Enterprise Minnesota Magazine - January 2013
HELPING MANUFACTURERS GROW PROFITABLY
A European-inspired facility and a passion for new product innovation build upon Delkor Systems’ engineering leadership in designing and manufacturing food packaging machines.
By Andrea Lahouze
Delkor President and CEO Dale Andersen watches the company's new robotic case loader in action.
Step onto the production floor at packaging manufacturer Delkor Systems in Arden Hills and you may think you’ve stepped into a showroom. On polished floors and under high ceilings sit dozens of new food packaging machines, each forming, filling or closing cartons of food products at high speeds. Colored tape outlines the correct position for every object that touches the floor, from machines to easels. The entire operation is bright with both high-efficiency and natural lighting, and color-coordinated in Delkor’s signature red and black stripes, which run across each machine and along the walls throughout the facility, punctuated by the company’s red and black logo.
For Delkor President and CEO Dale Andersen, the new space is a dream become reality. His food packaging equipment company, which manufactures machines that package food products in many parts of world, including 50 percent of North America’s cultured dairy products from Greek yogurt to cottage cheese, had added a second location in 2007 after outgrowing its primary location. But rapid growth in 2012, including 42 new hires, record-high exports and a 35 percent jump in overall sales, necessitated a larger location. After visiting a number of world-class manufacturers in Germany and other European countries, Andersen and other Delkor executives wanted to bring elements of those facilities back to Minnesota.
“German manufacturers really are dedicated to high quality standards in terms of the production floor. …Everything has its place, everything is nice and orderly and well-coordinated. It’s an efficient way to manufacture,” Andersen says.
Delkor’s new building is 114,000 square feet—approximately 60 percent larger than its previous two facilities combined. Andersen and his team designed it to promote efficiency in every department, from sales to shipping.
“We really paid close attention to how the flow was going to develop, so we would make efficient use of the space,” Andersen says.
With months of design and renovations completed, the logistics of moving a capital equipment manufacturing company required equal attention. Delkor moved one department at a time into the new space over a period of six weeks to prevent any dip in production. To minimize walking back and forth throughout the day, each department has a dedicated section of offices and cubicles, and each machine being tested has its own work cell, with all adjustment tools and parts kept right at hand. Andersen estimates that simply being in one location instead of two has increased efficiency by at least 10 percent, with layout revisions adding to that number.
The entire move is an apt example of Delkor’s dedication to continuous improvement throughout the business. “Every year, we focus on trying to understand how we can do something better,” Andersen says. That dedication has continued to guide and grow its success in an ever-evolving marketplace.
Navigating a Changing Industry
For the food packaging industry, gone are the days of plain paperboard boxes. Grocers’ aisles are now awash in colorful, eye-catching graphics and an array of shapes and sizes. For Delkor, the ongoing challenge is accommodating both current and future designs.
In years past, it was up to food companies to determine how each product would be shipped, packaged and presented for sale. Today, mass merchandisers regularly request new shapes, package counts, displays and materials, and it’s up to the food companies to deliver. As a result, Delkor customers are often unsure what packaging shapes, sizes or materials their machines will be required to handle in the future, so flexibility in machines they purchase is essential.
“The game has changed,” Andersen says. “If a customer has a traditional machine that doesn’t have enough flexibility, their only choice is to put a completely new packaging line in to accommodate the necessary changes, or to come back to the customer and say, ‘I’m sorry, we can’t do that.’”
To help its customers stay nimble, Delkor made new product innovation a cornerstone of its business, building flexibility for different packaging designs into the 34 machines it currently manufactures, and keeping it top of mind in design of future machines. The challenge in designing many of the machines is to accommodate the many different packaging formats while keeping pace with desired rates of production, which often range between 400 and 600 containers per minute.
“To have a machine that can quickly change over in a matter of five minutes to running something very different, that was the engineering challenge,” Andersen says.
Addressing that challenge has increased domestic sales and catapulted the company into new markets around the world, including Canada, Japan, Australia, New Zealand, and multiple countries in Central and South America. In 2011, international machinery shipments increased from 10 to 26 percent. In the first quarter of 2012, the company exported a record 50 percent of its sales to international customers, and was awarded the Governor’s International Trade Award by Minnesota Governor Mark Dayton and the Minnesota Trade Office.
Built on Innovation
Terry Cook, Delkor’s vice president of finance, attributes that growth to a companywide culture of “true innovation.”
