Industry Today, Volume 18, Issue 2 5 Major Issues That Will Determine the State of Manufacturing

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PUBLISHER’S LETTER

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PUBLISHER’S LETTER

A

s the Great Recession begins to slowly fade away into the chapters of history, it’s time to look at how the United States has recovered, and identify the pieces of the economy that will be instrumental in once again propelling the nation forward into economic prosperity for decades to come.

U.S. manufacturing is one of these pieces, accounting for 12 percent of the nation’s GDP and, if stood on its own, would represent the 9th largest economy in the world.

In this edition’s Focus article, we look at how manufacturing in the United States, particularly with respect to the middle-market companies, has recovered, and how certain topics like on-shoring, workforce development, and tax reform figure to impact manufacturers differently, depending on their current and future activity.

Despite “a long period of economic turmoil, manufacturers in the United States are finding reasons to be optimistic. Demand is up and companies are seeing improvements in productivity, along with increases in profits,” says Karen Kurek, a partner at McGladrey LLP, the nation’s leading provider of assurance, tax, and consulting services. Kurek and her colleagues ran a survey in 2014 called the McGladrey Manufacturing & Distribution Monitor Report, which polled more than 1,100 mostly privately held manufacturers and distributors on their expectations for profits and increases in workforce.

67 percent of the middle-market manufacturers and distributors, the backbone to the nation’s overall manufacturing success,

reported that they expected profits to rise and 57 percent believed they would be adding jobs in the coming year. Yet, perhaps the most telling statistic was the fact that 36 percent described their current businesses as thriving, a stark contrast to the 9 percent figure reported in 2009.

Despite all of this, the fresh wounds of the recession still have industry executives remaining quite cautious, so what can be done to further shore up one of America’s economic pillars and the overall confidence in such?

Kurek discusses, among other things, the need for core markets like the automotive sector, which has risen like a phoenix from the ashes in recent years, to continue to remain strong in the face of continued retirement from an aging workforce, and the need to hire a younger generation to adequately replace them.

Hovering in the background of all of this is the expectation of many middle market manufacturers to their operations back within the borders of the United States. Kurek says that beyond the logistics of equipment and workforce transportation is the need to undergo tax reform aimed at reducing the uncertainty for middle market manufacturers and distributors, and enable them to plan further down the road with regards to employees, energy costs, and overall performance.

Manufacturing in the U.S. is coming back in a big way, but there are still several critical components that need to be respected and addressed in order to ensure that the United States remains a juggernaut in production for many years to come.

INDUSTRY TODAY 3

CONTENTS 06 FOCUS: MCGLADREY

16 FEATURE: IDC MANUFACTURING INSIGHTS

24 FEATURE: THOMASNET

VIDEO

32 FEATURE: DIGITAL AGE

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Industry Today is published bi-monthly by Positive Publications LLC, 65 Madison Avenue, Suite 510, Morristown, NJ 07960. Subscription price is $55 per year. Single copies may be purchased at $15 each plus shipping. Email, fax or phone the above address for details. POSTMASTER: Send address changes to Industry Today, 65 Madison Avenue, Suite 510, Morristown, NJ 07960. Copyright © Industry Today 2015. All rights reserved. No part of this publication may be reproduced in any form or for any purpose without prior written consent from the publisher and payment of the agreed fee. ISSN # 1521-8058

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VOLUME 18 • ISSUE 2

62 UPONOR PIPE EXCELLENCE

VIDEO

40 FORD ELEVATING AMERICA'S TRUCK

VIDEO

54 LUFKIN POWER TRANSMISSION GEARED PERFORMANCE

76 NOVA BUS SUSTAINABLY DRIVEN

94 ALUMASA

Stepping Up

128 ITW

Believing in Brazil

120 MARIZA ALIMENTOS

Recipe For Success

106 COLMEIA

Steady Build-Up

138 JORGENSEN FORGE

Forging Ahead

86 MECACHROME

Precision Machining

View Our

VIDEOS

INDUSTRY TODAY 5

FOCUS MCGLADREY LLP

FIVE MAJOR ISSUES

That Will Determine The State Of Manufacturing 6 INDUSTRY TODAY

FOCUS MCGLADREY LLP

After a long period of economic turmoil, manufacturers in the United States are finding reasons to be optimistic.

Demand is up and companies are seeing improvements in productivity, along with increases in profits. For this upward trajectory to continue, however, industry executives and governmental representatives cannot be complacent. Production efficiency, energy costs, tax legislation, and education access are integral to the success of the industry’s current fiscal condition and need to be nurtured or reformed. If the current business environment is to last, there is still more work to do.

B

y most measures, the United States economy is gaining strength. In 2014, nonfarm job growth rose an average 246,000 per month , with creation of high-wage jobs often outpacing low-wage jobs . According to the 2014 McGladrey Manufacturing & Distribution Monitor Report, a survey of more than 1,100 mostly privately held manufacturers

and distributors, 67 percent of middle market manufacturers and distributors who participated in the survey expected an increase in profits before interest and taxes over the course of the coming year; 57 percent expected to increase their workforce.

The Monitor also noted that 36 percent of participating executives described their INDUSTRY TODAY 7

FOCUS MCGLADREY LLP

businesses as thriving, a significant difference from 2009, when only 9 percent were bold enough to say in the middle of the recession that they were doing more than just holding steady.

To maintain this positive trajectory, a number of industry and economic stars need to align.

The automotive industry must remain strong Middle market manufacturers, who serve as the supply chain for auto production, have been 8 INDUSTRY TODAY

performing steadily. But rates of production and hiring must remain consistent or increase in 2015 for the momentum to continue. So far, this appears to be the case. Auto production is robust, and small- and mid-size firms are leading the way in hiring in this sector.

Demand for autos through the end of November 2014 increased at a 17 million annualized pace. With owners holding onto their cars longer than usual (The average age of a U.S. car is just under 11 years.), as well as policies such as

FOCUS MCGLADREY LLP

The tax environment in Washington, D.C., and across the country is especially vexing to manufacturers and distributors, and can be summed up in one word: uncertainty.

“cash for clunkers” that were put in place after the economic crisis, excess inventory was taken out of the system. Despite some sales fluctuations that can be attributed to severe weather across the country, demand is expected to rise over the next several months to replace wornout stock.

Nevertheless, industry executives remain cautious. Although most manufacturers anticipate sales in the United States to increase by an average of 8 percent in the first half of 2015, they

expect only increasing their workforce by an average of 5 percent. If hiring doesn’t keep pace with demand, the current workforce pinch will only tighten, assuming markets continue to improve. Monitor results show that the availability of skilled workforce personnel is expected to limit or significantly limit growth at 50 percent of companies.

According to the National Association of Manufacturers, “manufacturers in the United States are the most productive in the world, far INDUSTRY TODAY 9

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surpassing worker productivity of any other major manufacturing economy.” Those who supply the auto industry will need to sustain their production status to keep up with demand.

Middle market manufacturers must steadily bring production back to the U.S. According to McGladrey’s Monitor, production is expected to return to the U.S. in coming years.

Many Companies Have Brought (Or Are Considering Bringing) Operations Back To The U.S. A number of issues factor into these on-shoring decisions: cycle times, customer demand and product quality, among others. But each company’s supply chain is unique, and analysis of current spend, total-cost data, and emerging supplier opportunities contribute to onshore and offshore decisions, as do the efficiencies to be gained by having activities physically closer to the customer. Approximately 36 percent of Monitor participants feel it is important to have their operations in physical proximity to their supply chains — and, in fact, have made it a competitive advantage.

On-shoring investments are bringing much-needed jobs to communities, reducing assembly and delivery cycles, and boosting local economies. Customers’ perceptions also play a role in deciding supplier locations: 75 percent of executives report that it is important to their brand that their products are made domestically, and 34 percent believe that domestic demand increased because products were made domestically.

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Notably, some participants pointed out that products made in the U.S. enjoy a reputation for quality around the world. Depending on the market, the value that customers place on these products can translate into premium prices and profits.

Unfortunately, companies that have an operations presence or joint venture offshore find it can be cost-prohibitive to leave a country. In China, for example, it can be difficult just to get physical materials and equipment out of the country — and the severance costs can be quite high.

Energy Must Be Affordable Since manufacturers consume about a third of all energy in the United States, reduced energy costs are vital to the financial success of U.S. manufacturers.

With low fuel prices generating cash savings, companies are using that money to make much-needed capital investments in software and technology, equipment, research and development, and other areas.

With U.S. industry capacity at around 80 percent — a level considered full utilization — the reasons behind plant expansions and investments in new equipment become obvious: manufacturers and distributors are racing to keep up with rising demand after years of potential underinvestment. Lower energy prices are allowing companies to redirect capital into areas that allow them to stay competitive, rather than simply holding steady.

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FOCUS MCGLADREY LLP

There Must Be Tax Reform In The Middle Market Approximately 70 percent of all manufacturers in the United States are pass-through entities, and are therefore taxed at the individual tax income rate – one of the highest tax rates in the world. As such, any rise in taxes on a personal level or for investment income lowers profits that might otherwise be used for hiring or capital investments.

The tax environment in Washington, D.C., and across the country is especially vexing to manufacturers and distributors, and can be summed up in one word: uncertainty. In this 12 INDUSTRY TODAY

environment, companies cannot plan what they need to do to improve their business, or where and how they want to invest. At the federal level, for example, executives find it problematic to wait on tax credit extensions that might or might not materialize. Although an extension was given to more than 50 expired tax breaks, including a research tax credit, in December 2014, the extension was for only one year. At the same time, many state tax agencies have become increasingly aggressive in levying and collecting taxes, such as those for unclaimed property, or asserting that a nexus has been established within the state’s jurisdiction.

FOCUS MCGLADREY LLP

Education should be affordable. As manufacturing companies look to expand their workforces, employees must have access to affordable education to heighten their skills.

The differentiator in today’s competitive landscape is people. Keeping people motivated, knowledgeable on industry changes and committed to corporate strategy is analogous to success. Approximately 43 percent of

manufacturers with improved productivity report that workforce education and training is a critical factor.

Training isn’t just for the shop floor: 37 percent of these same companies report that leadership and management development is a key training area. Talent management is crucial today as baby boomers retire and companies look to replace their skills and knowledge.

Karen L. Kurek is a partner with McGladrey LLP, the nation’s leading provider of assurance, tax and consulting services focused on the middle market.

As national head of its industrial products practice, she oversees the audit, tax and consulting services to the firm’s manufacturing and distribution clients. She has provided financial assurance services to scores of manufacturing and distribution companies, as well as to enterprises across a broad spectrum of industries.

Kurek is also on the board of the National Association of Manufacturers.

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Products made in the U.S. enjoy a reputation for quality around the world. Depending on the market, the value that customers place on these products can translate into premium prices and profits.

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FOCUS MCGLADREY LLP

Thriving companies are different Why do some companies thrive while others only hold steady or decline?

While “thriving” is a somewhat subjective term, these companies follow a number of similar patterns, including: • Investing in equipment as well as in technology infrastructure and software; • Implementing continuous improvement processes though out their organizations; • Investing in workforce training beyond the shop floor; including management and leadership education; • Using information technology and other resources to share information with suppliers and internal personnel; • Understanding and meeting customer needs; • Minimizing the financial impact of government regulations and taxation.

To address the need to attract and retain a skilled and younger workforce, many firms are collaborating with local colleges, trade schools and high schools on training programs. Some school districts have dedicated education centers with programs specifically designed to encourage trade careers. Many companies are finding skilled workers among those who recently retired from the military.

State governments are acknowledging the need for and benefits of training. In the fall of 2014, the Ohio Development Services Agency announced it will be accepting yet another round of applications for its Ohio Incumbent Workforce Training Voucher Program, which is designed to create an exceptional state workforce with advanced skills that can meet the present and future demands of a

changing economy. Under the program, eligible employers can apply to receive direct financial assistance, up to $4,000 per employee per fiscal year.

Maintaining The Momentum Financial conditions in the U.S. remain solid, wages and jobs are on the rise, demand is high and low fuel prices are encouraging spending.

But if we have learned anything since 2009, conditions can change rapidly. Company executives and government officials need to remain vigilant to address the issues under their control and adjust to factors beyond their authority.

The 2015 Monitor survey launches in late March, with reports scheduled to be released during the summer. To learn more, visit www.mcgladrey.com/manufacturing.

INDUSTRY TODAY 15

FEATURE IDC MANUFACTURING INSIGHTS

THE DRIVERS BEHIND MANUFACTURERS’ IT INVESTMENTS & TWO TOP PRIORITIES FOR 2015

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I

n our IDC Manufacturing Predictions for 2015, we identified seven essential drivers that shape the IT investments manufacturers are making in 2015. We believe they represent the current situation - the reality - for manufacturers today. These drivers are the keys to making short-term as well as long-term strategic decisions. Some drivers are naturally more impactful on investments and are likely to add the most complexity and cost in implementation, but all are relevant.

Seven Key Drivers • Complex, dynamic value chains: Manufacturers participate in complex, overlapping value chains, with dynamic change, and an ongoing search for business improvement and new opportunities.

• Emerging market-emerging-market growth: Manufacturers continue to reshape supply chains and product strategies to support emerging market growth sourced from and manufactured in emerging regions.

• Traceability and transparency, brand and reputation: Manufacturers must take a stand on product quality and build up their reputations, and increased traceability and transparency are critical components.

• Demanding customers: Consumers and customers expect and dictate increasing levels of service, forcing business cycles to compress to meet customers’ requirements.

• Converging technologies for manufacturing: Technologies - Operational Technology (OT), Information Technology (IT), and INDUSTRY TODAY 17

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Communications Technology (CT) - are mandatory for manufacturers to design, manufacture, and deliver their product.

