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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q

          [X]  Quarterly Report Pursuant to Section 13 or 15(d)
                 of the Securities Exchange Act of 1934
               For the quarterly period ended June 30, 1998

          [ ]  Transition Report Pursuant to Section 13 or 15(d)
                 of the Securities Exchange Act of 1934
               For the transition period from _____ to _____

               -------------------------------------------------

                         Commission file number 0-22580
                         ------------------------------

                                    JPE, Inc.
             (Exact name of registrant as specified in its charter)


                                    Michigan
                         (State or other jurisdiction of
                         incorporation or organization)


                                   38-2958730
                      (I.R.S. Employer Identification No.)


           775 Technology Drive, Suite 200, Ann Arbor, Michigan  48108
               (Address of principal executive offices)        (Zip Code)


                                 (734) 662-2323
              (Registrant's telephone number, including area code)


                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed, since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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.

                     Yes  /X/                 No  / /

As of June 30, 1998,  there were  4,602,180  shares of the  registrant's  common
stock  outstanding.  This  Quarterly  Report on Form 10-Q contains 17 pages,  of
which this is page 1.

<PAGE>

                                    JPE, INC.

                                      INDEX


                                                                         Page
                                                                         ----

Part I.   Financial Information

     Item 1.  Financial Statements
              Consolidated Condensed Balance Sheets ...................     3
              - At June 30, 1998 and 1997 (Unaudited)
              - At December 31, 1997 (Audited)

              Consolidated Statements of Income and
              Comprehensive Income (Unaudited) ........................     4
              - For the Three and Six Months Ended
                June 30, 1998 and 1997

              Consolidated Statements of Cash Flows (Unaudited) .......     5
              - For the Six Months Ended
                June 30, 1998 and 1997

               Notes to Unaudited Consolidated Financial Statements ...   6-8

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations .....................  9-15

Part II.  Other Information

     Item 6.  Exhibits and Reports on Form 8-K ........................    16

     Signature ........................................................    17

<PAGE>
                                   
                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
                                    JPE, INC.
<TABLE>
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                    (Amounts in Thousands, Except Share Data)
<CAPTION>
                                                  At June 30,       At Dec. 31,
                                               1998         1997       1997
                                               ----         ----       ----
                                                  (Unaudited)        (Audited)  
<S>                                          <C>          <C>          <C>
ASSETS
Current assets:
  Cash ...................................   $    493     $    200     $     29
  Accounts receivable, net ................    36,219       40,630       37,997
  Inventory ...............................    36,338       41,165       39,412
  Other current assets ....................     7,923       11,152        8,375
                                             --------     --------     --------

    Total current assets ..................    80,973       93,147       85,813

Property, plant and equipment, net ........    69,888       72,980       72,981
Goodwill, net .............................    30,770       31,985       31,962
Other assets ..............................       790        2,774        2,459
                                             --------     --------     --------

    Total assets ..........................  $182,421     $200,886     $193,215
                                             ========     ========     ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt .......  $114,912     $  1,212     $105,402
  Short-term debt .........................     9,525        8,678        7,723
  Accounts payable ........................    22,694       25,795       25,219
  Accrued liabilities .....................     5,651        9,288        6,650
  Loan guaranty ...........................     1,361         --           --
                                             --------     --------     --------

    Total current liabilities .............   154,143       44,973      144,994

Deferred income taxes .....................     3,292        3,453        3,804
Other liabilities .........................     1,788        1,643        1,651
Long-term debt, non-current ...............       517      116,052        9,272
                                             --------     --------     --------

    Total liabilities .....................   159,740      166,121      159,721
                                             --------     --------     --------

Shareholders' equity:
  Preferred stock, 3,000,000
   authorized, no shares issued
   and outstanding ........................      --           --           --
  Common stock, 15,000,000 authorized,
   4,602,180 issued and outstanding at
   June 30, 1998 and at June 30, 1997,
   no par value ...........................    28,051       28,026       28,051
  Retained earnings (deficit) .............    (4,990)       6,752        5,714
  Foreign currency translation
   adjustment .............................      (380)         (13)        (271)
                                             --------     --------     --------

    Total shareholders' equity ............    22,681       34,765       33,494
                                             --------     --------     --------

    Total liabilities and
     shareholders' equity .................  $182,421     $200,886     $193,215
                                             ========     ========     ========

</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements.

