock,  subject to adjustment in certain events.  The Company
may at any time redeem all or any portion of the convertible preferred stock for
$10.00 per share plus all accrued and unpaid  dividends  thereon.  The preferred
stock has a mandatory redemption date of March 31, 2003, subject to any existing
contractual  agreements  that may prohibit such  redemption.  The amended senior
credit agreement does not allow,  however, for such cash dividend payments prior
to April 30, 2002 unless approved by the lenders.  As a result of this mandatory
redemption provision,  the outstanding preferred stock is no longer reflected in
the equity  section of the  balance  sheet but is now  reflected  as a long-term
obligation of the Company.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

OVERVIEW

The following  information  should be read in conjunction  with the accompanying
Condensed  Consolidated  Financial  Statements  of the Company and  Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations  set
forth in the  Company's  Annual  Report on Form 10-KSB for the fiscal year ended
December 30, 2000.

The  Company  is a  full-service  custom  injection  molder,  providing  program
management,  design and engineering services, injection molding and post-molding
assembly to a diverse base of customers in the automotive,  heavy truck,  office
furniture  and consumer  goods  industries.  Clarion's  business  strategy is to
create,   through   acquisitions  and  internal  growth,   one  of  the  largest
full-service  custom  injection  molding  businesses  in the  highly  fragmented
plastic  injection-molding  industry to serve customers in the Company's  target
markets.

The Company has completed  several key  acquisitions  during the past two years,
including a business  combination  effective on February 1, 2000, for the assets
of Drake Products  Corporation,  a full-service  plastic injection molding firm,
and the real properties used by the Drake operations.  This business combination
was accounted for as a purchase and accordingly,  financial data in Management's
Discussion  and Analysis of Financial  Condition and Results of Operations  only
include  operating  results  for  this  company   subsequent  to  the  effective
acquisition date, which impacts the comparability of results between the periods
presented.

                                      -8-

RESULTS OF OPERATIONS

The  table  below   summarizes  the   components  of  the  Company's   Condensed
Consolidated Statements of Operations as a percentage of net sales:



                                               Third Quarter Ended                Year to Date Ended
                                        September 29,     September 30,    September 29,     September 30,
                                             2001              2000             2001              2000
                                             ----              ----             ----              ----
                                                                                          
      Net sales                                  100.0%            100.0%           100.0%            100.0%
      Cost of sales                               97.6%             88.6%            98.9%             84.7%
                                             ----------        ----------       ----------        ----------
           Gross profit (loss)                     2.4%             11.4%             1.1%             15.3%
      Selling, general and
      administrative expenses                     11.4%             11.1%            11.5%             10.5%
      Impairment and other
      nonrecurring charges                           -                 -              9.1%                -
                                             ----------        ----------       ----------        ----------
           Operating income (loss)                (9.0%)             0.3%           (19.5%)             4.8%
      Interest expense                           (11.2%)            (6.5%)           (9.5%)            (6.3%)
      Other income (expense), net                 (0.2%)             0.1%            (0.2%)             0.1%
                                             ----------        ----------       ----------        ----------
      Loss before provision for
      income taxes                               (20.4%)            (6.1%)          (29.2%)            (1.4%)
      Provision for income taxes                      -              0.6%             0.3%              0.6%
                                             ----------        ----------       ----------        ----------
           NET LOSS                              (20.4%)            (6.7%)          (29.5%)            (2.0%)
                                             ==========        ==========       ==========        ==========


Net sales

Net sales of $26.9  million  in the  third  quarter  of 2001  were $4.4  million
(14.1%) lower than net sales of $31.3 million in the third quarter of 2000.  Net
sales for the first  three  quarters of 2001 were $83.5  million,  a decrease of
$2.1 million  (2.5%) over net sales of $85.6  million for the same period in the
prior year. The third quarter decrease was primarily due to lower OEM automotive
sales as a result of the continued economic downturn in the domestic  automotive
industry as well as a decrease in tooling  sales  resulting  from the  Company's
decision in the second quarter to outsource the  manufacturing  of tooling.  The
decrease for the year to date period is primarily  due to the  foregoing as well
as lower consumer  products sales due to a significant  program launch and model
changeover with a major customer.