• Ubiquitous connectivity: Connectivity is ubiquitous, in devices, interfaces, and processes, and extends to the edge, with manufacturers assuming the communication infrastructure will keep up.

• Truth in data: Manufacturers are looking for the truth in data as they seek more valuable analysis of greater volumes and varieties of data and the information that will bring them closer to digital execution.

Most of these drivers represent conditions that have been building in the industry over the last decade but have become particularly critical in 18 INDUSTRY TODAY

just the last few years.

Two Underlying Issues - Security and Employee Skills We also believe security and employee skills represent two issues that manufacturers must address or acknowledge in everything they do.

For security, we’re referring to physical security as well as cyber security. And in the workforce, manufacturers continue to face two basic challenges: • Shortage of expertise: an aging workforce, with a significant amount of expertise at or reaching retirement age, as well as stagnant or declining numbers of new graduates in manufacturing and engineering-related disciplines.

FEATURE IDC MANUFACTURING INSIGHTS

• Technology-savvy: an incoming workforce that treats technology of all kinds as a natural component of the work process.

These issues, security and the changing workforce, as well as the seven drivers, can become stumbling blocks or opportunities for manufacturers to distinguish their organizations. We think that manufacturers are rallying around two priorities that cut across (and must consider) all of these – product quality and customer centricity. They impact the corporate goals, KPIs at all levels of the organization, how manufacturers judge their suppliers, and how they achieve their financial objectives. As a result, we know product quality and customer centricity will have and already are having a di-

rect impact on manufacturers’ IT investments in 2015. Here are our two predictions for 2015, regarding product quality and customer centricity: Product Quality and Customer Centricity Impacting IT Investments in 2015 • Product Quality: In 2015, product quality, including compliance, will underpin twothirds of all IT application investments across the manufacturing organization.

You probably remember the big news story from 2014 about the wide scale recall of potentially defective air bags in more than 10 million passenger vehicles. Despite the time and attention given to this issue, the root cause is still unclear. One major automotive OEM already INDUSTRY TODAY 19

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plans to work with an alternative parts supplier to meet the demand for replacement air bags.

This is the sort of crisis that can and will ruin partnerships and reputations.

Of course, the automotive industry is not the only one that has been the subject of a recall. As products and supply chains get more complex, and companies scale up to serve more markets, there’s no way around the fact that product quality is hard to guarantee. This comes down to traceability, transparency, brand, and reputation, with people, process, and technology implications, including the need for a corporate culture that promotes individual and corporate responsibility.

Enterprise quality can be improved by monitoring, measuring, and managing data and processes. Manufacturers must be able to identify root causes, improve communication, and learn from past mistakes, as well as build in processes and workflows that enable corrections before they become another crisis. We think that C-level executives are willing to put some money into improving product quality and product compliance. According to IDC surveys, manufacturers in every region and role across the manufacturing organization — in engineering, in the supply chain, and in manufacturing — indicate that quality is a top priority.

What type of investments will be justified by the benefits they provide to product quality? As you might imagine, it will be all over the map.

Two of the most impactful will be PLM or product analytics and digital manufacturing. We also think this is an opportunity for manufac20 INDUSTRY TODAY

turers to recognize that product quality is often about lifetime performance from the customer perspective, so service-related investments are also relevant here.

• Customer Centricity: In 2015, the importance of customer centricity and its impact on service, innovation, and manufacturing will lead 75 percent of manufacturers to invest in customer-facing technologies.

The majority of manufacturers we speak with believe that being more customer focused is the key to their future business growth, both in sales and profits. In a recent survey conducted

FEATURE IDC MANUFACTURING INSIGHTS

by IDC Manufacturing Insights, customer centricity has grown in importance dramatically, not just in terms of classic customer service in the supply chain (on time delivery in full) but also in terms of the role of product quality, from the perspective of both product reliability and performance and also the pace and relevance of innovation. Being customer centric means enabling functional capabilities to support customer and consumer needs, but it also requires that companies be efficient and effective. Customer centricity does not abandon obligations to cost savings and waste elimination; but it does mean

that when trade-offs need to be made, they favor the customer.

What types of investments will manufacturers make on the customer facing side? Many of these will be related to improving the customer experience and relationship, with examples such as upgrading the touchpoint to the customer with more self-service capabilities or more relevant information, such as better access to account information, order status, or even equipment and asset monitoring (think connected products).

We also expect more proactive touchpoints, in the form of mobile messaging shipment INDUSTRY TODAY 21

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Kimberly Knickle, Program Director, IDC Manufacturing Insights As a Practice Director, Kimberly Knickle is responsible for research and analysis of business and IT issues for manufacturers. She leads the IT Priorities & Strategies program, which focuses on hot topics that are changing the way manufacturers buy and use IT, such as big data and analytics, cloud, IoT, mobility, social, and sustainability. The program also includes research based on IDC survey data related to manufacturers’ IT investment priorities and plans. Knickle also manages the Product Innovation, Service Innovation, and Connected Products research.

EDUCATION/INDUSTRY ACCOMPLISHMENTS She received the Executive Certificate in Technology, Operations, and Value Chain Management from the MIT Sloan School of Management, and is a graduate of Boston University’s School of Management, where she earned her MBA degree. Knickle also holds a bachelor’s of science degree in electrical engineering from Cornell University.

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notification or more critical information or even remote software updates to connected products.

Recommendations We recommend that manufacturers take the following approach to ensure they are maximizing the value they derive from technologies: • Adopt modern IT infrastructures and applications, and mature your use of 3rd platform technologies, as well as in the way your organization builds upon the combination of IT, OT, and CT (information, operation, and communications technology).

• Put in place a group focused on process innovation, where newer 3rd platform technologies can be reviewed, incubated, and rolled out in the organization; where skills can be developed, and the organization educated on what the technologies can and can’t do. Keep evaluating innovation accelerators, such as 3D printing, robotics, and cognitive computing in this group as well.

• Work with partners to accelerate your IT capabilities and serve the line of business. Although we expect manufacturers to embed and apply more technology to how they operate, manufacturers must recognize that they need external resources and expertise, especially if they are going to move quickly.

Quite a few manufacturers have already achieved moderate success with 3rd platform technologies – including mobile applications, mobile devices, social tools, cloud, big data and analytics, and even IoT (Internet of Things). We expect leading manufacturers to be able to embed IT into the way they do business and into their products. This year, more companies will also focus on combining newer technologies, because of the drivers we’ve listed above, and to renew their focus on product quality and customer centricity. Essentially, it’s all about digital transformation – using technology for business innovation and transforming business models.

INDUSTRY TODAY 23

FEATURE THOMASNET

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FEATURE THOMASNET

IT TAKES A

VILLAGE:

TO SUSTAIN THEIR GROWTH, MANUFACTURERS MUST JOIN FORCES

TO ATTRACT

MILLENNIALS

I

f anyone should be smiling, it’s Karen Norheim, Executive Vice President of American Crane & Equipment Corporation. She’s in her dream job, and her company is flourishing. After years of steady progress, American Crane, which manufactures cranes, hoists and other material handling equipment, expects significant growth this year, and is investing confidently in machinery, software and new people.

Karen’s wonderful story is playing out all INDUSTRY TODAY 25

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across the country. Indeed, ThomasNet’s most recent Industry Market Barometer® (IMB) survey of North American manufacturers shows companies growing on all cylinders. Like American Crane, they’re hiring and investing to capitalize on more growth to come. The research erases any doubts that America’s manufacturing engine is in high gear…or does it?

For now, the industry appears to be roaring ahead—but a deeper look at our numbers shows the makings of a “perfect talent storm.”

Many factors are converging that could stall or

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derail it.

First, according to IMB, 38 percent of the manufacturers we surveyed will retire within ten years, and seven out of ten have no succession plan. There is a ready source of talent to replace them—Millennials (age 18-32)—who are quickly becoming America’s largest living generation this year. However, at most manufacturing companies, they represent no more than 25 percent of the workforce, and eight out of ten manufacturers have no plans to increase those numbers.

FEATURE THOMASNET

The IMB research shows a set of negative perceptions that are making the talent storm even darker. Forty-six percent of our respondents report that younger people still perceive manufacturing as “blue collar” work. Another 43 percent believe that this generation lacks the work ethic and discipline to succeed. These perceptions threaten to keep Millennials away from the industry at a time when they’re sorely needed. Without a steady pipeline of young

workers to replace retiring Baby Boomers, manufacturers will not be able to sustain their momentum.

Fortunately, some manufacturing executives are already stepping up to turn the situation around. Karen Norheim is one great example, and Tracy Tenpenny, Partner, Tailored Label Products, is another. Both of them believe that they can make a local footprint on an important national issue. I’m pleased to share their

As the president of ThomasNet®, part of Thomas Industrial Network®, Mark Holst-Knudsen is passionate about being part of a family-owned business and stewarding ThomasNet’s mission to connect buyers and sellers of industrial/commercial products.

In his role as president Mr. Holst-Knudsen is responsible for the overall strategic direction and profitability of the company. Through his leadership, ThomasNet continues to improve the comprehensive content, design and functionality of its Product Sourcing and Supplier Discovery Platform, ThomasNet.com, to meet the evolving needs of serious buyers and drive more sales inquiries to suppliers. He also oversees the development and expansion of other Thomas programs to help manufacturers and distributors grow and operate more efficiently. These include Results Powered Marketing (RPM), an agency marketing service, and Thomas Enterprise Solutions, a group that enables suppliers to syndicate their product data across systems and sales channels.

Mr. Holst-Knudsen holds an MBA in marketing and finance from New York University (NYU) Stern, and earned his undergraduate degree in music from Connecticut College.

INDUSTRY TODAY 27

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stories in hopes of inspiring others to follow in their footsteps.

Showing New Generations that “Manufacturing is Cool” The thought of losing ground because of a worker shortage is what keeps Karen Norheim up at night. Every job opening at American Crane is getting harder and harder to fill, whether in management or on the plant floor.

For now, the company is strong—but to expand into new areas, it must attract more people. American Crane needs to convince new generations that, as Karen says, “manufacturing is cool.”

To do so, Karen and her colleagues at American Crane are using a variety of strategies. They are active in their community - serving on the advisory boards of local colleges and technical schools, such as Penn State Great Valley, building a presence as an employer. In addition, they conduct regular plant tours and offer informal internship and mentorship programs. Karen is active with groups including Women in Manufacturing and U.S. Women in Nuclear, sharing or presenting on what she’s done and encouraging her peers to take action. Believing that it’s never too early to start that flicker of interest, she recently made a short video about manufacturing, starring her young niece and nephew.

Ten Commandments that Make a Difference Tracy Tenpenny shares Karen’s sense of urgency. His company, a custom manufacturer of 28 INDUSTRY TODAY

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high performance labels, has developed a plan to attract Millennials and keep them happy. It’s working – with close to 50 percent of its staff representing this new generation.

The plan starts with a good work environment. TLP has received numerous honors as a “best place to work” and a Wisconsin Manufacturer of the Year. As a result, when the compa30 INDUSTRY TODAY

ny posts a job, it’s inundated with applications.

Tracy and his colleagues also created their Ten Commandments for Attracting and Retaining Millennials, which they follow religiously.

Among those “rules”: • Cross-train employees in three job skills/ functions to give them more reasons to stay; • Embrace cloud computing & social media

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important role in the company’s record sales and double-digit growth.

Embracing Millennials’ Unique Talents

platforms that fit in with Millennials’ work styles; • Offer progressive benefits such as wellness programs using FitBit; • Boost Millennials’ pride by encouraging community volunteer work.

For TLP, these efforts are paying dividends.

Last year, younger team members played an

Tracy and Karen disagree with the naysayers who question Millennials’ suitability for manufacturing. They say this generation not only works “hard and smart”; they’re technology savvy, collaborative, and socially/environmentally conscious, too.

Judging by that description, manufacturing jobs are perfect for Millennials. Our latest IMB shows that they can make a social impact working with sustainable and green technologies, solar energy, and wind power. In addition, innovations in design and manufacturing software, automation/robotics, and 3D printing make manufacturing the new “hot tech sector.”

But manufacturers need to reach across the aisle and show Millennials that this is the case.

Our IMB provides a glimmer of hope that it’s happening. For instance, many companies now offer apprenticeship programs, but these aren’t applicable to all manufacturers, and they’re no panacea.

We have to do more. If we give in to the misperceptions about Millennials swirling around us, and accept the talent storm as status quo, then we are only shortchanging ourselves.

Karen Norheim and Tracy Tenpenny provide two powerful examples of the difference each of us can make. By joining with them now, we can ensure the continued vitality of an industry that we all treasure.

INDUSTRY TODAY 31

FEATURE

NOT YOUR

FATHER’S BUSINESS

MODEL:

Competitiveness

in the age of digital 32 INDUSTRY TODAY

FEATURE

Market forces are redefining the concept of competitiveness, with a shark fin replacing the bell curve in the face of technology adoption. To outcompete the competition in this highly complex, volatile, ambiguous business environment, successful companies are agile, adaptive and aligned, a triple “A” advantage discussed in the article.

J

ust when you thought the world of business couldn’t be more volatile, the price of oil dropped for seven consecutive sessions in the first half of March, and the Energy Information Administration reported that crude inventories more than doubled. Just when you thought it couldn’t get more complex, regulatory agencies upend the rules. And, when you thought business couldn’t move at a faster clip, enter the speed of digital.

Digital disruption has dramatically shortened market lifecycles. Back in the day, a product or service lifecycle was represented with a bell curve, with adoption gaining momentum INDUSTRY TODAY 33

FEATURE

Your father’s business model is rapidly going the way of the Model T, eighttrack tapes and rotary phones. When your father entered the business world, products and services tended to enjoy a long, illustrious reign in the marketplace. Now they appear and disappear overnight.