<PAGE>

                                    JPE, INC.
<TABLE>
                        CONSOLIDATED STATEMENTS OF INCOME
                            AND COMPREHENSIVE INCOME

            For the Three and Six Months Ended June 30, 1998 and 1997
                  (Amounts in Thousands, Except Per Share Data)
                                   (Unaudited)

<CAPTION>
                                              Three Months             Six Months
                                                 Ended                    Ended
                                                June 30,                 June 30,
                                            1998        1997        1998         1997
                                            ----        ----        ----         ----
<S>                                       <C>         <C>         <C>          <C>

Net sales ..............................  $66,643     $77,006     $136,067     $145,031

Cost of goods sold .....................   58,396      65,553      121,628      124,617
                                          -------     -------     --------     --------

    Gross profit .......................    8,247      11,453       14,439       20,414

Selling, general and 
 administrative expenses ...............    7,317       7,608       15,014       14,391

Discontinuance of stamping
 operations ............................     --         2,250         --          2,250
                                          -------     -------     --------     --------

    Operating profit (loss) ............      930       1,595         (575)       3,773

Other expense ..........................    3,122         104        2,987          176

Interest expense, net ..................    3,551       2,657        7,016        4,866
                                          -------     -------     --------     --------

    Loss before income taxes ...........   (5,743)     (1,166)     (10,578)      (1,269)

Income tax expense (benefit) ...........    1,693        (176)         126         (164)
                                          -------     -------     --------     --------

    Net loss ...........................   (7,436)       (990)     (10,704)      (1,105)

Other comprehensive expense
  Foreign currency translation
   adjustment ..........................      (90)         70         (109)         (13)
                                          -------     -------     --------     --------

Comprehensive loss .....................  $(7,526)    $  (920)    $(10,813)    $ (1,118)
                                          ========    =======     ========     ========

Basic loss per common share ............  $ (1.62)    $ (0.22)    $  (2.33)    $  (0.24)
                                          =======     =======     ========     ========

Weighted average shares outstanding ....    4,602       4,602        4,602        4,606
                                            =====       =====        =====        =====

Loss per common share
 assuming dilution .....................  $ (1.62)    $ (0.22)    $  (2.33)    $  (0.24)
                                          =======     =======     ========     ========

Weighted average shares outstanding       
 and common stock equivalents ..........    4,602       4,602        4,602        4,606
                                            =====       =====        =====        =====

</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements.

<PAGE>

                                    JPE, INC.
<TABLE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)
<CAPTION>
                                                                   Six Months
                                                                     Ended
                                                                    June 30,
                                                              1998           1997
                                                              ----           ----
<S>                                                         <C>            <C>
Cash flows from operating activities:
  Net loss ...............................................  $(10,704)      $ (1,105)
  Depreciation and amortization ..........................     5,516          4,678
  Loss on disposal of fixed assets .......................       --              24
  Discontinuance of stamping operations ..................       --           2,250
  Write-down of assets related to JPE Canada .............     3,107           --
  Accrual of loan guaranty on JPE Canada debt ............     1,361           --
  Adjustments to reconcile net loss to net
  cash provided by (used for) operating activities:
    Changes in operating assets and liabilities:
     Accounts receivable .................................     1,778        (11,890)
     Inventory ...........................................     3,074         (1,531)
     Other current assets ................................       644           (937)
     Accounts payable ....................................    (2,525)         5,277
     Accrued liabilities and income taxes ................    (1,743)          (604)
     Deferred income taxes ...............................      (882)           269
                                                            --------       --------

       Net cash provided by (used for)
         operating activities ............................       346         (3,569)

Cash flows from investing activities:
  Purchase of property and equipment .....................    (2,062)        (7,425)
  Acquisition of BATCO ...................................      --           (5,518)
                                                            --------       --------

       Net cash used for investing activities ............    (2,062)       (12,943)

Cash flows from financing activities:
  Sale of common stock ...................................      --               77
  Repayments of other debt ...............................      (279)        (1,297)
  Net borrowings under revolving loan ....................     1,781         14,275
  Net borrowings under Canadian credit facility ..........     1,596          1,537
  Borrowings (repayments) under capital lease ............      (150)           900
  Tax benefit from options ...............................      --               28
                                                            --------       --------

       Net cash provided by financing activities .........     2,948         15,520

  Effect of currency translation on cash .................       (48)          (124)

Cash and cash equivalents:
  Net increase (decrease) in cash ........................       464         (1,116)

  Cash, beginning of period ..............................        29          1,316
                                                            --------       --------

  Cash, end of period ....................................  $    493       $    200
                                                            ========       ========
</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

<PAGE>

                                    JPE, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                             (Amounts in Thousands)


A.   BASIS OF PRESENTATION:

     The accompanying unaudited consolidated condensed financial statements have
     been prepared in accordance with generally accepted  accounting  principles
     for interim financial information. Accordingly, the financial statements do
     not include all of the  information  and  footnotes  required by  generally
     accepted accounting  principles for complete financial  statements.  In the
     opinion of  management,  all  adjustments  considered  necessary for a fair
     presentation  have  been  included,  and such  adjustments  are of a normal
     recurring  nature except as disclosed  below.  The  consolidated  financial
     statements should be read in conjunction with the financial  statements and
     notes  thereto  contained  in the JPE,  Inc.  Form 10-K for the year  ended
     December 31, 1997 and the Form 10-Q for the quarter ended March 31, 1998.


