Five to Watch
These five Minnesota manufacturing companies have shown growth and expansion even during an economic downturn. Expect even more in 2009.
BY SARAH ASP OLSON
Across Minnesota’s manufacturing landscape, you’ll find shining stars. Companies with integrity and ingenuity, clear goals and the drive to meet them. You’ll see companies getting creative and thriving despite economic downturns. The five companies profiled below fall into this category. From a specialty glass manufacturer that’s growing fast to a company that switched from tools to vacuums to great success, these five are certainly ones to watch in 2009.
IRD Glass: Shattering Expectations
IRD Glass is on the move. Physically, the company that produces specialty precision glass components such as optical prisms, laser mirrors and ceramics, doubled the size of its Litchfield plant just two years ago, but the growth did not stop there. IRD Glass now hopes to double its sales over the next five years.
“Our goal is to grow from approximately $5 million to $10 million by 2013,” says IRD Glass’ sales and marketing manager, Todd Anderson. Anderson, along with IRD Glass vice president and general manager Dirk Kvale and the whole IRD Glass team hope to jumpstart this growth with new equipment and technology for producing precision glass prototypes.
With all the equipment and personnel in place, IRD Glass is to launch the prototype cell this month. In an industry where the standard turnaround for prototypes is six to eight weeks, IRD Glass will be able to crank them out in just two.
“If you can’t do the prototypes, you aren’t going to be able to get to the end production level,” says Anderson. “We felt there was a significant quick-turn market available there [so] we took that into the Eureka! Program through Enterprise Minnesota and it came back reinforcing our hunches.”
While quick turnarounds are already proving valuable in attracting new customers— from government to research to aerospace— IRD Glass believes the new technology will benefit existing clients by shortening lead times for new products as well as their existing parts. This all fits into what Anderson sees as IRD Glass’ mantra: customer intimacy.
“Customer intimacy [means] being intimately involved in our customer’s current operations,” he says, “as well as their future opportunities by giving them the expertise, support and communication other suppliers are unwilling or unable to provide.”
While developing new and faster technologies and delighting clients is always a top priority for IRD Glass, Anderson also stresses the need to actively pursue new markets.
“Precision glass components are a very niche market and you’re not going to find much by doing a Google [search],” he says.
“We are aggressively and proactively pursuing new customers and new markets,” Anderson continues. “And when [we] do find customers ... everyone from our president down to the team on the floor [are all] eager to prove how fast they will get it done with excellent quality.”
EPCO: The Little Pigtail on the Big Market
In 1976 the Minnetonka-based Engineered Products Co. (EPCO) bought the right to manufacture a tiny piece of equipment called the stranded grounding pigtail. The company has since come up with a way to cut out most of the labor involved in producing this curly piece of wire. And since it is used in commercial buildings all over the country, manufacturing it has helped EPCO build a successful business.
“It’s just a grounding wire,” says Jeff Mueller, Enterprise Minnesota business growth advisor. “They produce it on a machine developed 40 years ago or more, and it just keeps cranking out these little pigtails that every single contractor needs to ground wires, so that’s a little cash cow for them.”
In addition to its steady business producing the pigtail, EPCO, a company primarily serving electrical distributors for the commercial construction industry, continues to introduce new products to its client base. In the past year, the company introduced a gasketted fluorescent fixture that can be used to light damp spaces such as car washes or agricultural buildings.
“I think [the fluorescent fixture] will be a very successful product for us in the future,” says EPCO president Jack Schuster. “We chose to [manufacture] it ourselves. It’s a better product than what we could import—all the components are made in the United States.”
And in the first quarter of 2009, Schuster says EPCO is set to begin manufacturing and selling a type of tubing for fluorescent lights often found in grocery stores. “That equipment is pretty capital intense,” says Schuster. “We have $350,000 of equipment and building improvements to accommodate the equipment, [but it] will increase our margins by 20 percent.”
With all the growth happening at EPCO, it’s no wonder the company is focused on serving as many clients as possible with a unique, diverse lineup of products and extreme customer service.