The reason: Digital is reshaping operating models and becoming a catalyst for industry convergence while market cycles shrink from years to weeks.

Surviving in this environment is requiring companies to become more agile, adaptive and aligned. In pursuit of the triple “A” advantage, they eliminate waste to deliver new products faster, cheaper and better; reinvest their savings to fund new areas of growth and innovation; and they move beyond compliance to adopt ethical practices that can differentiate them in the market.

Today, we see digitally-charged companies achieving such growth in a matter of just a few years. gradually and sustained success over time. That pattern allowed numerous players to grab their slice of the pie.

Today, with the market changing rapidly, the new product and service adoption curve looks more like a shark fin than a bell, as it is characterized by sudden, even violent success followed by a short brilliant period of dominance ending with a dramatic decline which prompts a new product enhancement or extension. Another disruption occurs and the cycle continues. For instance, Kinect, an add-on device for Microsoft’s Xbox 360, sold 8 million sensors in just two months. Then, the market became saturated and Microsoft moved on to the next innovation.

Digital is also opening the floodgates to contestable markets – those with low barriers to entry and exit – so that upstarts and traditional 34 INDUSTRY TODAY

players can emerge from nowhere and quickly gain market dominance. That’s a feat. Historically, it took decades to build a billion-dollar company. Today, we see digitally-charged companies achieving such growth in a matter of just a few years.

To grab opportunities in the face of this rapid, complex and volatile landscape, companies need to become much more agile, adaptive and aligned as they create new business models that are more suited to today’s business environment. New times necessitate new strategies.

The Triple Advantage: Agile, Adaptive and Aligned To be competitive in today’s marketplace, companies need to compete on all three of these cylinders: Agility: In today’s digital world,

FEATURE

competitive strength partly hinges on a company’s ability to deliver better products and services cheaper. Management needs to change their operating models to make them more flexible. Doing that requires de-cluttering – eliminating bureaucracy and simplifying man-

agement tiers, or setting principles within a company to encourage two key growth engines –productivity and innovation.

To achieve agility, companies also need to lower their fixed costs by permanently eliminating waste and reinvesting the resulting savings

INDUSTRY TODAY 35

FEATURE

Today’s marketplace is much more fluid inside and outside organizations: Competitors are now partners, rivals are collaborators and other industries become critical links.

36 INDUSTRY TODAY

FEATURE

in areas that offer opportunity for growth.

Adaptability: Adaptability, our second “A,” has never been more important. Competitive markets are changing, moving in ways that were not possible or even envisioned before the advent of digital. Consider the seismic shifts in broadcasting networks and cable TV with the rise of

Apple TV, Google and Netflix. Industry observers suggest that Apple’s continued push into the television market may “unravel the pay-TV bundle” model.

Today’s marketplace is much more fluid inside and outside organizations: Competitors are now partners, rivals are collaborators and other industries become critical links. Leading companies see ecosystem collaboration as integral to their path to success. For instance, Phillips announced a healthcare-focused partnership with Salesforce.com to create a cloud-based platform for clinical information sharing, and another to introduce an app that allows immobilized patients to control Philips products via a brainwave scan.

In the study, Traits of Truly Agile Businesses, Accenture found that C-suite and senior level executives at leading organizations in particular see partnering important to their continued success whether it meant partnering with their customers (80 percent), suppliers (64 percent), governments (56 percent), other industries (52 percent) or in communities where they work (48 percent).

Aligned: Lastly, companies need to meet the expectations of their customers, stakeholders and society at large. Be aligned with them.

Ten years ago, if a company’s ethical standards were sub-par, the likelihood of the public finding out was slim. Not true today. With social media, organizations are under unparalleled levels of scrutiny. Everything is transparent and traceable. So news of unsafe working conditions at a factory in Bangladesh becomes world news INDUSTRY TODAY 37

FEATURE

in relatively short order. And, the effects go straight to the bottom line.

Companies that “walk the walk” of ethical business practices – when it concerns people, profits and the planet – can use their behavior as a differentiator. Consistent with that, Accenture research revealed that 93 percent of CEOs see sustainability as important to future success and 80 percent see it as a route to achieving a com38 INDUSTRY TODAY

petitive advantage in their industry. Likewise, 78 percent of investors believe the adoption of sustainability practices can set industry leaders apart from others in their competitive set.

The Bottom Line The business environment is markedly different today. Digital is redefining competitiveness and your father’s business model won’t be sufficient

FEATURE

Chloe Barzey, a managing director in Accenture Strategy, has more than 24 years consulting and industry experience. She works with clients across industry sectors to help them identify opportunities to generate strong business value, and has particularly deep experience in the communications industry.

Chloe earned her MBA from the Wharton Business School, and an electrical engineering degree from Cornell University. She resides in Atlanta, Ga.

Companies that “walk the walk” of ethical business practices – when it concerns people, profits and the planet – can use their behavior as a differentiator. to win in the market as the shark fin replaces the bell curve. Surviving in this highly complex, volatile and oftentimes ambiguous business world requires having the triple “A” advantage: being agile, adaptive and aligned. Your business may have one or two of these characteristics wo-

ven into its business model, but it will take all three to get ahead and stay there. And, given the speed at which today’s marketplace is moving, there’s no better time than the present to build out your triple “A” advantage.

INDUSTRY TODAY 39

PROFILE •FORD

40 INDUSTRY TODAY

FORD • PROFILE

The all-new Ford F-150 is the toughest, smartest and most capable F-150 ever, and its advanced manufacturing and assembly adds another chapter to Ford’s storied history, where innovation has always been the standard. Steve Engelhardt reports. t was in 1908 when Henry Ford first introduced the Model T automobile to the public, and only five years later when he integrated a moving assembly line method of production that revolutionized the way businesses manufactured and met market demand.

They were two variables—a product and a process—whose groundbreaking properties would

serve to define Ford’s reputation as a leading innovator and catalyst of cutting-edge automotive technology throughout the next century. And with the company announcing in January 2014 that it would redesign and enhance its most popular vehicle, the F-150, as well as integrate an entirely new set of manufacturing technologies at the facilities where it’s made, it was clear INDUSTRY TODAY 41

PROFILE • FORD

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42 INDUSTRY TODAY

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FORD• PROFILE

that Ford was ready to once again make a revolutionary impact upon not only the automotive sector, but global industry as a whole.

Much as the Model T defined Ford’s initial success in the automotive market, the 2015 Ford F-150 today serves as the company’s crown jewel and as part of Ford F-Series, its Pictured: Ford celebrates the start of production of the all-new 2015 F-150 - the toughest, smartest, most capable, F-150 ever - at its Dearborn Truck Plant; below: The all-new 2015 Ford F150 on the streets of San Antonio and off-road in the Texas back country, where media are driving the toughest, smartest, most capable F-150 ever.

most popular vehicle. In fact, for the last 33 years F-Series has served as the best-selling vehicle in the United States, an integral and sustained player in America’s deep-running love affair with the pickup truck and what it stands for. “Ford F-Series was first introduced in 1948 and has since served as an icon for not only Ford Motor Company, but for American automotives and manufacturing overall,” says Bruce Hettle, vice president of North America Manufacturing for Ford.

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INDUSTRY TODAY 43

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FORD• PROFILE

EXECUTIVE PROFILE: BRUCE HETTLE As Vice President of North America Manufacturing, Hettle is responsible for Ford’s North America manufacturing footprint – the company’s largest in the world with more than 30 manufacturing plants. He continues to play a key role in Ford’s ongoing efforts to improve manufacturing flexibility and efficiency.

Hettle also oversees Ford’s product expansion in North America and the company’s seamless conversion to global platforms. He reports to Joe Hinrichs, Ford executive vice president and president, The Americas, and to John Fleming, Ford executive vice president, Global Manufacturing and Labor Affairs.

Hettle joined Ford in 1986 and has spent his entire 27-year career with the company in manufacturing.

Since 2008, he has led Ford’s manufacturing engineering group as executive director, Global Vehicle Operations Manufacturing Engineering. In addition to other leadership roles, Hettle served as director for Ford’s Manufacturing Business Office, and was plant manager for Wayne Stamping and Assembly and Edison Assembly.

Hettle, born May 1961, holds a bachelor’s degree in mechanical engineering from Oakland University, and a master’s degree in engineering management from Wayne State University.

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INDUSTRY TODAY 45

PROFILE • FORD

aluminum alloy body.

“It’s a high-strength, military-grade, aluminum alloy body whose properties helped to reduce up to 700 pounds of weight, improving capability, performance and fuel efficiency,” he says.

The weight loss has led to a number of

positive effects upon the truck’s performance, as the new 2015 unit can tow up to 1,100 more pounds and haul up to 530 more pounds than the 2014 model, and achieves the highest EPA-estimated fuel economy ratings of any full-size gasoline pickup available in the

Pictured (left to right): Alan Mulally, President and Chief Executive Officer, Ford Motor Company, William Clay Ford, Jr., Executive Chairman, Mark Fields, Chief Operating Officer, Joseph R. Hinrichs, Executive Vice President and President of The Americas, and Raj Nair, Group Vice President, Global Product Development, with the all-new 2015 Ford F-150; right top: 2015 Ford F-150 adds snow plow prep option; right below: F-150 in the Lighting Lab. 46 INDUSTRY TODAY

FORD• PROFILE

combines metal brackets and custom cleats to secure a variety of accessories in the cargo box, including ramps, bed dividers, and storage bins.

The radical new design may have been seen as a risk by some, given the original model’s already established presence in the market, but early sales figures show demand for the truck is booming.

“Truck customers are some of the most loyal consumers in the market, and the early figures show as much, and because of such success, we see ourselves ramping up production of the units even more as the year goes on,” says Hettle.

Manufacturing Makeover market. Specifically, when equipped with an available 2.7-liter EcoBoost® engine, the 2015 Ford F-150 4x2 returns EPA-estimated fuel economy ratings of 19 mpg in cities, 26 mpg on highways, and 22 mpg when combined.

The truck also has an available 360-degree camera system that utilizes exterior cameras to create a bird’s-eye view of the truck to help drivers park and maneuver in tight spots, and navigate narrow roads and trails when driving.

With respect to the vehicles’ beds, the allnew BoxLink™ cargo management system

For Hettle, the launch of the revolutionary truck and its success thus far is particularly significant. Since 2009, Hettle’s team has been planning the shut down and retooling of the

INDUSTRY TODAY 47

PROFILE • FORD

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FORD• PROFILE

company’s historic Rouge Center production plant in Dearborn, Mich., one of two U.S. plants where the F-150 is manufactured, to allow for machinery and process upgrades to be integrated into the facilities that would allow them to meet surging demand for the truck.

“This was a big decision, because the Dearborn Truck Plant, which is part of Ford’s Historic Rouge Center, is the primary production location for the F-150, Ford’s top selling unit,” he says, adding, “So to shut down such a facility, it meant temporarily putting a number of workers on hold and ceasing production of Pictured: Consumers wanting to drive the future of trucks can get behind the wheel of the 2015 Ford F-150 – the toughest, smartest, most capable F-150 ever – in 38 markets across the United States.

our most popular vehicle.”

For two months, Hettle and his team oversaw a $359 million transition of the factory, and by the beginning of December, the plant was ready to begin production again. “During this time, the Dearborn plant experienced the largest overhaul ever in its long and storied history,” he says, adding, “Much of the legacy equipment was replaced with the latest in manufacturing technology, which was necessary for the long-term production of such an advanced vehicle.”

Among the new processes implemented in the plant were new press lines to help stamp four different types of high-strength aluminum alloys that assist with light-weighting the vehicle and cab box, as well as new hydroforming lines to use fluid pressure to form metal INDUSTRY TODAY 49

PROFILE • FORD

tubes into structurally strong support rails.

Additionally, there is now an advanced chemical and heat treat area for corrosion resistant and material hardening, allowing for stronger, more durable materials to be produced, and the implementation of a closed-loop aluminum recycling system process in which all aluminum

assembly scrap is collected and sorted so it can be used again in the new F-150’s—a process that saves energy and lowers overall costs.

“We also invested in 500 new robots in our brand-new body shops so we can conduct stateof-the-art joining technology, which allows for a much more durable truck,” Hettle says,

Pictured: Four-spoke steering wheel: F-150’s traditional, four-spoke design allows for a comfortable grip on the lower portion of the steering wheel. Other pickup truck manufacturers have closed off the bottom portion of the steering wheel.

50 INDUSTRY TODAY

FORD• PROFILE

“Much of the legacy equipment was replaced with the latest in manufacturing technology; which was necessary for the long-term production of such an advanced vehicle.” adding, “and finally, our paint shops were updated with dirt detection technology and increased automation for a much more durable paint application upon each of the trucks.”

Overall, the new processes lead to a much

more efficient—and greener—Dearborn Truck Plant and the changes figure to set the tone for other major automotive companies looking to keep their facilities up to date with the technology of their vehicles. After all, when INDUSTRY TODAY 51

PROFILE •FORD

“The F-150 has long stood as an iconic vehicle in this country, and it’s largely because of the skill and dedication of our American workers that we are able to consistently manufacture a high quality truck year in and year out.”

meaningful change occurs across an industry, it’s usually from an industry leader, much like Ford is to theautomotive sector.

Meeting Demand Hettle says that during the renovations, current employees participated in an intensive training program to get them up to speed on production of the new F-150, and hired an additional 500 employees at the Dearborn Truck plant to accommodate demand that soon followed.

52 INDUSTRY TODAY

And because of such a strong start, Hettle says that the company recently made the decision to expand production of the F-150 to their plant in Kansas City, Missouri. In fact, because of such a strong first-sales month, he says the plant hired 900 additional workers to come in and help the plant accommodate surging demand.

The 1,400 jobs added across both plants speak to a greater commitment by Ford: the American worker.