B.   SALE OF COMPANY:

     On March 23, 1998, the Company announced that it intends to pursue the sale
     of the entire  Company.  The proceeds  from the sale of the Company will be
     used to retire the debt of the Company,  although there can be no assurance
     that the  proceeds  will be  adequate  for this  purpose.  These  financial
     statements have been prepared as a going concern with no provision for loss
     on sale of the  Company.  The  Company  is in  violation  of its  financial
     covenants  under the Credit  Agreement at June 30, 1998, and has obtained a
     forbearance agreement from its lender.


C.   INVENTORY:

     Inventories by component are as follows:

<TABLE>
<CAPTION>
                            June 30, 1998     June 30, 1997     Dec. 31, 1997
                            -------------     -------------     -------------
     <S>                       <C>               <C>               <C>  
     Finished goods ........   $17,903           $16,673           $19,309
     Work in process .......     1,957             5,712             2,435
     Raw material ..........    12,193            16,150            15,211
     Tooling ...............     2,705             2,630             2,457
                               -------           -------           -------

                               $36,338           $41,165           $39,412
                               =======           =======           =======
</TABLE>

D.   WRITE-DOWN OF ASSETS OF JPE CANADA:

     JPE Canada is not in compliance  with its loan covenants and its lender has
     made demand for payment and given  notice of its  intention  to enforce its
     security  interests.  In order to  ensure  production  for  General  Motors
     Corporation ("GM"), its only customer,  JPE Canada has entered into certain
     accommodation  agreements  with its  lender  and GM that  permit  continued
     operating  activities  under certain  conditions and  covenants,  including
     additional  out-of-formula funding in the amount of $4.0. Due to the impact
     of the GM strike on JPE Canada's  operations  during the months of June and
     July,  JPE  Canada  has  fully  drawn  on the  additional  funding  and has
     defaulted  under the  amended  loan  agreement.  The  lender  has agreed to
     provide  additional  out-of-formula  funding in the amount of $2.0 million,
     although  the  Company  has  informed  the lender and GM that JPE Canada is
     insolvent and has no present  ability to repay in full the  indebtedness to
     the secured creditors.  In addition,  the Company does not believe that the
     proceeds  from the sale of JPE Canada  will be adequate to satisfy its debt
     obligations to the lender, GM and unsecured creditors.

     The Company has applied the accounting treatment under Financial Accounting
     Standards to JPE Canada. Under these pronouncements,  all of the assets are
     adjusted to the  carrying  amount which will be used to settle JPE Canada's
     obligations.  The Company has  adjusted  the value of JPE Canada  assets to
     approximate  fair value by  eliminating  the  deferred tax assets and other
     assets that have no value in a  liquidation.  This  resulted in a charge of
     approximately  $4.5 million which includes the recognition of the JPE, Inc.
     unsecured  loan guarantee and patent  write-down.  The amount of the assets
     and liabilities of JPE Canada included in the Consolidated Balance Sheet at
     June 30, 1998 is as follows (amounts in thousands):

     Receivables ................................   $ 3,113
     Inventory ..................................     3,723
     Other Current Assets .......................       641
     Property, Plant and Equipment ..............    16,258
                                                    -------

        Total Assets ............................   $23,735
                                                    -------

     Short-Term Debt ............................   $ 9,525
     Current Portion of Long-Term Debt ..........     8,883
     Accounts Payable ...........................     4,082
     Accrued Liabilities ........................     1,276
     Other Liabilities ..........................       378
                                                    -------

        Total Liabilities .......................   $24,144
                                                    -------

        Net Deficit .............................   $  (409)
                                                    =======

     The following unaudited pro forma summary for the six months ended June 30,
     1998 and 1997 assumes  that  effective  January 1, 1997,  JPE Canada was no
     longer  treated as a  consolidated  subsidiary.  The pro forma  information
     reflects the JPE  Consolidated  Income  Statement with exclusion of the JPE
     Canada results and the  elimination of the write-down of patents related to
     the JPE Canada  business and  recognition  of the unsecured  loan guarantee
     that are  reflected  in JPE,  Inc.'s  books at June 30,  1998  (amounts  in
     thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                 Six months ending June 30,
                                                 1998                  1997
                                                 ----                  ----
     <S>                                       <C>                   <C>

     Revenues ...............................  $113,578              $111,582
     Operating profit .......................     3,038                 6,127
     Loss before income taxes ...............    (3,272)                 (203)
     Net loss ...............................    (2,381)                 (415)

     Loss per common share ..................     (0.51)                (0.09)

</TABLE>

E.   INCOME TAXES:

     The Company has  recorded  $905,000  and $1.7  million  valuation  reserves
     related to the tax benefits  previously  recognized in the U.S. and Canada,
     respectively.