“Most of our distributors tell us nobody ships complete orders like we do,” says Schuster. “Ninety-nine percent of our orders go out on time, and if a distributor places an order with 10 line items, 99 percent of the time 10 line items will go out. So, not only do they get their order on time, but they also get it complete.”
EPCO stays on top of its excellent record in shipping by measuring its own errors and polling customers and independent sales representatives with satisfaction surveys administered by St. Thomas University.
As for the future, Schuster anticipates the company will ride out the economic recession, double in size within five years, continue to add products that fit the company’s vision and, of course, continue to crank out that pigtail.
“[EPCO] is one of my favorite clients to work with,” says Mueller. “They understand what they need, what they want and aren’t afraid to go for it.”
NACS Inc .: These Guys Deliver
North Anoka Control Systems , or NACS Inc., a design-and-build company for specialized automated machinery in Ham Lake, is one of those companies with strong Midwestern values.
“They’ve developed a good reputation with some of the medical device companies in the Twin Cities,” says Enterprise Minnesota business process engineer Mary Connor. “They’re always committed to doing the right thing, always humble in what they do. They’re really an honorable group of people.”
Along with being honorable and “very Midwestern” according to Connor, NACS Inc. is thriving due to good planning and smart business practices since setting up shop in 1991.
“We started as an automation control business with the electronics side of machine control,” says NACS Inc. president and CEO Bill Doty. “As we evolved, we added the mechanical component to our business so we could be more or less a one-stop shop for our customers rather than having to partner with a mechanical business.”
Doty and his executive team saw another opportunity three years ago to move closer to their customers. Originally based in Isanti, NACS Inc. relocated to Ham Lake after one of the major players in medical equipment manufacturing in the Twin Cities closed up shop.
“The move was a strategic decision that we needed to take advantage of,” says Doty. “We needed to get closer to our customers.”
By all accounts, the move and NACS Inc.’s relentless attention to company culture has paid off in a big way—the company has grown 50 percent in the last two years alone. Doty and crew are not taking that growth for granted.
“In these uncertain economic times, we have to be careful,” says Doty. “What we’re doing now is shoring up the business at this level. There are many opportunities to improve how the business functions. Sustaining sales is a concern [as is] delivering on customers’ expectations consistently. We’re like the Domino’s Pizza guys: We deliver.”
To manage such profound growth and keep the company moving forward, NACS Inc. has implemented a plan called Enterprise Excellence. Working with Enterprise Minnesota, NACS Inc. has begun integrating lean principles and polling its customers under this plan.
“We’re talking to our customers, trying to find out from them what do we need to do,” says Doty. “We’re looking ahead saying, ‘What does the customer need us to be like, to look like, to be able to function like in one, two, five years?’ ” Connor says NACS Inc. is on the right track to serving its clients’ present and future needs.
“They work very closely with their clients and most of their work is custom,” she says. “They get in front of their clients to get in front of the solution.” And before the client knows that’s what they need, NACS Inc. has delivered it.
Atrix Tool Co.: A Product of Their Own
In 1993, the publicly owned Atrix Tool Co. was struggling to keep its head above water and its numbers in the black. With about 80 percent of revenue tied into the low-commodity tool industry, Atrix was competing with thousands of other tool distributors across the country.
“They brought me in to turn the company around because they had mounted some losses after efforts to go public,” says Atrix CEO Steve Riedel. “I was fortunate enough to have some lucky breaks in repositioning and expense cutting and was able to turn the company around.”
By turning Atrix around, Riedel not only means boosting the company’s bottom line, but also a 180-degree shift in Atrix’s focus and market position. First, Riedel purchased Atrix, which had been trading on the NASDAQ exchange, from the remaining stockholders. He then set about remaking the company, from distribution of tools to manufacturing highly specialized vacuum cleaners—a niche that had made up just 15 percent to 20 percent of Atrix’s revenue before Riedel’s purchase in July 1999.