“In 2011 Ford made a promise to the United

FORD • PROFILE

Auto Workers to add 12,000 jobs by 2015, and with the recent additional hires, that number is now actually well over 15,000.” He says the combination of a great product manufactured by a highly skilled worker is what makes Ford who they are. “The F-150 has long stood as an iconic vehicle in this country, and it’s largely because of the skill and dedication of our American workers that we are able to consistently manufacture a high quality truck year in and year out.” And he says that if demand

continues to increase, the company could soon be hiring even more.

The decision to shake-up the makeup of Ford’s most popular model was a huge bet, but it looks as though it’s going to payoff in a big way.

With a revolutionary F-150 now out on the roads, and a manufacturing presence behind it that is just as impressive, Ford Motor Company appears to be strongly positioned to continue its presence as one of the world’s most dynamic innovators.

INDUSTRY TODAY 53

PROFILE • LUFKIN INDUSTRIES

Lufkin Industries, part of GE Oil & Gas, is a leading provider of gear products and gearing technologies custom engineered and designed to fit mechanical drive applications anywhere in the world, supported by an extensive and unparalleled service network. David Soyka reports on how its Power Transmission division helps a range of industries gear up.

54 INDUSTRY TODAY

LUFKIN INDUSTRIES • PROFILE

ny company headquartered in Houston, Texas is bound to have something to do with the oil and gas industry. The Power Transmission division of Lufkin Industries, which became part of GE Oil & Gas two years ago, certainly does. But its customers extend to steel mills, sugar mills, mining, chemical, rubber and plastics, marine, hydro-power and other power generation and energy industries.

“We provide high performance, custom engineered gearboxes designed to perform under extreme operating conditions to a variety of industries around the world,” points out Donald Smith, general manager of Lufkin’s Power

Transmission division. “We also service both our own products and those of other manufacturers.”

“For 75 years Lufkin has manufactured high and low speed parallel shaft industrial gearboxes,” Smith explains. “Our precision-made gearboxes weigh anywhere from 300 to 120,000 lbs (136 to 54,431 kg), with power ratings ranging from 20 to 100,000 hp (74 MW).”

Smith notes that the acquisition by GE Oil & Gas has helped Lufkin further extend its global reach and better service its customers. “Our relationship with GE Oil & Gas has provided us access to GE’s technology and research centers INDUSTRY TODAY 55

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LUFKIN INDUSTRIES • PROFILE

Lufkin provides repair and maintenance services worldwide not only in support of its own products, but those of other manufacturers. and engineering resources to improve the efficiency and performance of our products as we look for ways to meet our customers growing demands.” The acquisition of Allen Gears, a provider of high speed high power gearing for industrial and marine applications, specializing in epicyclic gears, in January 2014 complements Lufkin’s core industrial applications, shows how important the gear business is for GE and added exciting new options and capabilities to service Pictured: Epicyclic gears are compact, lightweight, mechanically efficient and ideal for customers with space constraints.

specialized gearing applications.

“Allen Gears makes epicyclic gears, which are compact, lightweight and highly efficient.

Their epicyclic solutions cover power ranges between 650 hp (0.5 MW) to 50,000 hp (37 MW), transmitted torques up to 0.62X109 ozf. in (4.35 MN.m) and operating at speeds from as low as 19 rpm up to input shaft speeds of 40,000 rpm. This kind of gearing is ideal for high ratio applications such as gas and hydro turbines where you have a small footprint and you need to move efficiently from high speeds to low speeds.”

INDUSTRY TODAY 57

PROFILE • LUFKIN INDUSTRIES

Smith points out that while all Lufkin gearing solutions have a structured component to them, designs are also tailored to specific customer requirements. “About 50 percent of what we do is consistent from application to applicaPictured: Lufkin designs, manufactures and installs high performance, custom engineered gearboxes that perform under extreme conditions to a variety of industries around the world.

58 INDUSTRY TODAY

tion, while the other 50 percent is completely new and customized designs. Lufkin Industries also operates a foundry, so that makes it easy and cost-effective for us to cast new parts when we need to.”

Lufkin’s Power Transmission business employees approximately1,000 people around the world. Manufacturing facilities include plants in Lufkin (the town that gave the company its name), Fougerolles, France, Wellsville, New

LUFKIN INDUSTRIES • PROFILE

state-of-the-art products you need state-of-theart manufacturing technologies and processes.”

Geared to Customer Needs Smith emphasizes the importance Lufkin places on staying close to the customer. “We focus on things like operational excellence and flawless execution, but what customers value most about us is having direct access to our team, our engineering experts and our field personnel,” he says.

He adds, “When customers need assistance with a gearbox, it’s usually urgent. Downtime is lost money. Our customers appreciate that

York, and Pershore, United Kingdom (Allen Gears). The company markets using a direct sales force as well as a global network of distributors and sales representatives.

“We’re investing in upgrading our manufacturing tools–we added new hobbing and grinding equipment in our Lufkin facility. And we recently expanded our test stand capabilities in France, and added 118,400ft2 (11,000m2) of manufacturing space,” Smith says. “To make

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INDUSTRY TODAY 59

PROFILE • LUFKIN INDUSTRIES

Lufkin designs, manufactures and installs high performance, custom engineered gearboxes that perform under extreme conditions to a variety of industries around the world. we not only have the expertise to solve their problem, but that we can also be where they need us thanks to our worldwide network of experienced technicians and service centers.”

“Lufkin has the capabilities to service other manufacturers’ gears” Smith says. “In fact, it’s a testament to the quality of service we provide how often we are called upon to provide maintenance or repair systems for gears from other manufacturers.”

Over the last five years, the gearing business has seen an average 5 percent annual growth rate. “I think that’s going to continue to be the trend for the next four to five years as well. As a global company that services OEMs (Original 60 INDUSTRY TODAY

Equipment Manufacturers) and end users in a variety of markets, we have the advantage that when a particular local economy or industry segment is in a slow cycle, other markets and economies are experiencing an upswing. It all balances out. Even if new system purchases are slow, gears are like any mechanical device, particularly those in high stress applications - they need to be maintained and repaired, and that’s at least 50 percent of our business.”

Smith says there are three factors that distinguish Lufkin in the marketplace. “We have the proven capabilities to meet a range of power transmission needs. We have the engineering expertise to design, test and deliver world class

LUFKIN INDUSTRIES • PROFILE

FROM SAWMILL TO POWERHOUSE Lufkin was founded in 1902 to manufacture railroad and sawmill equipment and named after its Texas hometown. The company created the first counterbalanced oilfield beam pumping unit in 1925 and started making industrial gears in 1939. Jump ahead to the end of the century when Lufkin began acquiring a series of companies until it was itself acquired by GE Oil & Gas in July 2013. In addition to its Power Transmission Division, Lufkin designs, manufactures and markets artificial lift technologies, automation and services for the oil and gas industry. Lufkin also operates an iron foundry that provides castings used primarily for its gearbox and pumping unit manufacturing operations. gearing solutions to meet any requirement.

And we have an extensive service network of highly trained and experienced technicians to respond to the gear repair and service needs of our customers.”

He adds, “I believe that the key to our business is the expertise of our people and the

hundreds of thousands of successful operating hours of our equipment, along with the proven reliability. Lufkin is intent on providing our power transmission customers with the superior products and services they can rely on to deliver the power and performance they need in any situation.”

INDUSTRY TODAY 61

PROFILE • UPONOR

62 INDUSTRY TODAY

UPONOR• PROFILE

As one of the original pioneers of the revolutionary PEX piping technology, Uponor is a company that is known around the world for generating innovative solutions across a number of different applications; from plumbing and fire safety, to radiant heating and cooling systems, and pre-insulated pipe configurations for residential and commercial spaces all over the world.

2015 marks the 25th anniversary since they established their North American headquarters in Apple Valley, Minn., and in a conversation with Industry Today, Bill Gray, president of Uponor North America, talks about what makes his company’s products so effective, and how their market success has them expanding in a number of different ways. Steve Engelhardt reports.

INDUSTRY TODAY 63

PROFILE • UPONOR

ponor’s origins trace back to 1918, when Aukusti Asko-Avonius established a carpentry workshop in Lahti, Finland, but perhaps the biggest turning point for the company was their adoption and subsequent manufacturing of PEX piping technology in 1972. The piping technology, initially developed by German inventor Dr. Thomas Engel, offered a state-of-the-art solution to a number of different industries and proved to be instrumental in launching the company’s products onto a global platform.

Initially expanding their supply of products to the North American market in 1984, the real Pictured above: The Uponor North American headquarters facility in Apple Valley, Minn.

move came when the company decided to open corporate offices, a manufacturing facility, and a training center in Apple Valley, Minn., in 1990. “Apple Valley was the perfect location to transition our company’s Nordic roots into,” Gray says, adding, “It also made sense logistically and there was a strong talent pool there that we still continue to draw from today.”

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UPONOR • PROFILE

PEX Experts The decision to not only expand business into the world’s largest and most competitive market, but establish a permanent presence there as well, proved to be an instant success. With dePictured: : Bill Gray, president of Uponor North America; Below: Uponor’s PEX manufacturing facility in Apple Valley, Minn.

mand thriving, the company continued to roll out new products over the next two decades to meet the current and emerging needs of North America’s residential and commercial sectors.

“We are one of the only companies out there whose pressurized systems are entirely PEXbased,” he says, adding, “And over the years when you’re focused primarily on one kind of material, it makes you an expert of sorts.”

INDUSTRY TODAY 67

PROFILE • UPONOR

“When you crosslink polyethylene you end up with a very strong, pliable, and flexible product that makes installation easy and long-term stability a guarantee.”

68 INDUSTRY TODAY

UPONOR • PROFILE

Pictured: Uponor North American headquarters; left: an illustration of Uponor’s hydronic radiant heating and cooling system.

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PROFILE • UPONOR

BENEFITS OF UPONOR PEX TUBING OVER COPPER AND CPVC • Flexible for fewer fittings, reduced leak-point liability; • Resists corrosion, pitting and scaling; • Retains more heat in hot-water lines; • Resists condensation on cold-water lines; • Expands up to 3X its diameter to help resist freeze damage;

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• Connections do not require the use of dangerous chemicals or solvents; • Offers a complete lead-free system from inlet to faucet; • NSF International certification for water purity; • Backed by a 25-year limited warranty on PEX tubing and ProPEX fittings.

But what exactly is PEX technology? PEX, or crosslinked polyethylene, is a flexible, durable piping product that, although developed over 40 years ago, has been used in plumbing systems for the last 20 years. “When you crosslink polyethylene you end up with a very strong, pliable, and flexible product that makes installation easy and long-term stability a guarantee.” The best part about the Uponor system is its unique ProPEX® connections. To make a ProPEX fitting, the pipe is expanded with an expansion tool before a fitting is inserted into the expanded pipe. As the flexible pipe contracts around the fitting, it creates a connection with a high degree of integrity.

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UPONOR • PROFILE

“We are the only company out there whose pressurized systems are entirely PEX-based.”

The technology has made Uponor’s products – including its AquaPEX® plumbing system, AquaSAFE™ multipurpose fire sprinklers, Wirsbo hePEX™ radiant heating and cooling systems and Ecoflex® pre-insulated pipe systems – leading options in their respective fields, and Gray believes that as more contractors realize PEX’s superiority over alternatives like PVC, CPVC and copper pipe, demand will continue to grow.

“One of the most compelling cases for using our PEX systems today is the fact that you can’t dry fit a ProPEX connection,” Gray says, adding, “This is particularly notable today, given the shortage of skilled labor and its critical role in the installation of internal systems within residential

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INDUSTRY TODAY 71

PROFILE • UPONOR

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UPONOR • PROFILE

and commercial buildings.” He says because of PEX’s properties and the high degree of integrity that results from its ProPEX expansion fitting, the risk of having loosely connected pipes that could break apart at any moment because of a dry fit is nonexistent. “That alone has bought us significant loyalty and resulted in many contracPictured: upper left: Uponor Academy; below: Uponor training center.

tors, who can’t risk their the integrity of their installations, converting over to our systems from other options like CPVC or copper.”

Customer Centricity The quality of Uponor’s PEX systems is particularly important, given the areas of homes and buildings where they are being installed.

“Most customers determine the quality of their

INDUSTRY TODAY 73

PROFILE • UPONOR

contractor by the kind of materials they use for either construction or installation,” he says, adding with a laugh, “And if you’re building, let’s say, a $400,000-$500,000 home, is the pressurized water system really the area where you want to take a risk and try to save a little extra money?”

This kind of customer awareness is what drives Uponor and their success in North America, and Gray says the partnership that ultimately exists between Uponor and their end users, is what defines their culture as a company. “Understanding who our customer is and recognizing their role in our own viability really motivates us to keep improving ourselves and our systems.”

Taking this idea further, he says that Uponor has a large customer service team that is ready to travel on-site and solve any application issues the customer may be having. “I think they appreciate our commitment to them and their projects, and demonstrating this consistently over the years has led to a lot of success for us.”

Expanding Capacity In fact, the company’s current success led them to recently announce an $18 million investment into expanding their manufacturing facility in Apple Valley. The current facility is already at 240,000-square-feet, but Gray says in the face of increasing demand and an Pictured: Uponor plumbing systems; below:Uponor residential radiant floor heating; right: Uponor commercial radiant heating and cooling.

74 INDUSTRY TODAY

UPONOR • PROFILE

ambition to continue to develop industry-leading products through their PEX technology, more room was simply needed.

The $18 million will be used toward the renovation and expansion of an additional 88,000-square-feet, which Gray says will be used to for increasing capacity, as well as provide more room for the company’s engineers to develop new technologies, including that related to research and development activities.