F.   DISCONTINUANCE OF STAMPING OPERATIONS:

     On May 15, 1997, the Company  announced a plan to discontinue  its stamping
     operations at its East Tawas,  Michigan  facility of Starboard  Industries,
     Inc.,  a  wholly-owned   subsidiary  of  the  Company.  The  plan  included
     resourcing  stamped  parts to third party  suppliers,  the sale of stamping
     assets and a  reduction  in the  Starboard  workforce.  As a result of this
     plan,  the  Company  recorded a charge of $2.25  million  comprised  of the
     following:

     Loss on sale of fixed assets ..........................  $1,348
     Severance expenses ....................................     365
     Adjustment to scrap value of inventory ................     407
     Other .................................................     130
                                                              ------

          Total ............................................  $2,250
                                                              ======


<PAGE>

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

The following  discussion  should be read in conjunction  with the  consolidated
financial statements and notes thereto filed with the Company's Annual Report on
Form 10-K to assist in understanding  the Company's  results of operations,  its
financial position,  cash flows,  capital structure and other relevant financial
information.

RECENT INFORMATION

On August 12, 1998, the Company  announced that JPE Canada's lender has issued a
demand letter along with a Notice of Intention to Enforce  Security  because JPE
Canada is not in compliance with the financial  covenants of its loan agreement.
The lender's  loan is secured by  substantially  all of the assets of JPE Canada
and by none of the  assets  of JPE,  Inc.  JPE,  Inc.  remains  obligated  on an
unsecured  loan guarantee of Cdn. $2.0 million for JPE Canada and the lender has
issued a demand letter for the loan guarantee.

FORWARD LOOKING INFORMATION

This Quarterly  Report on Form 10-Q contains,  and from time to time the Company
expects to make,  certain  forward-looking  statements  regarding  its business,
financial  condition and results of  operations.  In  connection  with the "Safe
Harbor"  provisions  of the Private  Securities  Reform Act of 1995 (the "Reform
Act"),  the Company intends to caution readers that there are several  important
factors that could cause the Company's actual results to differ  materially from
those projected in its forward-looking statements, whether written or oral, made
herein or that may be made  from  time to time by or on  behalf of the  Company.
Readers are cautioned that such forward-looking  statements are only predictions
and that actual events or results may differ materially.  The Company undertakes
no  obligation  to  publicly  release  the  results  of  any  revisions  to  the
forward-looking  statements to reflect events or circumstances or to reflect the
occurrence of unanticipated events.

The Company wishes to ensure that any forward-looking statements are accompanied
by  meaningful  cautionary  statements  in order to comply with the terms of the
safe harbor provided by the Reform Act. Accordingly, the Company has set forth a
list of  important  factors  that could cause the  Company's  actual  results to
differ  materially  from  those  expressed  in  forward-looking   statements  or
predictions made herein and from time to time by the Company.  Specifically, the
Company's  business,  financial  condition  and results of  operations  could be
materially different from such  forward-looking  statements and predictions as a
result of (i) customer pressures that could impact sales levels and product mix,
including customer sourcing decisions,  customer evaluation of market pricing on
products produced by the Company and customer  cost-cutting  programs;  (ii) the
impact on  operations  and cash  flows of labor  strikes  at the  Company's  OEM
customers; (iii) operational difficulties encountered during the launch of major
new OEM programs;  (iv) the ability of the Company to control scrap rates at its
operations;  (v) the ability of the Company to integrate  acquisitions  into its
existing  operations and achieve expected cost savings;  (vi) the ability of the
Aftermarket Group to balance the cyclical nature of the OEM industry;  (vii) the
availability  of funds to the Company for continued  operations  during the sale
process; (viii) the granting of compliance waivers by the Company's lenders; and
(ix)  the  timing  and  amount  of  proceeds  from the  sales  of the  Company's
businesses.


RESULTS OF OPERATIONS

SECOND QUARTER ENDED JUNE 30, 1998 COMPARED
TO SECOND QUARTER ENDED JUNE 30, 1997
-------------------------------------------

JPE CANADA OPERATING RESULTS

Net sales for JPE Canada for the quarter  ended June 30, 1998 were $10.3 million
as compared to $17.5 million for the same period in 1997.  Lost sales due to the
GM strike  in June  amounted  to  approximately  $2.2  million.  The  additional
decrease  in  sales  is  attributable  to the  resourcing  of some  unprofitable
business in the third quarter of 1997 and lower production on certain car models
that will be  replaced  by new  models in fall of 1998 and  spring of 1999.  The
weakening of the Canadian dollar also has contributed to the reduction in sales.