Gross profit

Gross profit,  as a percentage of 2001 net sales, was 2.4% for the third quarter
and 1.1% for the  first  three  quarters,  compared  to 11.4%  and  15.3% in the
corresponding  periods of 2000.  Gross  margin in the third  quarter of 2001 was
negatively  impacted  by new product  pricing  issues,  a continued  increase in
prices of resin which, in some cases, have not been passed on to customers,  and
lower plant  utilization due to reduced sales as discussed  above.  The decrease
for the year to date period is primarily  due to the foregoing as well as launch
costs associated with the consumer products model changeover.

                                      -9-

Impairment and other nonrecurring charges

During the fourth quarter of 2000 and the first three quarters of 2001, the U.S.
economy has  experienced a slowdown in  manufacturing  activity.  In particular,
several of the industries served by the Company, such as the domestic automotive
and heavy truck  markets,  are  currently  experiencing  material  reductions in
orders.  The Company has already  felt the impact of this  downturn  and expects
these conditions to continue in the near term. In response to these  conditions,
management has taken action to  consolidate  existing  operations,  cut overhead
costs and reduce  excess  capacity.  These  actions have resulted in the need to
write-down the value of certain assets and to recognize the costs anticipated to
execute these actions.

At the start of 2001, the Company had two  manufacturing  operations  located in
Greenville,  Michigan.  On March 16, 2001, the Company  announced the closing of
one of these facilities. The plant closing resulted in the transfer of employees
and related  production  to other  Company  facilities,  including the remaining
facility in Greenville  and the Company's  other  facilities  located in Western
Michigan.  Management  accrued a  nonrecurring  pre-tax  charge of $1.5  million
related  to  the  closing  to  cover  various  exit  costs  ($0.7  million)  and
anticipated  non-cash  losses on the sale of the  property,  plant  and  certain
equipment  ($0.8 million) in the first quarter of 2001. At the end of July, 2001
the closing  activities were  substantially  completed.  At the end of the third
quarter,  $40,000 of exit cost  payments had been  recorded  against the related
liability.

During the  second  quarter of 2001,  the  Company  announced  its  decision  to
relocate  certain  functions  previously  located in its Technical Center and to
outsource the manufacture of tooling.  Specifically,  these actions included the
relocation  of  engineering,  program  management  and  sales  personnel  to the
Company's manufacturing facilities in order to provide integrated support to the
manufacturing  operations.  In addition,  many of the tool makers and  equipment
previously  used in the manufacture of tooling have been moved directly into the
manufacturing  facilities  to provide more  efficient  and cost  effective  tool
maintenance support to the Company's manufacturing operations.  The Company will
continue  to program  manage new tooling  programs  for its  customers  but will
outsource  the actual  tool  manufacturing.  Management  accrued a  nonrecurring
pre-tax  charge of $0.9 million  related to these  actions to cover various exit
costs ($0.4  million) and  anticipated  non-cash  losses on the  disposition  of
certain  furniture,  fixtures and equipment ($0.5 million) in the second quarter
of 2001. At the end of the third quarter, $0.1 million of exit cost payments and
$0.5  million of losses on property  disposals  have been  recorded  against the
related reserves.  Other nonrecurring moving costs of approximately  $12,000 and
$0.1 million were  incurred and expensed  during the second and third  quarters,
respectively.

Under the guidance of FASB Statement No. 121, the Company  performed an analysis
of the expected future cashflows related to one of its manufacturing  facilities
and determined that an asset impairment charge in the amount of $5.0 million was
required  to  properly  reflect  the  current  value  of the  assets,  including
goodwill, related to this facility. This non-cash charge was recorded during the
second quarter of 2001.

Selling, general and administrative expenses

Selling,  general and  administrative  ("SG&A") expenses  decreased $0.4 million
(11.4%) from $3.5 million for the comparable  quarter in 2000. SG&A expenses for
the first three quarters of 2001 were $9.8 million,  an increase of $0.8 million
(8.9%) over SG&A  expenses  for the same  period in the prior year.  The year to
date SG&A  expenses  were  impacted by a one-time  charge of $0.8 million in the
second quarter charged against accounts receivable reflecting anticipated losses
from a customer's pending financial reorganization and certain billings that are
being  contested  by a customer.  Excluding  the impact of these  charges,  SG&A
expense in the first three quarters would have been the same as 2000.