Gray says the move is also a sign of their confidence in the future of the U.S. economy, and the relevant industries that they supply to. “It’s a very exciting time to be in the building industry, especially after the downturn we experienced in the market just a few years ago,” he says, adding, “We’re seeing significant growth in commercial and residential construction, and this expansion will ensure we match our forecasted growth and demand for our PEX systems.”

It’s an exciting future for Uponor, and thriving economic conditions coupled with a manufacturing expansion signal that the company’s PEX systems look to be populating more and more facilities across North America in the very near future.

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PROFILE • NOVA BUS

Nova Bus, a division of the Volvo Group, develops and delivers eco-friendly transit solutions to the North American market. These transit solutions comprise a range of clean-diesel, natural gas, hybridelectric and soon, 100 percent electric vehicles built to the custom specifications and needs of various transit companies and municipal authorities, at the lowest life cycle cost possible. David Soyka reports on this Made in the U.S.A. manufacturer that builds vehicles to transport people with the greatest possible safety, economy and sustainability.

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NOVA BUS • PROFILE

ova Bus designs and manufactures buses with best-in-class technologies that are good for the environment, good for the ride and good for a transit authority’s budget. Just don’t call it a bus maker.

“Of course we’re building buses,” notes John Kardos, vice president of business development, “but we’re building buses as part of sustainable

transit solutions that address the unique requirements of a city and its highly variable 24/7 transport condition with eco-friendly, high capacity vehicles and integrated intelligent transportation systems.”

Nova Bus is based in St-Eustache, Quebec, Canada, a suburb of Montreal. In 2009, the company opened a brand new 140,000 INDUSTRY TODAY 77

PROFILE • NOVA BUS

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NOVA BUS • PROFILE

square-foot plant in Plattsburgh, New York.

“Some questioned why we would spend so much during a recession to build a plant” Kardos says.

“But it heralded our return to the U.S. market”.

Building this plant was a strategic corporate decision that has proven to be invaluable for the company. Last year, the facility underwent a 10,000 square foot expansion to accommodate an assembly production line for Nova Bus’ sister arm of the Volvo Group, Prevost. Today, the plant generates over 530 domestic jobs.

The buses that come off of the Plattsburgh assembly line fulfill Buy America requirements.

Kardos adds, “It’s sometimes a challenge to find Pictured: Nova Bus has the vehicle to respond to high capacity demand. The LFS Artic is rolling on the streets of the largest cities in North America.

the best and most economical U.S.-made supplier for a particular component. We make it a point to encourage local suppliers and found the best U.S.-made products. I’m proud to tell that all our vehicle structures are made from U.S.-sourced stainless steel. We know our American customers want a Made in U.S.A. product and we deliver one.”

With customers in Chicago, New York and Houston, among others, after six years Nova Bus gained 15 percent of the U.S. bus market share. At the same time, it stands as a major supplier of public transit vehicles across Canada, and is the leading bus provider to the Quebec province public transit system, a consortium of nine large public transportation providers. In addition, its parent company, Volvo Bus, is also one of the largest bus suppliers in the world.

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PROFILE • NOVA BUS

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NOVA BUS We would like to wish them all the best for their continued growth.

group 80 INDUSTRY TODAY

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NOVA BUS • PROFILE

SERIES-E: THE SMART ELECTRIC BAE Systems introduces the “smart” electric to transit. Offering much more than your standard hybrid, Series-E delivers complete electric propulsion and power systems for transit buses.

All bus propulsion and accessory systems are powered electrically and include zero-emission modes of travel.

Together with Cummins Inc., BAE Systems brings the first ever engine Stop/Start technology to the transit industry. Now Series-E powered buses pull up to bus stops without the engine running to prevent idling and the release of emissions, while saving fuel and providing a quieter experience, all while powering accessory systems. Combine this with new GPS tracking software and your smart decision just got smarter, Series-E can learn where your longer idle time stops are and shut off the engine automatically.

Series-E offers other electric modes of travel in and around passenger terminals, bus garages, and other sensitive areas in the community for a positive impact. What’s more, Series-E makes economic sense with its ability to provide the benefits of EV without the added vehicle cost and infrastructure costs and/or the range limitations of a full EV.

Kardos emphasizes that a Nova Bus’ transit solution is multidimensional, encompassing factors that range from price to sustainability to the length and incline of the bus route. “There are something like 70,000 active buses in North America. About 4,500 to 5,000 of them are under consideration for replacement each year. Each of those vehicles has very different specifications—there’s no one model fits all,” Kardos says.

Pictured: Nova Bus supports more than 375 suppliers in 36 states. The Plattsburgh, NY plant generates altogether over 530 direct jobs in the US.

“We strive to design a solution that offers superior overall value in balancing affordability, sustainability and usability as it applies to the specific operating conditions. Our success in North America attests to our abilities to deliver that value.” Kardos added.

Going Electric While Nova Bus makes traditional fossil-fueled vehicles, it is also a leading provider of hybrid-electric buses and pursues extensive research on the development of fully electric buses that underlay its Electro Mobility strategy.

Nova Bus is currently testing the LFS HEV hybrid vehicle integrating an advanced propulsion technology that can switch from diesel to a

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NOVA BUS • PROFILE

The electrification of transportation is a major initiative that has reached several milestones in the past few years; Nova Bus is currently testing a demo hybrid that can switch from diesel fuel to full electric operation in Quebec City.” temporary full-electric mode, the first technology of its kind in North America.

“The electrification of transportation is a major Nova Bus initiative that has already reached several milestones in the past few years.

Next year we’ll have three fully electric buses in service in Montreal,” Kardos notes. “These are fully functioning revenue vehicles, from which we will collect data we’ll use to refine features and functionalities of future iterations and customize them to the operating conditions of the

specific transit authority.”

While Nova Bus sees electric propulsion as an environmentally-friendly alternative to fossil fuels, widespread adoption for the immediate future is uncertain. “We expect for the next 10 to 20 years at least, most transit authorities will still rely on conventional fossil fuels, including compressed natural gas.”

He adds, however, that, “We do see hybrids cresting throughout this period as a cost-effective and sustainable compromise between

INDUSTRY TODAY 83

PROFILE •NOVA BUS

LONG TRIP Nova Bus began its travels some 35 years ago, when it was created to continue manufacturing the high floor Classic and Rapid Transit Series (RTS) models originally developed by General Motors (the RTS platform is still in production, though no longer made by Nova Bus). In 1996, the company introduced the wheelchair accessible Nova LFS (Low Floor Series), which remains the platform for its various fuel, size and capacity vehicle models. In 2004, the Volvo Group acquired full ownership. Currently, Nova Bus employs a little under 1,000 throughout North America.

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NOVA BUS • PROFILE

A Nova Bus transit solution is multidimensional, encompassing factors that range from price to sustainability to the length and incline of the bus route.

all-electric and diesel or CNG. Regardless of fuel choice, the cornerstone of every Nova Bus transit system solution is improved sustainability. That encompasses everything from improving fuel efficiency to smarter design. We don’t, for example, just pile a bunch of batteries into a bus so we can have electric power when needed.

Batteries are heavy and the materials they are

made out of are not the easiest to recycle. So, our R&D efforts focus on developing systems that have the precise number of batteries to perform according to the vehicle’s specific operating requirements. No more, no less. Our public transit buses are designed to transport people, not batteries.”

Kardos notes that being part of the Volvo Group enables Nova Bus to tap into an extensive global R&D effort. In addition, all Nova Bus vehicle parts are easily available from Prevost Parts, its sister arm. Kardos is quick to point, that Nova Bus vehicles do not require a major structural midlife overhaul as they are made from rust-resistant Stainless Steel. And they are often running at top performance even towards the end of a transit bus typical 12-year lifespan and well beyond.

“We work closely with all our sister companies in Volvo in our efforts to provide customers with transit solutions that meet all their challenges regarding mobility, safety and productivity,” Kardos says. “Our driving objective is to design what is best for the customer and their riders, and what’s best for cities and environment they travel”.

INDUSTRY TODAY 85

PROFILE • MECACHROME

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MECACHROME • PROFILE

For over 75 years, Mecachrome has served as a global leader in the design, engineering, manufacturing, and assembling of complex precision-engineered components for aircraft and automotive applications. 2014 marks the 10th anniversary of their division in Canada and Charles Magnan, Vice President of Sales and Engineering of Mecachrome Canada, talks about the success they’ve been enjoying in the North American markets, the depth of impact their products have within the aerospace and automotive sectors, and why demand, and sales, of their products are only going up. Steve Engelhardt reports.

n 2002, Mecachrome acquired Aero Machining in Canada, setting the stage for a long-term presence in North America. By 2004, executives deemed operations in Canada as “good to go” and launched Mecachrome Canada as a full-functioning subsidiary, to impact the Canadian and U.S. aerospace markets where their France-based parent company could not. Magnan says that while this signified the start of their branch, the most signif-

icant impacts made and major partnerships brokered have for the most part come within the last 5 years. “Many companies similar to us went under during the economic recession of 2009-2010, and we took this time to take a step back and reassess what we wanted our identity, which was a high-volume machining company at the time, to be going forward,” he says.

Magnan says rather than continue along their initial route and inevitably engage in INDUSTRY TODAY 87

PROFILE • MECACHROME

AT A GLANCE: PRODUCTION EXPERTISE Mechachrome’s areas of manufacturing expertise are as follows: • Design; • Industrialization (methods, NC programming); • Machining; • Robotics; • Development and qualification of new concepts; • Mechanical and hydraulic assemblies; • Dimensional and three-dimensional controls price wars, they opted to invest in becoming integrators, incorporating the capabilities of engineering and designing along with their preexisting manufacturing prowess. “We wanted to go up the food chain, so to speak, and not only do manufacturing,” he says, adding, “after some investments, we were able to find our first customer in 2011; a project where we would be responsible for the not just the manufacture, Mecachrome’s engineering and manufacturing facility, Mirabel, Quebec.

but the initial design and build of their aircraft components.”

Prestigious Partnerships Since then, the company has taken on integration work for some of the world’s most prestigious aircraft businesses, including a couple of projects in 2012 with the Bombardier 7000, and one with GE Aviation in 2013 as well. “As a supplier to the aircraft industry here in North America for the last ten years, we had initially did ‘build to print’ on one side, and a little bit

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MECACHROME • PROFILE

of engineering with packages on the other, but never did any integration work between the two until recently,” he says, continuing, “this incorporation of capabilities has taken us a long way in terms of our credibility with our existing customers and the open market, and more importantly, reflects our identity of a Tier-2 supplier with Tier-1 ambition.”

So, exactly, what kind of aircraft parts are manufactured, and in some cases, designed and engineered by Mecachrome Canada? The list is expansive, ranging from structural fuselage assemblies, engine pylon parts, and thruster parts, to wing parts, landing gear components, and aeronautical engine modules. Of all their products they are capable of manufacturing, however, Magnan says the highest in demand are their pylon parts, and nose and wing-based solutions.

Magnan says that Mecachrome Canada was selected in 2011 to design, fabricate, and INDUSTRY TODAY 89

PROFILE • MECACHROME

assemble a ‘next generation pylon’ by Middle River Aircraft Systems (MRAS), further displaying the aerospace industry’s acknowledgment of their commitment to quality and craft. The result was a state-of-the-art product whose demand has increasingly risen in the few years it has been available. With regards to their nose and wing products and services, Mecachrome has engaged in partnerships with companies such as Airbus, Boeing, Bulfstream, Bombardier, and Learjet, to supply everything from landing gear boxes and wing skins, to

conducting a stress analysis of the fuselage or the production of stub wing designs.

“We consider ourselves as experts in these areas, and when individuals and businesses across the aerospace industry are looking for these types of parts, Mecachrome is the name they look to first,” Magnan says.

Manufacturing Power Nearly all of Mecachrome Canada’s engineering and manufacturing is done at their 170,000-square-foot facility in Mirabel,

“We consider ourselves as experts in these areas, and when individuals and businesses across the aerospace industry are looking for these types of parts, Mecachrome is the name they look to first.”

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MECACHROME • PROFILE

Quebec. In addition to an in-house engineering team capable of designs and modifications, Mecachrome Canada’s solid model design equipment capabilities include CNC high speed 5-axis milling machinery, advanced CMM abilities, and a CATIA network providing conceptual design, engineering analysis and CNC programming.

“Our manufacturing presence is a huge strength for us, and while everything is under one roof, we have it all organized down to a

science,” he says, adding, “Our quality department tracks each product number and ensures that all parts are up to date, an effort reinforced by our AS9100 Revision C designation.”

The AS9100 Revision C appointment is particularly impressive, as it represents a widely adopted and standardized quality measurement system for the aerospace industry, but includes a number of additional requirements surrounding quality and safety when compared to the ISO 9001.

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PROFILE • MECACHROME

“This incorporation of capabilities has taken us a long way in terms of our credibility with our existing customers and the open market, and more importantly, reflects our identity of a Tier-2 supplier with Tier-1 ambition.”

Magnan says that lean manufacturing also has a huge presence within their facility. “We implement lean principles across all of our operations, from design engineering, to tooling, parts fabrications, and finishing product assembly,” he says, adding, “Lean manufacturing supported by a continuous improvement process ensures permanent added value to our customers.”

“In terms of manufacturing services, we’re widely known for our high speed aluminum machining, hard metal machining, and surface treatment; all of which is done with the goal of developing high quality, critical parts that serve to enhance an aircraft’s overall integrity.”

Mecachrome is a global leader in the design, engineering, manufacturing and assembly of precision - engineered components.

