J & D Tube Benders finds opportunities during business peaks, valleys
January 21, 2011
J & D Tube Benders Inc., founded as a partnership to produce a single part number in 1971, today generates $16 million in annual revenues and is on the cusp of the third generation of family ownership. The key to its longevity is learning valuable lessons throughout the past four decades, finding opportunities during expansions and downturns.
Wisconsin’s license plate motto is “America’s Dairyland” for good reason. The state boasts a cow population of 1.3 million and produces nearly 9 million gallons of milk per day. That said, the state is no stranger to manufacturing, either; it is home to eight manufacturers listed in the Fortune® 500: Johnson Controls Inc. (building and automobile controls), Oshkosh Corp. (heavy-duty trucks), Harley-Davidson Inc. (motorcycles), Rockwell Automation Inc. (industrial automation controls), Manitowoc Co. Inc. (cranes), Snap-on Inc. (hand tools and power tools), A.O. Smith Corp. (residential and commercial water heating equipment), and Briggs & Stratton Corp. (small engines).
Of course, not all the manufacturers are household names. Nestled among the many pastures and OEMs is J & D Tube Benders Inc., a fabrication shop staffed by nearly 100 employees in a 114,000-square-foot facility located near Wausau, in the center of the state.
It was founded as a partnership in 1968 and incorporated in 1971. The partners, Jack Gauger Jr. and Dane Felch, worked for a manufacturing company and started J & D as a little part-time gig to supply a single part to their employer. The business grew, perhaps better than the partners expected, and these days it generates about $16 million in annual revenue. The business owners have learned plenty of lessons over the years, and have had the good fortune of turning business downturns into opportunities. These lessons have made it a robust fabricator. This and the company’s dedication to its employees, community support, the way it serves its customers, and its efforts in promoting manufacturing careers have earned it the 2011 TPJ Industry Award.
Like many small businesses, J & D Tube Benders Inc. started small. The founders were employed by a local manufacturer, Drott Manufacturing Co. When management at Drott decided to shut down a line that manufactured a port tube for a hydraulic cylinder, Felch and Gauger knew where they could get their hands on a bender and a saw, so they bought the equipment and started supplying this single component to their employer and sole customer. They had no aspirations of being company owners or self-employed men or anything like that, according to Felch’s son, Tom, current co-owner and company president. It was just a little moonlighting gig they intended to run for some extra cash until they retired.
“At the time it was just the two founders and one overworked, underpaid employee,” said Tom.
Word spread and soon J & D was manufacturing hydraulic components for a handful of local manufacturers. For the most part, the first decade was uneventful; the company grew slowly but steadily. However, the recession of 1981 was a turning point. Like many small businesses, J & D had a handful of small customers and one large one. Its big customer, hydraulic equipment manufacturer Loed Corp., found itself in serious financial trouble, and it slipped into bankruptcy. J & D wasn’t big, but it was big enough to fight for. The partners had invested a substantial amount of time and money, and they weren’t about to watch it fold.
The two Felches hit the road to find some new customers, but the outlook was grim. Interest rates exceeded 20 percent, the national unemployment rate was nearly 11 percent, and two of the big drivers of the U.S. economy—construction and manufacturing—were in terrible shape.
“We had a lot of conversations with a lot of purchasing agents during that time,” Tom said. One told the Felches that fabricated tubular components weren’t hard to find, but good service and delivery were. Then another said it. Then another. The lesson was clear. They returned home with a few new customers and a renewed focus on taking care of all the customers, old and new.
Back in Wausau, things were looking up. The assets of Loed were purchased by another hydraulic equipment manufacturer, Warner & Swasey, and Loed machines became part of its Gradall® line of earthmoving equipment.
“We had the only drawings for the hydraulic tubes,” Tom said, “so we stayed with that product.”
J & D focused on providing good service and short delivery times, and it started paying off right away.
“Within two years we had all of the Gradall business plus all of the Warner & Swasey business,” Tom said. “Our two biggest competitors for that business were within an hour’s drive of Gradall, but we were able to take that business away from our competitors because of our service and delivery.”
