Ones to Watch
These five Minnesota manufacturers have achieved successes and growth throughout the economic recession, and they are ready for a rebound in 2010.
BY ANDREA LAHOUZE
Delkor Systems: Packing Profits
For today's product packaging industry, it's a brave new world--no longer just a way to transport goods from Point A to Point B. Perhaps no one is more aware of this than Dale Andersen. As CEO of Delkor Systems, a packaging equipment manufacturer in Circle Pines, Andersen has
watched the packaging industry accelerate from a simple method of transportation to full-throttle brand promotion, with eye-catching logos and unique package shapes designed to grab customers' fleeting attention.
To remain competitive in a stormy marketplace, Andersen has been at the helm of a four-year mission to create a completely new Delkor product line from the ground up. "We felt that the changes in the marketplace were so dramatic that the old designs just weren't going to
accommodate it," Andersen says. "So many things were changing that for us to use the designs we had from the '90s just didn't make sense."
Despite lower corporate sales figures in the first half of 2009, the company pursued new product development throughout the recession, pumping $500,000 into research and development efforts. Investing in research and development during slower times is "kind of like buying a
stock when the stock [price] is low," Andersen says. "You've got to just believe in it. Now that we're taking projects for 2010, we can see that a lot of the projects coming in are because of the product development we finished in 2009. It's a really good benefit, but it takes a
little courage."
Two of Delkor's innovations are already making particularly big waves in the industry. Intelligent Position--a patent pending technology by Delkor--helped the company package Cargill's Truviaâ„¢ natural sweetener product. Truvia's carton design and shape are important to its
brand identity, so perfect packaging is essential. Intelligent Position electronically analyzes the precise spot of each carton as it comes into the closing machine to guarantee a symmetric seal.
"Let's say that the top of the carton was 2 percent off," Andersen says. "We can correct that on the fly and make it nearly perfect every time, even though the carton behind it is also traveling at the rate of 150 cartons a minute. It's happening at a speed you can't
physically see with your eyes. It's certainly not your father's packaging equipment."
Another Delkor innovation helps customers reduce their carbon footprints. The company's Spot-Pak® packaging machine uses 50 to 60 less material than traditional packaging methods by replacing corrugated cartons with compact corrugated pads. The pads are placed between each
layer of product, and individual products are secured to each pad using just a few grams of temporary bonding adhesive.
Delkor patented the Spot-Pak® package concept, and now it has nearly 200 installations throughout North America. Eight of these installations are packaging Smart Balance® buttery spread, since the national brand manufacturer recently converted to Delkor's Spot-Pak® system for
U.S. sales. In doing so, Smart Balance® can now ship the same amount of product using 975 fewer tons in packaging materials.
Andersen credits Delkor Systems' continuous commitment to product development for an anticipated 30 percent growth in sales for 2010. To accommodate the projected increase, Delkor added 13 employees to its work force of 90 in November, December and January. Andersen wouldn't
be surprised if another six to eight employees joined the company this spring.
"Thirty percent is a lot to grow in one year," he says. "We're making sure that we're trying to stay ahead of that curve."
To learn more about Delkor Systems, visit www.delkorsystems.com.
RIE Coatings: One-Stop Coating Shop
In the 23 years since its founding, RIE Coatings has established itself as the place to go for coating metal items of nearly every shape and size for corrosion resistance and lubrication control. Together, the company's array of environmentally friendly coating materials and
processes constitutes a veritable recipe book of 700 coating solutions. This makes it possible to coat nearly any item--from tiny cell phone screws to large parts used on military transport vehicles to ATVs to John Deere tractors. The company's 250 customers are as diverse as its
coating options, and they represent a variety of industries--from aerospace and military to agricultural and industrial.
On the eve of the recession, RIE Coatings was busy positioning itself for growth with a new marketing strategy and an expansion of its marketing team. But when sales slowed, the company found itself at a crossroads. While its marketing team was essential for future growth, the
company's drop in sales was making it difficult to retain that team through the recession.
"Given our sales volumes, it was hard to justify keeping that [expanded] sales force," says Chuck Rau, president. "But with all the things that we were focusing on--[such as] repositioning ourselves for growth in the marketplace--it was critical to us to keep those
resources in place and continue to support them."