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MECACHROME • PROFILE

Magnan says that in addition to producing high-quality parts, his company also likes to engage in high-quality partnerships. “We look at our customers, and even competing companies, as potential partners, and try to find ways where it’s a ‘Win-Win’ for both sides.” He says that they recently entered into a agreement with a fellow Canadian aerospace supplier called Sonica, where Mecachrome will be handling a lot of machining capabilities for them while they provide a fair amount of service treatment, creating a business relationship that is mutually beneficial. “This kind of agreement is kind of new in our industry, a situation where there’s millions of dollars flowing both ways,” he says, adding, “But now when customers look at one supplier, they will also have access to the other, which I think is a great thing because it gives the customer a broader selection of options while providing us with a greater level of visibility to potentially new audiences.”

Representing itself as a dynamic manufacturer, Mecachrome Canada is a company that is on rise. With major growth in 2014, the company’s North American market share is steadily growing and doesn’t look t stop any time soon. And why should it? Mecachrome Canada represents an aerospace supplier that unquestioningly commits itself to quality and reliability, while also demonstrating the ability to innovate and be flexible when possible. Look for the name Mecachrome to continue to shine across North America and the rest of the world for many years to come.

INDUSTRY TODAY 93

PROFILE • ALUMASA

Alumasa has spent the last 30 years producing aluminum and plastic products for Brazil’s civil construction sector. Now, despite a stagnant Brazilian economy, as commercial director Rodrigo Fontanella confesses to Michael Sommers, hope is on the horizon with the dawning of an “aluminum culture.”

94 INDUSTRY TODAY

ALUMASA • PROFILE

ometimes ladders are more than a mere metaphor for corporate success. In the case of Alumasa, they quite literally constitute one of the key foundations of the company’s prosperity.

Based in Urussanga, a small town located in the southern Brazilian state of Santa Catarina, Alumasa started out in 1986 producing custom-made aluminum ladders for local construction companies. At the outset, products

were made according to individual specifications. It wasn’t until 1990, that the fledgling business began making standardized items on a larger scale when it branched out into the manufacture of aluminum windows for hardware and construction supply stores as well as construction companies. As volumes expanded so did Alumasa’s markets. By 2000, the company was not only supplying aluminum windows to clients throughout Santa Catarina, but

INDUSTRY TODAY 95

PROFILE • ALUMASA

AT A GLANCE: • Company Name: Alumasa; • Foundation: 1986; • Headquarters: Urussanga, Santa Catarina; • Constructed Area: 430,000 square feet; • Core Business: Manufacturer of aluminum ladders, doors, and windows and plastic garden and bathroom accessories ; • Key Markets: Civil construction companies and hardware and construction supplies stores; • Employees: 500.

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ALUMASA • PROFILE

throughout Brazil as well.

Low Incomes, High Volumes In 2003, an important turning point occurred when the company decided to begin producing plastic products for hardware and construction supply retailers. With a focus on items for bathrooms and gardens, the constantly expanding product portfolio runs the gamut from toilet seats and shower heads to buckets and garden hoses.

Along the way, Alumasa’s infrastructure also grew. Due to significant investments in the early 2000s, the company’s industrial facilities, which initially measured 8,600 square feet,

grew to 430,000 square feet while its work force increased to 500 employees. Concurrently, the company invested in top-of-the-line equipment and technology such as two extruders and two reflow ovens, the latter used to melt aluminum and produce billets measuring four, five, six, seven, and eight inches. In order to make its own plastics and derivatives, Alumasa also acquired a complete line of injection and blow molding machines and extruders.

Today, in terms of aluminum, the company’s main focus is the civil construction market; standard-sized windows and doors constitute Alumasa’s principal product line, accounting for around 40 percent of its

“Because the Brazilian market is largely untapped, there’s so much room to grow.”

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PROFILE • ALUMASA

business. Low-priced and geared towards Brazil’s burgeoning lower-income housing market, the company banks on large sales volumes.

“We’re very much involved in supplying products for public housing projects” says Rodrigo Fontanella, owner, co-founder, and commercial director of Alumasa, referring to “Minha Casa, 98 INDUSTRY TODAY

Minha Vida” (“My House, My Life”), the watershed federal government initiative committed to building millions of home for low- and middle-income families. “However, looking forward, we want to become more active in terms of supplying industries – with structural aluminum profiles, for example. We also want

ALUMASA • PROFILE

to concentrate more on aluminum billets for extruders.”

With respect to plastics – and ladders, which remain an important product line to this day – the company’s target market consists primarily of retailers of hardware and construction supplies. Although the products in this segment

are very diverse – and the market is highly pulverized – together, they represent around 60 percent of Alumasa’s business. “The plastics segment is a very competitive market,” points out Fontanella. “Because the profit margins are so narrow, you really have to have a lot of volume. In terms of production capacity for our INDUSTRY TODAY 99

PROFILE • ALUMASA

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ALUMASA • PROFILE

“We’re not at all aggressive in terms of marketing.” plastic items, we’re almost at 90 percent. By contrast, with our aluminum products, we’re only at 60 percent of our full capacity. As such, in terms of the latter, there is still lots of room for us to expand in the marketplace.”

Pictured: Alumasa focuses on the civil construction market.

When it comes to competitive strategies, Fontanella claims the company doesn’t really adhere to any. “We’re not at all aggressive in terms of marketing,” he confesses. “We work almost exclusively with commercial representatives. With respect to plastics and construction supply retailers, we focus mainly on the South

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PROFILE • ALUMASA

and South-East regions of Brazil whereas with aluminum we work with civil construction reps throughout the country.”

An “Aluminum Culture” Alamasa’s lack of a combative sales and marketing approach shouldn’t be confused with a lack of ambition for the future. In spite of the the recent economic slowdown that has brought overall growth in Brazil to a near halt over the 102 INDUSTRY TODAY

last two years, Fontanella has great expectations for the future of aluminum, particularly with respect to its growth potential.

“Despite the fact that we expect 2015 to be a difficult year overall, when it comes to demand for aluminum, things are very promising,” declares Fontanella. “Currently, in Brazil, Pictured: Alumasa invested heavily in their industrial facilities in the early 2000s.

ALUMASA • PROFILE

consumption of aluminum is very low. Annually, the average Brazilian purchases approximately 4 kilograms of aluminum goods compared to consumers in Europe and North American where average consumption is around 20 kilograms.

Because the Brazilian market is largely untapped, there’s so much room to grow.”

Brazilians’ reluctance to embrace aluminum has traditionally been motivated by the high cost of aluminum in relation to other metals INDUSTRY TODAY 103

PROFILE • ALUMASA

ADDING VALUE TO THE FUTURE “In terms of plastics, we make low-cost products aimed towards a mass market. Added value is low and profits are based on high sales volume. In terms of aluminum, there is much more added value; we plan to focus more on these items in the future.” Rodrigo Fontanella

combined with the popular impression that aluminum is more fragile and less resistant than alternatives such as steel and iron. “Today, however, the price of aluminum has fallen and is more competitive with that of steel,” declares Fontanella. “Moreover, the notion that alumi104 INDUSTRY TODAY

num is weak is becoming debunked by a new generation of aluminum products that have much greater strength and durability and are far more resistant to corrosion.”

To underscore the strength of aluminum, Fontanella points to the fact that 90 percent

ALUMASA • PROFILE

of automobile and airplane wheels are made out of aluminum alloys – “not to mention our ladders, which are very resistant,” he claims.

Increasingly, aluminum is also replacing wood, which in Brazil has become incredibly expensive (by law, in Brazil, only reforested wood

can be used for manufacturing purposes). “The culture’s going to change,” vows Fontanella. “It will be slow, but it’s going to happen. Brazil is going to adopt an aluminum culture; and when it does, we’re going to be right there, at the forefront.”

INDUSTRY TODAY 105

PROFILE • COLMEIA

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COLMEIA • PROFILE

The heady heyday of Brazil’s real estate boom may be over, but as one of the country’s most rock solid – and highly reputed –construction companies, Colmeia has plenty of room to grow. In an interview with the company’s president and financial director, Michael Sommers discovers how the company is using both tradition and technology to build a stable future. t’s not because it’s in the business of constructing residences that Colmeia is named after the Portuguese word for “beehive.” “‘Colmeia’ alludes to an ensemble of worker bees

as well as to a group of people brought together to work as a highly qualified team toward a common endeavor,” explains Otacílio Valente, Colmeia’s president.” With this beehive symbol INDUSTRY TODAY 107

PROFILE • COLMEIA

AT A GLANCE: • Company Name: Construtora Colmeia; • President: Otacílio Valente Costa; • Foundation: 1980; • Headquarters: Fortaleza, Ceará; • Affiliates: Natal (Rio Grande do Norte), Manaus (Amazonas), Campinas (São Paulo); • Employees: 2,375; • Core Business: Civil construction company specializing in upscale residential buildings; • Segments: Apartments and resorts (90 percent); offices and shopping centers (10 percent); • Largest Project: Golfville, a R$1.1 billion (US$35 million) resort in Ceará featuring 1,624 residential units and 9-hole golf course located on a 135-acre property, 50 percent of whose units will be delivered in 2015; • Projected Annual Growth: 5 percent. in mind, Construtora Colmeia, a civil construction company headquartered in the Northeastern city of Fortaleza, has been creating a buzz ever since its foundation in 1980.

The “Colmeia Concept” Two key tenets of the “colmeia concept” are professionalism and meritocracy – and Valente himself is a prime example of both. When he joined the company in 1985, it was as an on-

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site engineer who, over the years, worked his way up to supervisor, technical coordinator, partner and director, before finally, in 2000, becoming president. Valente is proud of the fact that he is an example instead of an exception to the rule; today many members of Colmeia’s team entered the company as interns or Pictured: President-Otacílio Valente Costa, Ronaldo Barbosa, Ana Virginia Martins; right: East Tower Residencial.

COLMEIA • PROFILE

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PROFILE • COLMEIA

“We’re among the elite.”

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COLMEIA • PROFILE

engineers, who were nurtured, and promoted.

“Every year we host a convention for all the company’s architects and engineers to get together and brainstorm. Last year, there were 49 professionals present and almost 90 percent of them had started out at the company as interns,” declares Valente. “Many of the top positions at Colmeia are held by people who came to us on internships. This focus on merit – and professionalism – is what really sets us apart in the marketplace today.”

The marketplace to which Valente is referring is Brazil’s real estate market, specifically the high-end residential market that caters to Brazil’s upper and upper-middle classes. Due to Brazil’s current economic slump, the real estate market as a whole has seen a marked slow-

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PROFILE • COLMEIA

down in comparison with the heady historic boom that held sway between 2007 and 2012.

During those years, surging economic growth combined with government housing incentive programs and unprecedented access to financing, meant that millions of Brazilians could suddenly afford to purchase the house of their dreams – which in turns spurred construction to record levels. Easy credit combined with a surfeit of hastily-constructed new properties and a flood of first-time buyers led to many consumers making what Valente refers to as Construtora Colmeia specializes in upscale residential buildings with luxury amenities.

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COLMEIA • PROFILE

“Over the last four years, we grew by 50 percent.”

“impulse purchases.”

“Back then the market was very irrational,” explains Ronaldo Barbosa, finance director of Colmeia. “There was a real necessity for real estate since you had consumers who hadn’t purchased property in 20 or 30 years. Because consumption had been repressed for so long, many people were buying without looking at the reputation and history of the construction company and its track record, without verifying it had a credit line in order to complete a proj-

ect, without studying the level of workmanship and services offered.”

“In 2015, however, the market is more rational,” continues Barbosa. “Today’s buyers have learned how to research and compare products, prices, and payment options. Although the boom is over, demand is still healthy; sales of residential and commercial real estate in Brazil increased by 14 percent, in 2013, and 11 percent, in 2014. However, due to the vast range of products, the consumer is privileged with

“Many of the top positions at Colmeia are also held by people who came to us on internships.”

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PROFILE • COLMEIA

respect to negotiating terms. Competition is fierce and construction companies have to work like never before to differentiate themselves.”

Traditional and Technological Fortunately, Colmeia has spent the last several decades differentiating itself in the quartet of regional markets in which it operates. These

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consist of Fortaleza, capital of Ceará, where its headquarters are located; Natal, capital of the neighboring Northeast state of Rio Grande do Norte; Manaus, capital city of the state of Amazonas; and Campinas, a thriving satellite city of São Paulo that serves as an entry gate to the Rio, São Paulo, and the rest of the Brazilian Southeast. “Despite being regional, we’re a

COLMEIA • PROFILE

INNOVATIVE ENGINEERING Although Colmeia is financially conservative, it banks heavily on innovation, particularly in terms of engineering solutions. Among its many “firsts,” Colmeia was the first construction company in Brazil.

• To perfect, and then introduce into residential buildings, a ribbed concrete slab structural system (used primarily in public buildings) that allowed for the construction of walls without columns and beams.

large-scale company, but our structure is limited,” explains Barbosa. “Over the last four years, we grew by 50 percent, however looking to the future we expect annual growth rates to hover at around 5 percent. We don’t want to sacrifice our reputation for quality and customer services.”

Barbosa adds that in each city, the

• To develop large plaster bricks that fit together like Lego pieces, making the assembly – and reassembly – of walls easier, and more sustainable (dispensing with cement, sand, water, etc.)

• To apply Toyota’s Lean Construction system to the civil construction segment.

• To construct buildings with individual water meters in each unit (in Ceará).

Apartments and resorts count for 90 percent of Colmeia’s business.

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PROFILE • COLMEIA

company is viewed as a local business rather than a regional affiliate. “To be seen as a local company is important. In recent times, many construction firms funded with stock market capital opened in São Paulo and their service departments are still based in São Paulo. Clients have to call 1-800 numbers to contact

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representatives and are treated as if they are mere numbers. In contrast, we have offices in all four cities. Clients can drop by, sit with a manager, have a coffee or cappuccino, and leave with paperwork in their hands. They can also call us and we’ll know them by name.

Everything’s very personalized.”