Years ago J & D learned to invest in the business during hard times as well as good times.
At the start of the 1990s decade, the company occupied a 6,000-sq.-ft. building. It didn’t have a lot of extra cash during the decade, but the company was able to expand little by little. Over the course of about 10 years, J & D built several additions, eventually occupying 28,800 sq. ft with no more room to grow.
“We knew we needed to expand, but there was no way to do it on our existing property,” Tom said.
The company purchased a 17-acre parcel in a business park and put up a building that more than tripled its floor space. It moved to the new location in November 2000. Within a few months, the long economic expansion that started around 1992 would start to give out. New orders for durable goods peaked in June 2000, then started to fall; manufacturing layoffs, which had been growing slowly, accelerated in early 2001; the Dow Jones Industrial Average lost more than 2,000 points in just a few months in 2001. New orders for durable goods would continue to fall until early 2003.
It sounds like a terrible time to move a company into a new building, but it wasn’t. J & D and many of its customers had a bit of slack time, so J & D used it well.
“During the downturn, we were constantly bringing customers in for tours,” Tom said. “We had a lot of open space, so what we sold them on was our ability to grow. We had many customers who, after the downturn, made us their single supplier of tubular product.
“If we had brought them into our old facility, we would have shown them a cramped, very tight facility with no room to grow, and it was the product of five additions, so the product flow was a mess,” he said.
Tom is certain that if the downturn had come six months earlier, J & D would have delayed the purchase of the new building and missed the opportunity to increase its capacity.
Based on that experience, the company’s management team made a conscious choice to add capacity during the 2009 slowdown.
“We went with the same approach,” Tom said. “We learned a valuable lesson about not stopping during a downturn, and that we can make ourselves a better company. We went to a 6-in.-diameter bender, we added the laser and quite a bit of tooling. In the last 18 months or so we put $1.25 million worth of equipment into our facility and probably $200,000 in tooling. Now that we’re coming out of the downturn, we are solid. We have picked up market share and new customers, and we had our core group of 85 employees intact so we didn’t have to hire and train anyone right away. We were ready to go.”
The last decade was a good one for J & D; the company’s sales volume nearly tripled from 2002 to 2006 alone. Like most manufacturers, J & D has had to make tough choices to handle the increased volume, trying to strike a balance between recruiting new workers and investing in labor-saving equipment. A recent example is an investment in a robotic welding cell (see Figure 1).
“We used to run 13 torches, nine to 10 hours a day, five days a week and some Saturdays. The robotic weld cell dropped that down to seven or eight torches running nine-hour days, five days a week,” Tom said. While most employees’ greatest fear is that a robotic system will take their jobs, it’s not necessarily true.
“We reallocated some of those individuals to other areas on the shop floor, and considering all the overtime they had been working, they were more than happy to do that,” Tom said. “They hadn’t been getting a lot of free time.”
Another investment (see Figure 2 and Figure 3), one in a laser cutting machine, had a big impact on processing time for many of the company’s tubular components.
“We put a laser in last July,” Tom said. “Before that we had an excessive amount of work tied up in a bottleneck in our machine shop. I had never thought a laser was for us, but recently Jon [Tom’s son] and Jeff Schaupp, our operations manager, approached me and said, ‘Maybe we should take a look at that.’ Now instead of bending tube, then sending it to the machine shop, we can laser-cut them, burr-free, in some cases make 30 holes, and fabricate them afterwards. When they come out of the bending area (see Figure 4), they are ready to ship. On some parts, we needed 15 to 18 minutes just to do the machining, but we can do all that on the laser in two minutes.”
The company also invests in new equipment to work its way into untapped markets. In 2008 or so J & D started working toward 1D bending capability.
“There is a pretty good market in the exhaust business for tight bends,” Tom said, “so we made a sizable investment in tooling, both for bending and end forming.” This investment revealed another lesson.