In the first quarter of 1998, JPE Canada had a loss before taxes of $2.4 million
which was primarily attributable to production difficulties experienced with the
launch of a truck trim program for GM. JPE Canada had implemented cost reduction
programs  and  obtained  a price  increase  from GM on two  programs  that  were
expected to return JPE Canada to profitability by the end of the second quarter.
However, due to the impact of the GM strike, significant losses continued at JPE
Canada. JPE Canada's business is 100% for GM. As result of the strike, the fixed
costs for this plant  could not be  recovered,  because of lower  sales  volumes
without  significant  reductions  in labor costs and  overhead  resulting  in an
underabsorbed  burden expense of $570,000.  In the second quarter ended June 30,
1998,  JPE  Canada's  loss  before  taxes was $2.2  million.  As a result of the
strike,  sales for JPE Canada in July 1998 were only  $380,000  compared to June
sales of $1.7  million  and it is  estimated  that JPE Canada will report a loss
before taxes in excess of $1.0 million for the month of July.

JPE Canada has been in default of its loan  agreement  and the Canadian bank has
issued a demand letter along with a Notice of Intention to Enforce Security. JPE
Canada continues to operate under  accommodations  which provide funding for JPE
Canada by the Canadian  bank and JPE Canada's  major  customer.

The Company has applied the  accounting  treatment  under  Financial  Accounting
Standards  to JPE  Canada's  financial  reporting  for the period ended June 30,
1998.  Under the  provisions of this  pronouncement,  all assets are adjusted to
carrying  amount  which will be used to settle  JPE  Canada's  obligations.  JPE
Canada has  recorded  a 100%  valuation  allowance  on the  deferred  tax assets
resulting in a charge to earnings of $1.8 million. In addition,  the Company has
written down patents related to the JPE Canada business and recorded a liability
for the unsecured loan guarantee  resulting in an additional $2.7 million charge
against earnings for the quarter ended June 30, 1998. Upon the legal transfer of
these assets or the filing under the Canadian Bankruptcy and Insolvency Act, the
Company will no longer  consolidate the JPE Canada operations into the Company's
financial statements.  Pro forma data related to the Company's operating results
without JPE Canada are set forth in Footnote D of the Financial Statements.

U.S. OPERATIONS

The  following  is a  discussion  of the U.S.  operations  of the Company as JPE
Canada  operating  results  are  discussed  above and a  discussion  of the U.S.
operating results in comparison to the prior period is important information for
the reader of the Financial Statements.

Net sales for the quarter ended June 30, 1998 for the U.S. operations were $56.4
million  compared to $59.5 million for the three months ended June 30, 1997. The
net sales decrease of 5.3% is partially  attributable  to the strike at GM which
began in June 1998 and continued through the end of July. The Company's Original
Equipment Manufacturers' ("OEM's") businesses estimated lost sales for the month
of June at $2.0 million.  In addition,  $2.6 million of the rate decline was due
primarily to the  discontinuance  of Starboard  stamping business in the fall of
1997.  For the quarter  ended June 30, 1998,  net sales for the U.S.  operations
were approximately 54% to OEM customers and 46% to Aftermarket customers.

Gross  profit for the U.S.  operations  decreased  13.9% to $9.1 million for the
three  months  ended  June 30,  1998 as  compared  with  $10.6  million  for the
comparable period of the prior year. The gross profit percentages were 16.2% and
17.8% for 1998 and 1997,  respectively.  The  decline  is  primarily  due to the
strike  at GM and lower  margins  in the  Aftermarket  business  due to  pricing
pressure and higher variances in the manufacturing of heavy duty springs.

Selling,  general and administrative  expenses for the U.S. operations decreased
3.6% to $6.8  million  for the three  months  ended June 30, 1998 as compared to
$7.0 million for the three months ended June 30, 1997. The decrease is primarily
attributable to lower sales commissions and non-recurring  costs relating to the
integration  of BATCO,  which was  acquired in the second  quarter of 1997.  The
percentage  of  selling,  general and  administrative  expenses to net sales was
12.0%  for the  quarter  ended  June  30,  1998 as  compared  to  11.7%  for the
comparable  period  of  the  prior  year.  The  slightly  higher  percentage  is
attributable  to the greater  percentage  of  Aftermarket  sales for the quarter
ended June 30, 1998 as compared to same period last year.

The  following  is a table of the  operating  profits  for the  U.S.  operations
adjusted for non-recurring items during the last two years.