To hold onto its new workers and keep its new marketing strategy intact, the company applied for and was awarded a grant from the Pohlad Family Foundation. At $100,000, the grant was enough to help the company stay focused on its plan for future growth by achieving ISO
certification, redefining its value proposition, and re-branding the entire business, including a new logo and slogan: "Better Performance "¢ Better For The Environment."
RIE Coatings' marketing efforts attracted a handful of major new accounts across the country. One new customer, a fastener manufacturer in Iowa, has worked with RIE Coatings to open a satellite operation within its facility, which allows its fasteners to be both manufactured
and coated under one roof. Rau hopes this will be the first of multiple satellite operations for RIE Coatings as manufacturers continue to pursue maximum efficiency.
"We're renting space from them and putting our machines and our employees right in their plant to finish the processing of a specific line of fasteners," Rau says. "This is just our first step in what looks like a very promising growth strategy for us."
All in all, Rau estimates new business accounts--including the Iowa manufacturer--will generate a 30 to 40 percent increase in sales, which will require 15 to 20 percent more employees.
In stark contrast to 2009, Rau predicts this year's challenge will be keeping up with opportunities to grow the business. "We've got a pretty bright future, and I'm really anxious to get into 2010 because 2009 was a real battle," he says. "It's nice to have survived it,
and we're looking to move ahead."
To learn more about RIE Coatings, visit www.riecoatings.com.
Naturally Bamboo: Conscientious Clothing
From healthy snacks to durable flooring to boats and bridges, bamboo has long been valuedfor its versatility. Now the soft, sustainable and durable material is becoming a large player in the eco-friendly clothing market as well, and a Mankato-based entrepreneur is helping to
lead the way.
April Femrite, CEO of Naturally Bamboo, says inspiration for her business appeared in the form of a news story she read one evening, which heralded the qualities of bamboo as a clothing material. Bamboo's silky fibers echo the feel of soft cotton, while the cellulose
material's micro-gap structure makes clothing breathable and wicks moisture away from the skin. The material is naturally antibacterial, allowing clothing to be worn multiple times before needing a wash. Bamboo needs no pesticides or chemicals to grow, making it a certified organic
material. And because bamboo grows quickly, shooting up about 75 feet in four months, it is also extremely renewable.
One news article later, Femrite had decided that bamboo clothing was her entrepreneurial calling. "That evening I bought my domain name for my Web site and decided that I was going to start my own bamboo clothing line," she says. "After researching it for six months, I
had my own six-piece line that was for sale in the fall of 2007."
In addition to being environmentally sustainable, creating ethically made clothing also shaped Naturally Bamboo's mission. "I knew from the beginning that if I was going to do this company, it had to have equal emphasis on both social and environmental responsibility,"
Femrite says. "If I was going to run a company, it was going to be ethical in all respects--from our raw materials to using recycled packaging to overseeing that our sewers are getting paid a fair wage." While many large brand-name clothing lines pay just pennies an hour to
sewers overseas, Naturally Bamboo's sewers in Prior Lake earn $10 to $12 per hour to make shirts, skirts, hats and dresses for the clothing line.
Since founding her business in 2007, Femrite has successfully sold her active and outdoor clothing line in retail shops across the country, with popular consumer bases in Minnesota and Hawaii. Between 2007 and 2008, sales grew by 100 percent. Last year, the company also became
a top five finalist out of some 1,500 applicants in Forbes' "Boost Your Business 2009" competition, which awards a $100,000 prize to the best entrepreneurial business plan. While Naturally Bamboo did not win the grand prize, exposure from the competition has helped Naturally
Bamboo establish its brand name as a producer of sustainable and ethically made clothing.
True to the company's mission of sustainability, Femrite is working to move her company's entire seed-to-shirt supply chain to the United States. While moso bamboo--the species Naturally Bamboo uses for its clothing line--is not indigenous to the United States, agricultural
scientists have pinpointed central Mississippi as an ideal location for the shoots to flourish. Femrite hopes that budding partnerships with investors and farmers will result in planting acres of moso bamboo in Mississippi this spring.
For more information about Naturally Bamboo, visit www.naturallybambooclothing.com.
Water Billboards: How You "Canby" Green
On a family vacation in 1998, Randy Kamrath was sitting at a Disney World cafeteria table when he was struck with an idea. Surrounded by wastebaskets and Styrofoam, he wondered why disposable plates and cups couldn't be made of compostable materials.