“True innovation is something that changes the process of how packaging is done, rather than simply a new bell and whistle on a piece of equipment,” Cook says. “Our people understand how important innovation is to our company, and they enjoy it because it’s fun.”
Andersen agrees. True innovation, he says, is twofold: creating new products and securing new patents. “And Delkor has been very successful in doing both,” Andersen says.
Each year, the company aims to develop a handful of completely new packaging machines. In 2012, the company unveiled a record seven new machines, including lidders, carton and case closers and tray formers. Its newest carton closer is also the first in the world to have “Intelligent Positioning” technology, which electronically analyzes the position of each individual carton flap entering the carton closer, and automatically adjusts the position if it’s out of alignment.
Delkor holds patents on both machines and packages. Seeking to reduce the amount of corrugated packaging required for shipping, company engineers developed the Spot-Pak packaging system, which uses 50 percent less corrugated packaging by forgoing a corrugated box for flat corrugated pads. The pads receive a temporary bond adhesive before they are loaded with product, stacked and shrink wrapped into packages. The environmentally sustainable solution cuts packaging materials costs by 40 to 60 percent, and is currently operating in approximately 200 locations in Canada, Mexico and the United States.
Creative problem solving extends throughout the company’s workforce. When engineers were working to develop a machine that could package a new shaped product at speeds of more than 400 units per minute, it was a recent graduate from a local technical college who came up with the winning solution. The company will apply for a patent on the idea later this year.
In 2013, the company expects to unveil six completely new machines, growing its product line to 40 machines. While there are always many new product possibilities, Andersen says the company chooses a small number of new machines to develop based on which have the most strategic importance.
“We try really hard to listen to the marketplace,” he says. It appears the company listens well. Delkor currently sells machines to eight of the top 10 yogurt manufacturers in North America. When you buy a pack of yogurt in North America, there’s a good chance it was packaged by a Delkor machine. In Ecuador, that chance increases to 80 percent.
Andersen says Delkor’s penchant for problem solving and innovation has made it not only a reliable vendor, but also a trusted partner among many of its customers.
“We typically are in discussion with a number of food companies on how to design new machines to accomplish what they’re trying to accomplish. It’s very common. Right now, we have 10 different projects in which we’re trying to define how we would solve a problem by changing the design of the machine in one way or another,” Andersen says.
The company also sits on multiple customers’ (highly confidential) new concept development teams to offer both design and manufacturing advice. Last summer, Delkor engineers helped Fontana, Calif.-based California Aseptic Beverages LLC roll out a tetrahedral container for a new juice product. Delkor engineered a robotic cartoning line to make it a reality—a challenge given the atypical shape of each juice container. Delkor’s carton former shapes the cartons, then its robotic loader automatically inserts each individual juice container at speeds of 250 per minute in a specific orientation to accommodate the tetrahedral shape. In the final step, the carton closer seals each carton with Delkor’s patented intelligent positioning technology to ensure proper alignment of its graphics. For California Aseptic Beverages President Jeff McClelland, the most surprising feature is that the entire packaging line can be run by just two people instead of the eight it would take to fill each carton by hand, leading him to dub Delkor’s robotic cartoning line “the future of packaging.”
Although confidentiality agreements keep details under wraps, Delkor engineers are now helping Unilever Australia finalize a new package design set to hit the market later this year.
Heading into the new year, Andersen admits that economic uncertainty is a main concern—“When then economy turns sour, big capital equipment projects get put on hold,” he says. But he quickly adds that continuing to pursue international sales will bolster the company’s growth. Probable projects in Columbia, Chile and Ecuador contribute to an anticipated 20 percent growth in overall sales.
“I continue to push our business in terms of looking at the export opportunities, because we’ve seen great growth there, and we know that there’s much more growth to be had, but it’s a step-by-step approach,” he says. While its machines operate in more and more places around the globe, Andersen says Delkor will continue to operate in Minnesota because of its highly qualified talent pool.
“One of the competitive advantages of working in Minnesota is the employees, the work ethic in Minnesota and the diverse economy,” Andersen says. “We have such great access to the schools that are here. We employ a lot of people after they come out of their degree programs. We have a very well educated workforce, and I believe that is one of the reasons that Delkor is successful.”
For more information about Delkor Systems, go to www.delkorsystems.com
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