Quarter Ended                       Operating Profit          Percent of Sales
-------------                       ----------------          ----------------

September 30, 1996                     $  993,000                   2.0%
December 31, 1996                      $1,307,000                   2.9%
March 31, 1997                         $2,749,000                   5.3%
June 30, 1997                          $3,630,000                   6.1%
September 30, 1997                     $3,638,000                   6.4%
December 31, 1997                      $1,750,000                   3.1%
March 31, 1998                         $  685,000                   1.2%
June 30, 1998                          $2,352,000                   4.2%

The above table shows consistent  improvement  through the third quarter of 1997
due to the actions taken at the Company's  Industrial & Automotive Fasteners and
Starboard Industries subsidiaries.  In the fourth quarter of 1997, the Company's
Plastic Trim subsidiary  experienced excess launch costs and higher scrap rates.
The Company  implemented a program to reduce scrap at this location in the first
quarter  1998 which  accounted  for  $850,000 of the  improvement  in the second
quarter of 1998.  The June 1998  quarter  was also  negatively  impacted by lost
sales due to the GM strike which the Company estimates reduced operating profits
by approximately $425,000.

Other expense for the second quarter 1998 included a $1.3 million  write-down of
the  patents  related  to JPE  Canada  owned by the  Company  to  estimated  net
realizable  value.  Also  included  under this  caption is the  recording of the
unsecured loan guarantee related to the JPE Canada indebtedness in the amount of
$1.4 million.

CONSOLIDATED OPERATING RESULTS

Net interest  expense on a consolidated  basis increased to $3.6 million for the
three  months  ended June 30,  1998 as  compared  to $2.7  million for the three
months ended June 30, 1997. The higher  interest cost is  attributable to higher
interest rate and amendment fees being charged under the Credit  Agreement.  The
Company's  borrowing  rate in the second quarter of 1998 was  approximately  11%
compared to 8% for the second quarter of 1997 (see  discussion  under  Liquidity
and Capital Resources).

Consolidated  income tax expense  for the  quarter  ended June 30, 1998 was $1.7
million.  Although  the Company  recorded a pretax loss of $5.7  million for the
quarter,  the normal tax benefit was offset by a recording of valuation reserves
of $2.5  million.  In  addition,  a valuation  reserve for certain  deferred tax
assets related to the U.S. operations was provided for capital losses which will
require the  recognition  of capital  gains to recognize a tax benefit.  The tax
benefit of $176,000 for the quarter ended June 30, 1997 is  attributable  to the
charge  recorded for the  discontinuance  of stamping  operations and the pretax
loss at the Company's Canadian operation.

Consolidated  net loss for the three months ended June 30, 1998 was $7.4 million
as  compared  to a net loss of  $990,000  in the  second  quarter  of 1997.  The
increase in the loss is  primarily  the result of the $4.5  million or $0.97 per
share  charge to write down the assets  related to JPE Canada,  higher  interest
costs, and the operating factors summarized above. Loss per share for the second
quarter of 1998 was $1.62 as compared to loss per share of $0.22 during the same
period  in  1997.  The net loss for the  1997  quarter  includes  a loss of $1.5
million or $0.32 per share due to the charge recorded for the  discontinuance of
the Starboard stamping operations.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED
TO SIX MONTHS ENDED JUNE 30, 1997
---------------------------------------

JPE CANADA OPERATING RESULTS

Net sales for JPE  Canada  for the six  months  ended  June 30,  1998 were $22.5
million as compared to $33.5 million for the same period in 1997. Lost sales due
to the GM strike in June amounted to approximately $2.2 million.  The additional
decrease is attributable to the resourcing of some unprofitable  business in the
third  quarter of 1997 and lower  production  on certain car models that will be
replaced by new models in fall of 1998 and spring of 1999.  The weakening of the
Canadian dollar also contributed to the reduction in sales.

The operating loss for JPE Canada was $3.6 million for the six months ended June
30, 1998 as compared to an  operating  loss of $356,000 for the six months ended
June 30, 1997.  The higher  operating  loss was  attributable  to the  difficult
launch of a truck trim program in the first  quarter of 1998,  with an estimated
cost of $1.2  million,  and  the GM  strike  in  June  resulting  in a  $873,000
operating loss for the month of June.  Also  impacting the operating  results in
1998 is lower sales volume  without a  significant  reduction in labor costs and
fixed overhead.

U.S. OPERATIONS

The following is a discussion of the U.S.  operations of the Company for the six
months  ended  June 30,  1998 and 1997,  as JPE  Canada  operating  results  are
discussed above. A discussion of the U.S. operating results in comparison to the
prior  period  is  important  information  for  the  readers  of  the  Financial
Statements.