Kamrath, a retired farmer, knew firsthand about the value of compost nutrients when used to fertilize crops. He also knew that his hometown of Canby would benefit from new businesses to help sustain its population of 1,700, which dwindled 10.1 percent from 2000 to 2008 as
younger residents migrated toward large cities with more jobs. It was especially important for the father of four to give his children opportunities to stay in the town where they grew up.
Kamrath's dreams of compostable disposables and more careers in Canby were realized when he and his wife, Susan, opened Water Billboards in August of 2008. The company's name is based on its original product: a water bottle with a customized label, or "water billboard."
Customers can choose between recyclable plastic bottles and biodegradable bottles made from polylactic acid. Last year the business expanded to become a one-stop shop for compostable food service items ranging from plates and bowls to cups and platters. The food service items are
made from sugar cane fibers and take only two weeks to biodegrade 95 percent.
Kamrath hopes that the convenience of his products will encourage customers to adopt a more eco-friendly outlook. "Of any landfill, 20 to 30 percent is organic waste, [such as] a banana peel, lettuce leaves and all that type of stuff," he says. "By using [compostable]
food service products, I think we can reduce landfill quantities by 25 percent."
As a burgeoning sustainability movement unfolds across the country, Kamrath believes companies, schools and other organizations have positive publicity to gain from their environmental efforts--if they make those efforts known. "Frankly, if you're going to do [green], you
want to toot your own horn, too," he says. "It's not like you're very secretive about doing the environmentally friendly thing. You want to make that well known."
To that end, Water Billboards started offering supplies for "green" events. In addition to its biodegradable food service items, Water Billboards provides on-site signage to publicize an event's environmentally friendly status. When an event is over, Water Billboards gives
customers information on where to properly dispose of their biodegradable items to ensure a truly eco-friendly event.
With a ballooning customer base of schools, companies, churches and nonprofit organizations, Kamrath is excited about his company's role in making environmental stewardship easy.
"The best thing about [using our products] is it's the right thing to do," he says. "You can use these things whether or not you believe in global warming, whether or not you're a wacko environmentalist. I mean, I'm a conservative Republican, but it's just the right thing
to do. That makes it just very exciting for me."
To learn more about Water Billboards, go to www.waterbillboards.com.
Pequot Tool: Diverse is the Word
In the small town of Jenkins, Pequot Tool's wide-ranging abilities and customer base are a recipe for recession-proof success.
Diversification is "part of our secret," says Mark Shervey, president of Pequot Tool. The 120-employee custom job shop has even more customers--127 to be exact--ranging from nuclear testing equipment manufacturers in California to a dental machine manufacturer in Texas to
customers in the aerospace, computer and firearm industries.
The company's diverse customer markets have been key in carrying it through the recession, Shervey says. Pequot Tool's largest customer industry has traditionally made up about 10 to 15 percent of its sales. In 2009, when many companies watched sales slip by 50 percent or
more, Pequot Tool saw a mere 2 percent dip.
The company's varied customer base may have something to do with its abilities. Instead of honing in on fabricating or machining, Pequot Tool concentrates on both equally. The company frequently updates its equipment to remain on the cutting edge of technology. Last year
alone, the business invested $1 million in a new horizontal machining center, the addition of a robot to an existing machine and a high-end turret punch. The new equipment allows three areas to run virtually unattended, freeing up workers to concentrate on different activities on
the shop floor.
To train workers on Pequot Tool's ever-changing equipment and processes, the company is working with Enterprise Minnesota in coming months on a program called Training Within Industry (TWI). The four-part program teaches supervisors a method for successful on-the-job training
to help companies adopt and sustain changes quickly and effectively.
Shervey hopes the training will encourage supervisors to train more frequently and ultimately improve efficiencies throughout the business. "We consider any mistake as an opportunity to train," he says. "That isn't necessarily done consistently throughout the company, so
we definitely see that TWI is going to get everybody on the same page [in terms of] being aware of the different things that make training effective."
In addition to training, Pequot Tool's mission for 2010 will be to attract customers from new industries or from industries that make up only a small percentage of the company's customer base. Due to a spike in firearm sales last year, Pequot Tool's sales to the firearm
industry accounted for nearly a third of the company's business in 2009. "Our goal in 2010 is to grow in non-firearm-related industries in order to rebalance that diversity," Shervey says. The company hopes to expand its horizons further in 2010 via new customers in the medical
and aerospace industries.
To learn more about Pequot Tool, visit www.pequottool.com.
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