COLMEIA • PROFILE

Colmeia’s emphasis on personalization isn’t just traditional – it’s also technological. Indeed, the company recently finished making major investments in communication channels aimed at strengthening relationships and increasing added value to clients, suppliers, and even employees. Via laptops, tablets, and Smartphones,

clients and suppliers can log into the company’s portal and, from there, access an endless array of sites. Clients, for example, can check on a building’s progress, make a monthly payment, download tax declaration forms and interact directly with agents. Suppliers can access goods or services that Colmeia requires and bid on them.

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PROFILE • COLMEIA

VIP TREATMENT In 2014, Colmeia launched an innovative program known as VIP (Vistória de Inspeção Programada). Inspired by the auto industry system whereby consumers receive maintenance check-ups during their vehicles first 5,000km on the road, Colmeia provides preventive maintenance of its buildings at 6-month and 12-month intervals during a buyer’s first 5 years of ownership. Running the gamut from rust removal to unblocking pipes and fixtures, the exclusive service is the first of its kind in Brazil’s construction sector.

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COLMEIA • PROFILE

Meanwhile, on site, technology has myriad uses. For example, if a safety inspector sees a worker performing a job on high scaffolding, he can use his tablet to instantly verify that the employee has completed appropriate training and is using the proper equipment; in the case of any non-conformity, he can take a photo and send it to the foreman. “Very few of our competitors

have the tools that we use,” says Barbosa. “Only the elite – and we’re among the elite.”

Colmeia’s elite status is recognized across the board. Valente points to the fact that in each of the four cities in which Colmeia operates, surveys place it among the top two or three most recognized – and reputed – builders in the marketplace. Among its suppliers, it counts major global firms such as ArcelorMittal, the largest steel manufacturer in the world, Alcoa, the world’s leading producer of aluminum, and Incepa, owned by Rocca, one of the world’s top makers of ceramic tiles and porcelain wares.

Its sterling reputation also explains why Brazilian banks provide Colmeia with inexpensive credit lines that ensure financing of 100 percent of its projects via a federal government program, Plano Empresário, whereby the Central Bank subsidizes credit lines to a select number of businesses deemed solid enough to deserve them. “A very exclusive group of companies in Brazil are selected to benefit from the program,” states Barbosa. “The fact that we’re among them is a testament to the solidity of our financial management and our corporate stability. These days banks only give credit to companies they’re sure can deliver projects on time and sell all units.”

“Colmeia has a hard-won reputation for being a very ethical company,” chimes in Valente. “And we’re recognized as such by our employees, suppliers, and clients. In a country such as Brazil, that is suffering from a real ethical crisis, being a company that people can trust really sets us apart.”

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PROFILE • MARIZA

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MARIZA • PROFILE

Having consolidated its position as the leading food company of the Amazonian North, Mariza Alimentos is ready to take on the rest of Brazil. Founder and president Flávio Costa explains to Michael Sommers how the company’s regional identity and reputation for innovation have become key ingredients in its recipe for national expansion.

ative to the tropical forests of the Brazilian Amazon is the urucuzeiro tree. Traditionally, the scarlet seeds of its fruit have been used by indigenous peoples for purposes as varied as body paint, insect repellent, and as a condiment that adds mild flavor and bright color to food. Known as urucum – or coloral (due to its intense orange hue) – in powder form, it is a mainstay of kitchens throughout the Brazilian North and Northeast.

And it literally provided the seeds to success for Mariza, today the largest food company in the Brazilian North.

A Big Mix Flávio Costa, founder and president of Mariza, was only 20, in 1983, when he began packaging and selling locally-grown coloral at the marketplace in his hometown of Castanhal, located in the vast Amazonian state of Pará. “Back then, I never imagined that today Mariza would be one of the leading food companies in the North and Northeast and that instead of just coloral, we’d be selling over 500 items.”

During its three decades of existence, Mariza has grown steadily and organically. However, over the years there have been a handful of acquisitions in which Mariza purchased other food industries scattered throughout Pará and then moved production of their lines to Castanhal, where it possesses 1.07 million square feet of industrial facilities along with its own separate packaging plant (where Mariza products account for 16 percent of business). Additionally, the company is partners in INDUSTRY TODAY 121

PROFILE • MARIZA

AT A GLANCE: Company Name: Mariza Alimentos • Foundation: 1983; • President: Flávio Costa; • Headquarters: Castanhal, Pará; • Industrial Area: 1.07 million square feet; • Core Business: Producer of packaged foods; • Top Selling Categories: condiments, sauces, olives and olive oil, cake mixes, cereals;

“We’re audacious in terms of many of our items.”

• Total Product Mix: 500 items; • Employees: 1,100; • Total Revenues (2014): R$160 million (roughly US$62 million); • Average Annual Growth: 12-18 percent.

a transportation company, based in São Paulo, where distribution of Mariza items represents 12 percent of revenues.

Acquisitions and alternative activities aside, the company’s growth over the years has been largely the result of expanding its customer base via the ongoing diversification of its product mix. Despite the vast number of items in its portfolio, Mariza focuses on several major categories: condiments, olives/olive oil, sauces, cake mixes, and cereals (popcorn, polenta, corn, rice and wheat flakes). While some of its products and ingredients are imported from abroad (Greece, Spain, Argentina, Chile and Peru are all important suppliers), Mariza is also strongly committed to sourcing locally in terms of 122 INDUSTRY TODAY

Pictured: President, Flávio Costa; Mariza Alimentos corporate offices; Oils & Vinegars;

MARIZA • PROFILE

everything from the cement it uses for expanding its facilities to the peppers that go into its sauces and condiments.

Tending to its Turf “We do a lot of training and prep work with local producers and suppliers,” says Costa, adding that such efforts are part of wider reaching social programs that the company has developed to benefit surrounding communities. Mariza’s various projects include the awarding of scholarships to high performing students, the annual donation of 70 tons of food to local entities, and the installation of indoor plumbing systems to areas in which residents have no running water in their homes.

Complementing its social consciousness is

the company’s commitment to environmentalism. Since 2007, Mariza has adhered to a zero waste policy whereby, every month, it processes 110 tons of rubbish and residue, which are then selected and reused or resold, or recycled into energy. More recently, the company invested R$2 million (roughly US$800,000) in a water treatment system in which all water used at its facility is treated and then returned, in pristine state, to the municipality.

While Mariza makes a point of tending to its backyard, its home turf of Pará has also taken good care of Mariza. Aside from its big product mix, one of the main factors that distinguishes the company in the marketplace is the distinctiveness of that mix, which stems from the many local and regional products that Mariza

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PROFILE • MARIZA

“I always considered whatever gains occurred to be very small and that they could be so much greater.”

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is the only company to supply on an industrial and/or national scale.

“For instance, we’re the only company that sells banana flour, which is very popular in the Amazon,” points out Costa. “But there are many other regional products that we not only work with, but try to divulge and popularize throughout the rest of Brazil. Tapioca flour was originally only known within a certain region of Pará; today it’s recognized all over Brazil.”

“We make a big effort to innovate in terms of the market. For example, in many parts of Brazil, people use different kinds of hot peppers to season their food. However, in the North

and Northeast, we are fond of a special type of yellow pepper that is not only hot, but also very aromatic. Selling yellow peppers on an industrial scale is tricky because they’re very unstable.

We carried out a lot of studies and experiments before we were able to successfully launch yellow peppers as one of our products. To date, we’re the only producers in Pará of this pepper, which sells well even in São Paulo.”

National Growth with Regional Focus Mariza’s innovative streak isn’t limited to regional products. As Costa points out, “We’re audacious in terms of many of our items.” As

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PROFILE • MARIZA

examples he cites the fact that Mariza was the first food company in Brazil to market roasted rock salt – the extra-dryness of which makes it ideal for Brazilians’ beloved churrascos (barbecues). It was also the first company to create sealed packaging for tofu. Meanwhile, the company isn’t afraid to go head-to-head with multinationals by producing its own version of international classics such as madeira sauce that rivals that of leading competitor Uncle Ben. While embracing its regional identity, the goal of transcending its regional origins – and location – is an increasingly important one as Mariza, having consolidated its position in the North and Northeast, seeks to make larger inroads throughout the rest of the country. “A major challenge for us today is the fact that being based in Pará means that we’re geographically – and logistically – remote,” admits Costa.

“In order to be less marginal, we’re in the midst of a massive expansion plan. Our aim is to set

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up plants in various key Brazilian regions and develop items there that take advantage of local products. The strategy is to grow nationally but with a regional focus.”

With this mission in mind, Mariza recently purchased a company in Cuiabá, capital of the Central-West state of Mato Grosso, with plans to begin production of its cereals line later this year. The fact that the Central-West is a major producer of soy, corn, rice, and other grains will allow Mariza to improve logistics and cut production costs since the plant will be surrounded by raw materials and much closer to its transportation company in São Paulo, not to mention to customers in the rest of Brazil.

The launch of the Cuiabá plant – Mariza’s cereal line will move production from Pará to Mato Grosso in February – is only the first stage of a plan that will see Mariza open four more regional plants over the next four years.

Also in the works are the acquisition of a peach

MARIZA • PROFILE

Pictured: Production line and the warehouse.

canning plant in the southern state of Rio Grande do Sul, which will subsequently become the base of Mariza’s entire line of preserved fruits – cherries, plums, pineapple – and a plant devoted to its line of olives, in São Paulo, where proximity to imported olives and factories that produce glass jars will also increase efficiency and drive down costs. Concurrently, the company is studying the possibility of opening a plant in the South-Eastern state of Minas Gerais, a major cultivator of potatoes, which will become the more practical launching base for its line of potato-based products (mashed potato mix, chips).

If aspiring to such significant growth in such a short time span seems ambitious, it’s also completely in keeping with Mariza’s ethos – and origins. “When I started out selling coloral, I never, ever imagined that I’d be where I am today,” muses Costa. “I produced the coloral myself and sold it at the local market, then to the local supermarket, then to supermarkets in neighboring towns and cities. I never planned on the growth that subsequently took place. I always considered whatever gains occurred to be very small and that they could be so much greater. Today, Mariza’s products are sold throughout Brazil, but we still work like this.

And I continue to instill in all of our employees the idea that we can always be so much greater.”

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PROFILE • ITW EQUIPMENT GROUP

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ITW EQUIPMENT GROUP • PROFILE

s the value of the Brazilian real falls against the dollar and inflation and unemployment rise, confidence in South America’s biggest economy is suffering a turn for the worse. However, ITW Food Equipment Group do Brasil thinks differently. Instead of backing out of the market, the group is stepping up activities based on its longstanding experience and adpatablility.

ITW designs and produces complete commercial food equipment systems, from storage to preparation and is the parent organization

One of Brazil’s biggest manufacturers of commercial food equipment for foodservice and food retail announces plans to become the market leader in the next five years. Through incorporated brands and accumulated experience, the company claims faith in the future of the industry is the key to reaching the top. Reuben Ford reports.

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PROFILE • ITW EQUIPMENT GROUP

COMPANY OVERVIEW • ITW Food Equipment Group do Brasil; • Products: commercial equipment for food service and food retail; • Location: São Paulo and Curitiba – Brazil; • Brands: Hobart, Vulcan, Bonnet and Perfecta; • Growth: 15 – 20 percent a year; • Position: Currently among the three largest in the sector, with the goal to reach market leadership

by 2020. of the independent brands Hobart, Bonnet, Vulcan and Perfecta.

Acquisitions have catalyzed growth of the group worldwide, bringing expertise and investment in diverse areas of the food industry.

“We focus equally on our markets and

prioritizing knowledge of each specific area to offer the best and latest technology to clients.

Brazil is not like other countries – it is not just a question of importing or developing new products, but understanding the local business ethic and market conditions,” says Country Manager, Luca Boselli.

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ITW (Illinois Tool Works) was founded in Chicago in 1912. Byron Smith, a financier placed an advertisement in the Economist looking to provide capital to a “high class business (manufacturing preferred) in or near Chicago.”

He chose a group of inventors with an idea to improve gear grinding and from these humble beginnings, ITW expanded into businesses across the globe, transforming entire industries through simple but ingenious solutions.

The company embarked on Brazilian territory in 1996, when it acquired Hobart, ITW produces a range of equipment including dishwashers and combination ovens.

ITW EQUIPMENT GROUP • PROFILE

AIMING HIGH Despite years of collective experience in diverse areas of commercial food preparation, ITW has expanded operations significantly in the last 15 years, introducing new brands to the Brazilian market and making important acquisitions.

the national leader in development and supply of commercial dishwashing, preparation, waste disposal and butcher’s equipment. “The acquisition was part of ITW’s worldwide diversification of food services,” Boselli explains. It also paved the way for the American group to introduce other brands to Brazil.

“ITW immediately noticed potential in Brazil and looked for other acquisitions and opportunities,” Boselli continues.

In 2000, the company launched Vulcan industrial ovens and hotplates in Brazil and in 2010 Bonnet combination ovens. “Bonnet has over 100 years of experience in combination ovens. As a specialist brand in quality professional, it uses steam systems to cook food without leaving them dry like models previously available in Brazil,” Boselli exemplifies.

Between the years 2000 and 2015, ITW has achieved constant annual growth of 15 to 20 percent through the brands Hobart, Vulcan, Bonnet and Perfecta.

ITW ranks in the top three food service equipment companies in Brazil and according to Country Manager Luca Boselli, will reach the number one spot by 2020. The argument is strong: While many family companies still operate in the industry, ITW offers international, all-round solutions to the client.

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PROFILE • ITW EQUIPMENT GROUP

An equally important step was the purchase of Brazilian baking, patisserie and confectionary equipment manufacturer, Perfecta in 2012.

Perfecta was a family company that had been founded in 1973. It is the established domestic market leader and the largest company of its kind in Latin America. Based in the southern city of Curitiba, Perfecta added valuable expertise to ITW’s Brazilian market presence, as well as another strong brand.