“We did kind of a flip-flop,” he says. “Today, about 80 percent [of our revenue] comes from vacuums and maybe 15 percent from tools.”
The choice to redirect Atrix’s market position was an obvious one for Riedel. “The margins on tools are quite low and it’s a very competitive market,” he says. “The vacuum market was a niche market with much higher margins. We felt we could compete better by building a better and more cost-efficient vacuum cleaner.”
Today, the company offers four basic vacuum models and sells to four primary industries: office products, abatement (for removal of dry chemicals, mold spores and asbestos), pest remediation and electronics.
The highly specialized nature of Atrix’s vacuums and advanced filtration systems give the company better than average market position, even in a recession. Riedel also credits his company’s position to the 2008 addition of pest remediation.
“There are two markets that we’re growing in now: the pest vacuum market and the electronics market,” says Riedel. “I think we’ve got some very well-positioned products and two new markets that we’re going into that have good expansion capabilities. We are growing those markets even in the down [economy] right now, and we’re growing nicely. Because of that, it’s enabled us to stay pretty level for last year.”
In the coming years, Riedel has even higher hopes for Atrix—15 percent to 20 percent growth per year in an even economy.
As Riedel prepares to retire and hand Atrix over to a five-member team, the company is in a good position to thrive thanks to savvy transition from low-value tool distributor to specialized, high-value manufacturer.
“[The switch] sets us up as not a ‘me too’ type of company,” says Riedel. “This is our product, the Atrix product of vacuums. We’re not just a tool distributor of somebody else’s tools; we manufacture the Atrix brand of vacuum cleaners. We have our own identity, our own products and our own services that we can sell worldwide.”
Ideal Aero smith: An Ideal Market Position
Some companies , due to the nature of their products and services, can still grow despite a difficult economy and turn a recession into profit. Ideal Aerosmith is one of those companies.
The 70-year-old supplier of precision inertial guidance test systems, rotational rate tables, centrifuges and flight test tables moved its primary operations to East Grand Forks in the ’80s. Since then, it has been refining and developing its offerings and operations to keep up with a changing world and a shifting economy.
During this current economic slowdown, Ideal Aerosmith senior vice president of growth and technology Jim Richtsmeier has seen the company’s client base grow. Companies that once handled systems testing internally, either by hiring or pulling staff from other areas within, are now turning to Ideal Aerosmith.
“When these companies have layoffs they don’t have the staff to implement a new test,” he says. “It is more efficient for them to contract with us to develop test equipment than it is to take one of their people who could be developing new product.”
And with the ever-shrinking global marketplace, Ideal Aerosmith—with 110 employees, 60 of whom are based in the Minnesota office—is now a worldwide operation. “
We probably work with 20 different countries,” says Richtsmeier. “A lot of our international work is in defense. Our products are used for testing navigation systems in military aircraft. We also have larger platforms that are used in the development of entire missile programs.”
One key to Ideal Aerosmith’s continued success? Diversification. The company continually expands and shifts its product and service line to work within rapidly expanding industries such as national security, auto technology and even the cell phone market. Some of Ideal Aerosmith’s highest profile clients include Boeing, Honeywell, Raytheon, Rockwell- Collins and Lockheed Martin.
“As these industries grow there is going to be more and more test equipment required,” says Richtsmeier. “We are staying current with technology and implementing new processes and procedures for efficiency so that we are well positioned—as the industry continues to evolve—to be a long-term provider.”
One of the ways Ideal Aerosmith is amping up efficiency is by partnering with Enterprise Minnesota.
“We’ve helped them significantly improve their on-time performance by shortening cycle time,” says Bill Martinson, Enterprise Minnesota business development specialist. “Now, we’re working with them to beef up their sales and marketing so they can leverage [that growth].”
And while the company is becoming more efficient all the time, Richtsmeier says what really sets it apart is innovation.
“[By] implementing new ideas in engineering, manufacturing and sales for continuous improvement, we’re providing the best experience for our customers, both in the products they receive and the services they receive from us,” he says.