Net sales for the U.S.  operations  for the six months  ended June 30, 1998 were
$113.6  million  compared to $111.6  million  for the six months  ended June 30,
1997. The net sales increase of 1.8% is  attributable to the full year inclusion
of Brake,  Axle and Tandem Company  ("BATCO")  which was acquired in April 1997,
offset by the impact of the strike at GM and lower sales of $5.1  million due to
discontinuance  of the stamping business in the fall of 1997. For the six months
ended June 30, 1998, net sales for the U.S. operations were approximately 57% to
OEM customers and 43% to Aftermarket customers.

Gross profit for the U.S.  operations  decreased  14.2% to $16.9 million for the
six months ended June 30, 1998 as compared with $19.7 million for the comparable
period of the prior year. The gross profit  percentages were 12.6% and 17.6% for
1998 and 1997, respectively. This decline is attributable to lower margin at the
Plastic  Trim due to high  scrap  rates in the first  quarter  and,  to a lesser
extent,  lower margin in the Aftermarket  businesses due to factory variances in
the manufacturing of heavy duty springs and from pricing pressure.

Selling,  general and administrative  expenses for the U.S. operations increased
4.9% to $13.8  million for the six months ended June 30, 1998 over $13.2 million
for the six  months  ended  June 30,  1997.  The  increase  is a  result  of the
acquisition of BATCO as discussed above. The percentage of selling,  general and
administrative  expenses  to net sales was 12.2% for the six months  ending June
30, 1998 as compared to 11.8% for the comparable period of the prior year.

See  quarterly  section  above for  discussion  on the charge  recorded  for the
write-down of JPE Canada related assets.

CONSOLIDATED OPERATING RESULTS

Consolidated net interest  expense  increased to $7.0 million for the six months
ended June 30, 1998 as compared  to $4.9  million for the six months  ended June
30, 1997. The higher interest cost is  attributable to the factors  mentioned in
the quarterly discussion above.

Income tax  expense  for the six months  ending  June 30,  1998 was  $126,000 as
compared to income tax benefit of $164,000 for the same period in 1997.  The tax
expense is a result of the associated factors related to the charges for the JPE
Canada  write-down of assets and the elimination of the deferred tax benefit due
to the recording of a valuation reserve.

Net loss for the six months ended June 30, 1998 was $10.7 million as compared to
net loss of $1.1 million over the same period in 1997.  The increase in the loss
is a result of the factors  summarized  above.  Loss per share for the first six
months of 1998 was $2.33 as compared to loss per share of $0.24 per share during
the same period in 1997.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  principal  source of liquidity  is its U.S. and Canadian  credit
agreements.  At June 30, 1998, both the Company and JPE Canada were in violation
of certain financial covenants under their respective debt agreements.  On March
23,  1998,  the  Company  announced  that it  intends to sell all of JPE and its
businesses,  although  there can be no assurance that the proceeds or the timing
of such sale(s)  will be adequate to retire the debt  agreements.  Further,  the
Company  is  working  with its  lenders  to  provide  adequate  funding  for the
continued  operation of the Company and its subsidiaries,  although there can be
no assurance that this can be obtained.

U.S. OPERATIONS

The Company's principal source of liquidity for its U.S. companies is the $116.9
million Third Amended and Restated Credit Agreement dated December 31, 1996 (the
"Credit  Agreement"),  as amended by Amendment No. 1 dated as of April 16, 1997,
Amendment No. 2 dated as of August 14, 1997 (effective June 30, 1997), Amendment
No. 3 dated as of  February  13,  1998 and  Amendment  No. 4 dated as of May 15,
1998. The Credit  Agreement is  collateralized  by all of the Company's  assets,
with  the  exception  of JPE  Canada's  assets.  At June  30,  1998,  borrowings
outstanding  under this Credit  Agreement  totaled  $105.7  million.  The Credit
Agreement expires on October 27, 1998.

Amendment  No. 3 to the  Credit  Agreement  required  the  Company to reduce its
borrowings  under the Credit  Agreement to no more than $70 million on or before
June 30, 1998.  In  addition,  the  Amendment  increased  the  interest  rate on
borrowings to prime plus 1.25%. There is also an amendment fee equal to $120,000
per month until the debt reduction occurs or the Credit Agreement  expires.  The
Company was not able to  consummate a sale of any of its U.S.  companies to make
the  required  debt  payment.  The  Company  has  negotiated  with its  lender a
forbearance agreement to provide required financing. Under this arrangement, the
lender has continued to provide financing based on an asset formula with maximum
borrowing of $105 million plus an  over-formula  advance of $42.1 million.  When
funding  in  excess  of  these  amounts  is  required,   the  Company  has  made
arrangements  with its major OEM customers to expedite payment on their payables
to the Company.  The Company is in the process of preparing an 18-month business
plan for the lender and other  banks to  consider  providing  a  refinancing  or
restructuring of the U.S. debt.