Interest expense

Interest expense for the third quarter of 2001 increased $1.0 million (50.0%) to
$3.0  million  from $2.0 million for the  comparable  quarter in 2000.  Interest
expense for the first three  quarters of 2001 was $8.0  million,  an increase of
$2.6  million  (48.1%)  over  interest  expense for the same period in the prior
year.  The increase in interest  expense for the third quarter was primarily due
to higher  interest rates that became  effective with the Third Amendment to the
Company's  senior  credit  facility,   higher  outstanding  debt  balances,  and
amortization of additional amounts of bank

                                      -10-

financing fees. Year to date interest expense increased as well due to financing
of the Drake business acquisition four weeks into the first quarter of 2000, the
acquisition of Small Parts in July, 2000, and funding of capital expenditures.

Income taxes

The Company's effective income tax rates for all periods presented differed from
the  applicable   statutory  rates  primarily  due  to  nondeductible   goodwill
amortization,  Michigan Single Business Tax, and fully reserving  federal income
tax benefits associated with net operating losses. The federal tax benefits,  if
any,  from net  operating  loss  carryforwards  will only be  recognized  as the
Company generates taxable income in future periods.

Net loss

The Company  recorded a net loss of $5.5  million for the third  quarter of 2001
and a net loss of $24.6 million for the first three quarters of 2001 compared to
a net loss of $2.1  million  and $1.7  million,  in the  same  periods  of 2000,
respectively.  As  discussed  above in the gross  profit,  impairment  and other
nonrecurring charges, and selling, general and administrative expenses sections,
the  results for 2001  include the impact of lower  margins due to the impact of
the economic slowdown as well as $8.2 million of one-time charges.


LIQUIDITY AND CAPITAL RESOURCES

At September 29, 2001, the Company had negative working capital of $51.1 million
compared to positive $0.8 million at December 30, 2000.  The decrease in working
capital  is mainly  attributable  to a $38.1  million  increase  in the  current
maturities of long-term debt (the Company's  senior credit  facility  matures on
April 30,  2002),  a net loss $24.6 million  (which  includes  depreciation  and
amortization  of $6.0 million and  non-cash  impairment  and other  nonrecurring
charges of $7.6 million) and capital expenditures of $1.7 million. Additionally,
in response to current economic conditions, the Company has successfully reduced
accounts receivable and inventory balances.

Investing  activities  consisted primarily of capital  expenditures in the first
three   quarters  of  2001  compared  to  capital   expenditures   and  business
acquisitions  in the same period of 2000.  Capital  expenditures  totaling  $1.7
million in 2001 consisted  primarily of new molding equipment and investments in
plant  automation.  During the first  three  quarters  of 2000,  the Company had
capital  expenditures  of $3.4 million and acquired the Drake  operations  using
$27.3 million of cash. No acquisitions  occurred during the first three quarters
of 2001.

Financing  activities  provided  $2.5 million of net cash in 2001 as compared to
providing  $32.0  million in 2000.  The  Company's  senior  credit  facility was
entered  into in the  first  quarter  of  2000  in  connection  with  the  Drake
acquisition,  which provided  amounts for the acquisition and to refinance other
revolving  credit and term debt agreements.  Financing  activities also included
the use of cash  totaling $1.5 million in 2000 for  preferred  stock  dividends.
During the first three quarters of 2001, financing activities included repayment
of debt, payment of deferred financing costs,  additional  borrowing on the line
of credit and bank debt, and proceeds of common stock  issuances  related to the
Employees Stock Purchase Plan.

Effective August 1, 2001, the Company received additional funding in the form of
a $5.0 million subordinated term note (the "Note").  Proceeds from the Note were
used to repay $3.6 million of  revolving  debt with the  remaining  $1.4 million
used for  operations.  The Note  requires  monthly  payments  of  principal  and
interest, at a rate of 8% per annum, beginning November 1, 2001, with a maturity
date of May 1, 2002. The Note is secured by certain assets of the Company and is
subordinated to the Company's senior bank debt.