“Perfecta was an addition that ITW assumed in Brazil. Vulcan and Bonnet were already a part of the group and imported technology,” Boselli clarifies. “The latest ITW brand in Brazil has consolidated 360º customer service and

established a new division in our broad food services.” Perfecta supplies national and international supermarket chains, Walmart, Carrefour, Pão de Açucar and restaurants such as Outback.

United Leaders ITW looks for brands that lead in their respective markets. Products include warewashing equipment, cooking equipment (including ovens, ranges and broilers), refrigerators, freezers and prep tables. The group has a healthy approach to competition and views new technology as an important part of achieving competitive edge.

Managed individually, the brands focus on providing customers with technological innovations

“ITW has a defined and definite approach, which is market segment focused and aims at steady growth.”

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ITW EQUIPMENT GROUP • PROFILE

that facilitate operations.

Hobart dishwashers now consume less water and energy. “New market developments move toward semi-economical and ecological features,” Boselli comments. Other developments include wireless Bonnet combination ovens, which allow remote control via flash drive; the ovens can be regulated and programed, switched on and off to run more efficiently.

“Constant evolution is important– small

modifications may not seem like much, but they make the difference and improve overall quality,” Boselli says.

For Brazilian brand Perfecta, investment in new technology has expanded market lead. With a 50 percent domestic market share, additional developments have added value to the country’s best-selling food services equipment. Boselli emphasizes that especially over the last two years, “ITW has invested in the Perfecta factory and ITW has a range of brands; Hobart, Bonnet, Vulcan and Perfecta.

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PROFILE • ITW EQUIPMENT GROUP

equipment lines–introducing electronic touchpanel controls and innovative modifications, while maintaining competitive pricing.”

Buying the leading brand, not only increased ITW’s diversification but also marked the start of nationally produced products (Vulcan and Bonnet are imported). Perfecta’s Curitiba factory covers 23,000 square meters and develops an Vulcan is part of the ITW brand using imported technology.

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average of two new pieces of equipment a year.

The brand opened a new factory in São Paulo in 2014. Hobart has technical headquarters in Germany and in the United States. ITW employs 300 people in Brazil.

Intensive Investment Moving forward, company investment strategy falls into two areas: engineering and infrastructure. The team of 20 engineers work on the structure and production of new equipment as well as the tools and machines needed for

ITW EQUIPMENT GROUP • PROFILE

manufacture. Following the presentation and approval of a prototype, innovations can enter the production line.

“Heavy investment in the Brazilian factory characterizes how much ITW believes in the Brazilian market,” Boselli reiterates. The company spent $500,000 on state-of-the-art painting technology last year alone. The machine has dramatically increased quality and reduced production time. It constitutes one of ITW’s first big investments in Brazil. According to Boselli an additional $2 million of cutting, folding and

tooling equipment is scheduled for the near future.

Research and development of the market involves clearly defined analysis. “ITW has a defined and definite approach, which is market segment focused and aims at steady growth,” Boselli says. Part of this research involves interviewing existing clients, to improve equipment currently in operation and understand local industry needs. Ideas for products are collected and analyzed systematically. Qualified professionals can take up to six months to INDUSTRY TODAY 135

PROFILE • ITW EQUIPMENT GROUP

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ITW EQUIPMENT GROUP • PROFILE

MACRO-ECONOMIC VARIABLES, MID-TERM RECOVERY Brazil’s economic outlook has been disappointing in the past few years, reaching an average 1.2 percent annual growth, and interest rates soaring to an estimated 12 percent (and rising). Industry increasingly struggles under the burden of high taxes and complex legislation.

ITW Food Equipment Group do Brasil, views the current crisis from a different angle. Country Manager Luca Boselli explains: “Brazil is not like the United States or Europe – it has a specific business ethic and conditions. With this in mind, ITW does not just import or ‘sell’, we meet local needs with market-appropriate solutions.”

The international group has faith in the future of the country. “We estimate the economy will recover by 2017-2020,” Boselli confirms. The optimism is strongly reflected in ITW’s heavy investment in engineering and infrastructure and strategy to achieve market leadership.

“ITW immediately noticed potential in Brazil.”

evaluate and re-work new projects to ensure that they meet clients’ expectations and rigorous quality control standards.

This is one of the many differences identified by partners and client alike. Boselli cites after-sales service, technical assistance and close relationship with customers as strong differentials: “We sell solutions,” he affirms.

ITW’s confidence in Brazil is clear. Despite economic crisis and political uncertainty, the group is focused on development. “We are always looking to simplify business. Brazil is not growing at the same pace as the past but we believe in recovery in the mid-term,” Boselli says.

There is no doubt that the Brazilian market can expect great things from ITW. The international group has stepped up its involvement in the emerging market through acquisitions and investment. Boselli is emphatic in his conclusion: “Trust in us, we are here to stay.”

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PROFILE • JORGENSEN FORGE

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JORGENSEN FORGE • PROFILE

Jorgensen Forge is a Washington-based manufacturer that has provided high-quality, critical components for some of North America’s most influential and innovative leaders of industry over the last 75 years. In a conversation with Industry Today, Dan Augustine, vice president of sales and marketing, discusses his company’s wide range of production and material capabilities and how, in the face of an increasingly demanding global market, they manage to ensure precision and efficiency in each and every one of their projects. Steve Engelhardt reports.

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PROFILE • JORGENSEN FORGE

n 1940, although the U.S. had yet to join the Allies in World War II, the U.S. Navy was busy building up its fleet along the West coast and was searching to find a similar location where they could manufacture all of their propeller shafts for each and every vessel. “This was a significant need for them because up until then, all propeller shafts were being produced on the East coast and given the lack of efficiency in trucking and rail shipping

the defense sector. For Augustine, it just seemed like a natural progression for the company. “Jorgensen is first and foremost known for its quality, something that has really been the standard for us since our initial partnership with the U.S. Navy began back in 1940,” he says, adding, “Over the years we have taken this commitment and married it with an expertise in the manipulation and production of complex metals; a dynamic that allows us

“Jorgensen is first and foremost known for its quality, something that has really been the standard for us since our initial partnership with the U.S. Navy began back in 1940.” back then, it would take quite a bit of time for the shafts to reach the ships they were to be installed in,” says Augustine.

The Navy decided to take the matter into their own hands and build a forge in Tukwila, Wash., which they then sold to a company called Iverson, who ran the business until 1963, when Earl Jorgensen took over and renamed the facility Jorgensen Forge. Although ownership had changed, the forge’s significance to the U.S. Navy remained the same, and the company took its in-depth partnership with the military branch and used it as a launching pad to expand into other industries.

Industry Excellence Today, those industries include aerospace and energy, as well as a deepened presence across 140 INDUSTRY TODAY

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PROFILE • JORGENSEN FORGE

today to bring the very best products to a number of different markets.”

And typically those who are leading their industries are the same ones that require the very best components in their products. Let’s start with the U.S. Navy, whom Jorgensen has continued its 75-year relationship of manufacturing propeller shafts into today, doing so for the Seawolf-class submarines and the Virginia Class-A attack submarines, respectively produced by Electric Boat in Groton, Conn., and the Newport Naval Shipyard in Newport Jorgensen is a renowned expert in the manipulation and production of complex metals.

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News, Va. “These subs are 58 feet in length and the tolerance for error in their components is less than one-thousandth of an inch, as they have to be absolutely silent when moving through the water,” he says, adding, “Additionally, we produce titanium periscope tubes for them, where the structural integrity of the pipe is critical given the constant stress it has upon it from the ocean’s rough waters.”

Not limited to pipe-based products, Jorgensen additionally provides the rings that go around the submarines’ launch tubes— the component that is ultimately responsible for the firing of its intercontinental ballistic missiles (ICBM).

JORGENSEN FORGE • PROFILE

QUALITY SYSTEMS & CERTIFICATIONS AT JORGENSEN FORGE: • Commercial/Industrial (ISO 9001); • Aircraft/Aerospace (AS9100C, NADCAP Heat Treat & NDT); • Commercial Nuclear (10CFR50, App.B, NCA-3800, HAF604); • Navy Nuclear (NAVSEA TP’s) and Commercial Marine (ABS); • Oil & Gas (API).

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PROFILE • JORGENSEN FORGE

Jorgensen Forge also has a deep partnership with Austal, a manufacturer of the U.S. Navy’s new Littoral combat ships. “The new Littoral combat ships don’t utilize propeller shafts, but rather an inboard-outboard jet system,” Augustine says, adding, “And the jets need to have cones that allow the water to pass through the motor, and we manufacture those for them.”

Given the close relationship between defense and aerospace, it’s no surprise that Jorgensen has taken its reputation amongst the U.S. Navy and its supply chain, and used to it to form partnerships with some of aerospace’s leading players, including SpaceX, United Launch Alliance, and Alliant Techsystems

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(ATK). “Similar to the ones we manufacture for the naval submarines, we are NASA-approved manufacturers of rings that go on the top and bottom of the separation stages for Atlas and Delta rockets, and it’s in these kind of projects that we thrive because our customers know that we bring the same level of dedication and commitment to the project as they do.” Augustine says that although composites have largely taken center stage in the aerospace world, there still is a very real need for forged components in particular areas of aircraft and air systems, and their partnerships with these companies reflect that.

Jorgensen Forge has recently been growing

JORGENSEN FORGE • PROFILE

its presence across the energy sector as well, playing a role in both the nuclear and oil and gas markets. “We make components to go inside of nuclear reactors and have quickly established ourselves as a premium manufacturer of drill collars—piping that enables a drill to pass through the earth and prevent it from collapsing—for many of the oil fields across North America. He adds that their success in energy has them pushing for an even bigger presence, with the expectation of eventually expanding into the United States’ wind, hydroelectric, and mining sectors as well.

Production Precision For all the success that Jorgensen Forge con-

tinues to have, one begins to wonder, just what exactly goes on inside the manufacturing facilities within their headquarters in Tukwila that leads to such high-quality components?

“When people think of forges, the first thing that typically comes to mind is steel work, and while we certainly do that, the real value at Jorgensen Forge is through our ability to mix and create complex metals to the specific strength levels requested by our customers,” he says, adding, “Everything we produce is done in a highly scrutinized and extremely thorough manner because frankly, it’s both what our customers demand and what we expect out of Jorgensen is one of the U.S.’s top metallurgical manufacturers.

INDUSTRY TODAY 145

PROFILE • JORGENSEN FORGE

“We are NASA-approved manufacturers of rings that go on the top and bottom of the separation stages for Atlas and Delta rockets, and it’s in these kind of projects that we thrive because our customers know that we bring the same level of dedication and scrutiny to the project as they do.” ourselves anyways.”

For Augustine, a retired U.S. Army Colonel who also later graduated from the Naval War College, it’s just the way things are supposed to be. “In the military, discipline and duty are paramount, and there’s a very similar feel

146 INDUSTRY TODAY

within our processes and overall commitment to the customer.”

And from a machinery perspective, the company has everything it needs to get the job done efficiently. “We have a series of presses that range from 660 tons to all the way up to 5,000

JORGENSEN FORGE • PROFILE

tons, and our forge operations can produce billets as small as six inches wide and ingots as big as four feet wide,” he says, continuing, “Through the combination of automated technology and our pressing and machining abilities, we can manipulate a bar into pretty much anything.”

Augustine says throughout each process, separate metallurgical and quality teams inspect the components every step of the way and upon completion of the final step in production, an additional inspection team will run a comprehensive test on the product to make sure that it is exactly what the customer asked for. “We care just as much about these components as our customers do, and I think the

many pictures of submarines, rocket launches, and others around our factory reflect our pride in what means to manufacture a high quality product.”

As Jorgensen Forge continues to succeed in its high profile partnerships, the opportunity to potentially expand its activity internationally becomes more and more possible. Augustine says given the proficiency of shipbuilding in South Korea as well as Europe, he could eventually see Jorgensen’s propeller shafts among other components in high demand within such markets. But for now, the company is content with its burgeoning success here in North America, and looks to continue to serve as one of the U.S.’s top metallurgical manufacturers.

INDUSTRY TODAY 147

ric

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Houghton International, Inc. Madison & Van Buren Avenues P.O. Box 930 • Valley Forge, PA 19482-0930 Phone: 610-666-4000 • Fax: 610-666-1376 Contact: houghtonintl.com/request_info.aspx

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IFC – Inside Front Cover 148 INDUSTRY TODAY

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4:28:12 PM

Altogether A Better Formula For Your Success For over 149 years, Houghton International’s proven reputation for advanced metalworking and industrial fluid technology has consistently delivered world-class products and services to reduce customers’ operating costs, improve productivity, increase part quality and strengthen their overall competitiveness.

With our extensive library of proprietary chemical formulations, we serve as the leading provider of mission-critical, environmentally friendly solutions to our global customers.

Our Mission Partner actively with our customers to provide innovative and sustainable technical solutions to help them increase productivity, reduce costs and minimize risks.

Industries That Benefit From Houghton’s Advanced Chemical Technology: • Energy

• Machinery And Metal Treatment

• Bearings

• Fabricated Metal Goods

• Aerospace

• Non-Ferrous Rolling

• Automotive • Steel Rolling

Houghton International has long-standing partnerships with over

13,000 Leading Global Customers

serving their metal working fluids needs across a diversified range of channels.

www.houghtonintl.com

We invite you to download the latest series of Houghton’s case studies by visiting houghtonintl.com.

Each summarizes the “Unique Challenge” presented to us and the “Houghton Solution” where measurable cost savings and other benefits were achieved.

Corporate Headquarters Houghton International, Inc. Madison & Van Buren Avenues P.O. Box 930 • Valley Forge, PA 19482-0930 Phone: 610-666-4000 • Fax: 610-666-1376 Contact: houghtonintl.com/request_info.aspx