JPE CANADA OPERATIONS

The principal  source of liquidity for JPE Canada is a Cdn.  $28.7 million (U.S.
$19.5  million)  credit  agreement  with a Canadian  bank.  The Canadian  Credit
Facility  permits  JPE  Canada  to  borrow  funds  in the form of  advances  for
operating  requirements  and capital  expenditures.  Advances under the Canadian
Credit Facility are  collateralized  by  substantially  all of the assets of JPE
Canada. Interest rates on the advances are computed at either the Canadian Prime
Rate or the Base Rate, as defined in the agreement. At June 30, 1998, borrowings
under the Canadian  Credit  Facility  totaled Cdn.  $27.1  million  (U.S.  $18.4
million).

JPE Canada is not in compliance  with its loan covenants and its lender has made
demand for payment and given  notice of its  intention  to enforce its  security
interests.  In order to ensure production for its only customer,  JPE Canada has
entered  into  certain  accommodation  agreements  with its  lender and its only
customer that permit continued operating activities under certain conditions and
covenants,  including additional  out-of-formula  funding in the amount of $4.0.
Due to the impact of the GM strike on JPE Canada's  operations during the months
of June and July, JPE Canada has fully drawn on the  additional  funding and has
defaulted  under the amended  loan  agreement.  The lender has agreed to provide
additional  out-of-formula  funding in the amount of $2.0 million,  although the
Company  has  informed  the  lender  and its only  customer  that JPE  Canada is
insolvent and has no present  ability to repay in full the  indebtedness  to the
secured creditors.  In addition,  the Company does not believe that the proceeds
from the sale of JPE Canada will be adequate to satisfy its debt  obligations to
the lender, its only customer and unsecured creditors.

The  Company has  provided an  unsecured  guarantee  in the amount of Cdn.  $2.0
million for a portion of the JPE Canada  debt which was  recorded as a liability
at June 30, 1998. JPE Canada's  lender has no additional  recourse to the assets
of JPE, Inc.

At June 30, 1998, Current Liabilities  exceeded Current Assets by $73.2 million,
reflecting the classification of the U.S. and Canadian debt agreements of $114.9
million as current liability.  Excluding the debt agreements, working capital at
June 30,  1998 would have been $41.7  million as  compared  to $44.7  million at
December  31,  1997.  The  lower  level  of  working  capital  is due  to  lower
receivables and inventory due to the GM strike.

<PAGE>

                           PART II. OTHER INFORMATION

                                    JPE, INC.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.  Exhibits:

               10.1 Letter  Agreement  dated  August  10,  1998 among the Banks,
                    Comerica  Bank, as Agent,  JPE,  Inc. and its  subsidiaries,
                    filed with this report.

               10.2 Amendment No. 1 to Executive  Severance  Agreement dated May
                    21, 1998 between  Registrant and Donna L. Bacon,  filed with
                    this report.

               10.3 Amendment No. 1 to Executive  Severance  Agreement dated May
                    21, 1998 between Registrant and James J. Fahrner, filed with
                    this report.

               10.4 Amendment  No.  4 and  Limited  Waiver,  dated as of May 15,
                    1998, to Third Amended and Restated Credit  Agreement by and
                    among Comerica Bank, other participants and JPE, Inc., filed
                    with this report.

         b.  Report on Form 8-K:

               None.

<PAGE>

                                    JPE, INC.

                                    SIGNATURE


Pursuant  to the  requirements  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.


                                    JPE, Inc.


                                    By: /s/ James J. Fahrner
                                        ----------------------------------
                                        James J. Fahrner
                                        Executive Vice President and
                                        Chief Financial Officer
                                        (Principal Financial Officer and
                                        Principal Accounting Officer)


Date:  August 14, 1998

<PAGE>

                                  EXHIBIT INDEX
                                  -------------
EXHIBIT
  NO.               DESCRIPTION
-------             -----------

 10.1               Letter  Agreement  dated  August  10,  1998 among the Banks,
                    Comerica  Bank, as Agent,  JPE,  Inc. and its  subsidiaries,
                    filed with this report.

 10.2               Amendment No. 1 to Executive  Severance  Agreement dated May
                    21, 1998 between  Registrant and Donna L. Bacon,  filed with
                    this report.

 10.3               Amendment No. 1 to Executive  Severance  Agreement dated May
                    21, 1998 between Registrant and James J. Fahrner, filed with
                    this report.

 10.4               Amendment  No.  4 and  Limited  Waiver,  dated as of May 15,
                    1998, to Third Amended and Restated Credit  Agreement by and
                    among Comerica Bank, other participants and JPE, Inc., filed
                    with this report.
 
 27                 Financial Data Schedule,  which is submitted  electronically
                    to the  Securities and Exchange  Commission for  information
                    only and not filed.