“It’s like the phrase from the movie ‘Field of Dreams’: If you build it, they will come,” Tom said, reciting the movie’s tagline. “As far as tooling, if we buy it and have it, we can market it, and the business comes,” he said. “We were never very successful on trying to bid work based on buying equipment and getting it in-house, because the lead-times for the initial order were too long. Once you have the equipment in-house, it’s a lot easier to market.”
Working in manufacturing isn’t easy. It’s hectic, unpredictable, and competitive. The phone rings, and it could be an anxious customer who needs a one-off part in a hurry for a new product currently in development. Or maybe it’s a frantic OEM customer with a manufacturing line that’s down and needs a part desperately to get the line back up and running. An urgent call from a big customer, one with deep pockets, would be a perfect opportunity to mark up substantially the cost of the part. Tom thinks that’s short-sighted. J & D charges the normal price.
“Some of our competitors charge a fee for ‘developing’ a new part,” Tom said. “We don’t do that—the customer provides a drawing, so the part has already been developed, so all we have to do is bend it. Also, we don’t add a fee for a rush job. We don’t charge a special setup fee for running a single part. Part of our thinking is, Where do you put an end to that?”
J & D doesn’t have to put an end to it because it hasn’t started it.
“I think it keeps the customers coming back,” Tom said. The word has a way of getting around too.
“The best salesmen we have are purchasing agents and engineers who go from one company to another, and when they do, many remember J & D, and they bring our reputation with them.”
In Tom’s view, the reputation is based on the entire staff’s commitment to getting parts out the door in record time.
“If I put in a rush order right now, it would go through the shop like a tornado,” Tom said. “If it hits the floor this morning, I know it will be in the shipping area tomorrow if it’s at all possible. It might even ship this afternoon yet. Everyone here buys into the fact that this is what we need to do. For this reason, we were able to compete years ago, even though we weren’t very big and we weren’t very automated—we are where we are today because we never lost touch with the importance of the customer.”
“I think everyone here feels it’s important,” added Jon. “We post the on-time delivery rate every day. They see it, they talk about it, and they realize that what they do today affects the on-time delivery rate tomorrow.”
The U.S. lost about 30 percent of its manufacturing jobs in the last decade or so, falling from 17 million to less than 12 million. Wisconsin hasn’t fared much better. The state lost about 100,000 manufacturing workers in the 2001-2003 downturn, their numbers dropping from 600,000 to 500,000. It lost another 75,000 in the 2008-2009 time frame. This trend is anything but encouraging, but Tom is doing what he can to help.
“I am very active with Northcentral Technical College, and I am a chairperson on a three-county manufacturing alliance. Our major function is addressing the shortage of skilled labor in the future. However, my biggest concern isn’t people coming into manufacturing without the right skills, but people not coming into manufacturing at all.
“An individual running a CNC bender can run at least twice the product of an old semiautomatic bender, or just a powered bender, so we can meet some of these needs with technology, but some of the basic needs will always exist,” Tom said. “We have kept up with technology and modernized: We have CNC tube benders, we have a laser, we have a robotic weld cell, we have automated our brazing and some of those applications, but some things haven’t changed—we still have a lot of basic manufacturing work. We need individuals to load the machines. We’re always going to need someone to handle the tube, and that’s where I think the shortage is going to fall.”
If high schools aren’t providing the necessary vocational training, Tom isn’t worried. J & D uses both a classroom environment and on-the-job training to teach blueprint reading, trigonometry, and other manufacturing skills.
“If we can find good individuals who want to work in a factory, we can train them on-site—we can train them to be a machine operator, a bend technician, even a tube welder,” Tom said.
J & D has been a family affair all along. In 1971 it involved people from two families, Felch and Gauger. In 1991 Tom Felch and his wife, Janet, bought Gauger’s interest in the company, and eventually bought his father’s portion too. Since that time Tom has been the company president who oversees the operations; Janet is vice president in charge of the administration of the company. Jon is next in line to run the manufacturing side of the business.
Who would replace Janet Felch? It’s probably not a coincidence that Jon’s sister, Lisa, has a business degree with an emphasis on human resources and benefits administration.
Not a bad legacy for a little company that started out with two founders and one overworked, underpaid employee.