Also effective August 1, 2001, the Company received an additional  investment of
$1.3  million  from one of its  directors  to be used in the  operations  of the
Company.  This  investment  is  intended  to be in  the  form  of a  short  term
subordinated  term note and as a result is recorded  in the  current  portion of
long  term debt as of  September  29,  2001.  As part of this  transaction,  the
Company  expects to issue  warrants to purchase  shares of the Company's  common
stock with a nominal exercise price.

                                      -11-

As shown in the Company's  most recent  annual  report Form 10-KSB,  the Company
incurred  significant  net  losses in each of the past two  fiscal  years and is
highly leveraged. Also, the Company had violated certain covenants of its senior
credit facility,  which the senior lenders waived until April 30, 2002, the date
on  which  the  senior  credit  facility  matures.   Finally,  the  Company  has
experienced  liquidity  constraints as noted above and current market conditions
in two of the  industries  the  Company  serves,  heavy  truck  and  automotive,
indicate  that a decline in overall  unit sales for OEMs can be expected in 2001
as  compared to 2000.  This  anticipated  decline in OEM sales  could  result in
continued  adverse financial  conditions that may be experienced  throughout the
supply  chain  within  these  industries,   and  therefore,  could  continue  to
negatively affect our operations through the first half of 2002.

In response to debt covenant  violations and in  anticipation of continued tight
liquidity, management negotiated a comprehensive restructuring of our senior and
subordinated  credit facilities  effective April 17, 2001 and of our convertible
preferred stock effective April 6, 2001. The details of this  restructuring  are
discussed in Notes 5 and 6 of the condensed consolidated financial statements.

At  September  29,  2001,the  Company was in violation of certain of its revised
covenants in its senior  credit  agreement  and was in technical  default of the
agreement.  In the event (i) these  violations  are not  remedied,  and (ii) the
senior  lenders elect to  accelerate  the senior debt, an event of default would
exist  under  the  Company's   subordinated  credit  facility  and  the  related
subordinated debt would be callable at that time. The Company does not currently
anticipate these events occurring.

Management  believes that the  restructuring  activities and additional  funding
discussed  above,  combined  with  appropriate  operational  changes  and  other
activities undertaken, will provide us with sufficient capital resources to meet
our needs through the anticipated refinancing of our senior credit facilities in
the second  quarter of 2002.  Long term viability of the Company is dependent on
the successful refinancing of this debt.

Management is  aggressively  pursuing  several  operating  initiatives to reduce
costs and improve future profitability and cash flow. These initiatives include:

o    We have  implemented  actions to reduce our  overhead  cost  structure  and
     continue to better leverage the purchasing power of consolidated operations
     with our vendors;
o    We have reduced production and administrative staff levels;
o    We have reviewed our production  programs and have eliminated  unprofitable
     product lines; o We have obtained price increases from selected customers;
o    We are eliminating excess  manufacturing  capacity; o We have closed one of
     our  manufacturing  facilities  in  Greenville,  Michigan,  and have  moved
     related production to other existing facilities;
o    We are  considering the sale of one additional  manufacturing  facility and
     the potential sale-leaseback of some or all of our real estate; and,
o    We have transferred engineering,  program management and sales staff to our
     manufacturing  facilities,  retaining  capabilities and improving synergies
     while eliminating the overhead cost of the Technical Center.

Management  expects  challenges  to  face us and  many  other  companies  in the
industries  in which we are  involved  with  over the  coming  months.  However,
aggressive  actions are being  taken to guide this  organization  through  these
challenges  and to reduce the  organization's  cost  structure,  enabling  it to
improve its operations and cashflow.

TAX CONSIDERATIONS

The Company has net operating loss ("NOL")  carryforwards  for tax purposes that
are available to offset future taxable  income.  However,  there are federal tax
laws that  restrict or  eliminate  NOL  carryforwards  when  certain  changes of
control  occur.  A 50% change of  control,  which is  calculated  over a rolling
three-year  period,  may  cause  the  Company  to  lose  some  or all of its NOL
carryforward  benefits.  Changes in control have  occurred as part of the equity
transactions  completed  by the Company in recent  years.  However,  the Company
believes that these changes have not reached the 50% level that would  eliminate
the future  cash  benefits  from  utilizing  NOL  carryforwards.  As the Company
executes it strategy of growth through acquisitions, there are likely

                                      -12-

to be more  transactions  in the future  involving  private  or public  sales of
equity securities. The Company cannot make any assurances that such transactions
will not result in the loss of NOL  carryforward  benefits  in the future due to
changes in control.

INFLATION

The Company does not believe that sales of its products are affected  materially
by inflation,  although there can be no assurance that inflation will not affect
sales in the future.  The Company does believe  that its  financial  performance
could be  adversely  affected by  inflation  in the plastic  resin  market.  The
primary  plastic  resins  used by the Company are  produced  from  petrochemical
feedstock  mostly derived from natural gas liquids.  Supply and demand cycles in
the petrochemical industry, which are often impacted by OPEC policies, can cause
substantial price fluctuations.  Consequently, plastic resin prices may increase
as a result of changes in natural gas liquid prices and the capacity, supply and
demand for resin and petrochemical feedstock from which they are produced.

In many instances the Company has been able to pass through  changes in the cost
of its raw materials to customers in the form of price increases. However, there
is no assurance that the Company will be able to continue such pass throughs, or
that the timing of such pass throughs will coincide with the Company's increased
costs.  To the extent  that  increases  in the cost of plastic  resin  cannot be
passed on to customers, or that the duration of time lags associated with a pass
through becomes significant,  such increases may have an adverse impact on gross
profit margins and the overall profitability of the Company.

CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION

The statements  contained in this document or incorporated by reference that are
not historical facts are  forward-looking  statements  within the meaning of the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995.  The  forward-looking   statements  are  based  on  management's   current
expectations or beliefs and are subject to a number of risks and  uncertainties.
In particular,  any statement  contained  herein  regarding the consummation and
benefits of future acquisitions and liquidity and capital resources,  as well as
expectations  with  respect to future  sales,  operating  efficiencies,  product
expansion,  and the  refinancing  of the Company's  senior  credit  facility are
subject to known and unknown risks,  uncertainties  and  contingencies,  many of
which are beyond the control of the  Company,  which may cause  actual  results,
performance or  achievements  to differ  materially  from those described in the
forward  looking  statements.  Factors which may cause actual  results to differ
materially from those contemplated by the forward-looking  statements,  include,
among other things: overall economic and business conditions; the demand for the
Company's goods and services; competitive factors in the industries in which the
Company  competes;  increases  in  production  or material  costs that cannot be
recouped in product pricing;  changes in government regulations;  changes in tax
requirements  (including  tax rate  changes,  new tax laws and  revised  tax law
interpretations);   interest  rate   fluctuations   and  other  capital   market
conditions;  the ability to achieve anticipated synergies and other cost savings
in connection with acquisitions;  the timing,  impact and other uncertainties of
future  acquisitions;  and the  Company's  relationship  with its  lenders.  The
Company  undertakes  no  obligation  to  update  publicly  any   forward-looking
statements, whether as a result of new information, future events or otherwise.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company's  primary  market risk  exposure is a change in interest  rates in
connection with its outstanding  variable rate short-term and long-term debt. An
increase  in  interest  rates of 1% could  result in the  Company  incurring  an
additional $0.4 million in annual interest  expense.  Conversely,  a decrease in
interest  rates of 1% could result in the Company  saving $0.4 million in annual
interest expense.  The Company does not expect such market risk exposure to have
a material adverse effect on the Company. The Company does not enter into market
risk sensitive instruments for trading purposes.

                                      -13-

PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

The Company is not currently involved in any material  lawsuits.  The Company is
subject to claims and  litigation in the ordinary  course of its  business,  but
does not believe that any such claim or litigation will have a material  adverse
effect on its  consolidated  financial  position,  results of operations or cash
flow.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During the third quarter ended September 29, 2001, the Company did not issue any
unregistered shares of its Common Stock.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Refer to Liquidity and Capital Resources Section within Management's  Discussion
and Analysis of Financial  Condition and Results of Operations in Part I, Item 2
and Note 6 to the Condensed Consolidated Financial Statements in Part I, Item 1.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

      No exhibits required.

(b) Reports on Form 8-K

     No reports on Form 8-K were filed  during the quarter for which this report
is filed.


                                      -14-

                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    CLARION TECHNOLOGIES, INC.

Date:  November 13, 2001            /s/ Edmund Walsh
                                    Edmund Walsh, Acting Chief Financial Officer














                                      -15-