Our Sites

Product development drives growth at Illinois metal fabricator

Product development helps cart manufacturer overcome the odds

Figure 1
J-tec fabricates mother-daughter tugger cart systems for a variety of OEMs. Shown here in use at a J-tec customer, the mother carts stay with the tugger train, while workers remove and return the daughter carts as needed.

In 2008 Jon Peterson and Joe Knepp felt on top of the world. They had launched J-tec Industries Inc. in 2005 as a designer of returnable containers for agricultural equipment OEMs. Business was booming, so much so that they had just completed a 7,000-square-foot expansion of their plant in East Peoria, Ill., virtually doubling its size.

Then when the Great Recession hit, over a matter of weeks business effectively stopped. “In 2008 and 2009, the downturn hit us,” Peterson said. “We basically had to lay everybody off, including ourselves. The phone stopped ringing.”

J-tec was a small business, so one would think that it would have fallen by the wayside as just another casualty of the bad economy. But that didn’t happen. For one thing, the company wasn’t suffocating with bad financials and excessive debt. It didn’t overleverage even during the leveraging heydays prior to the recession.

Moreover, Peterson and Knepp soon got to work on another idea. As Peterson recalled, “When the phone stopped ringing, we decided to design another product. Joe came to me and told me he wanted to design a new light tower, which could be used by school districts and city government.”

That idea never caught on, but another idea did: a mother-daughter cart system designed to help OEMs and other manufacturers reduce their fork truck usage (see Figure 1). Pushing forward with good ideas, along with implementing them at the right time, changed the course of the company’s history.

Just over a decade old, J-tec now employs more than 100 people in 185,000 square feet of manufacturing space, generating about $15 million in annual sales. That’s not bad for a company that seven years ago had to lay off its entire workforce.

The Right Business Partner

Before launching J-tec, Peterson had spent years in the returnable-packaging business, selling custom-made containers, many stackable as well as collapsible, to manufacturers in the construction and agriculture equipment sectors. He was a partner in a company near Moline, Ill., yet he grew frustrated with the current state of affairs. Customer service and communication problems abounded.

As Peterson recalled, “I wasn’t happy with the way things were going, so I said, ‘I can do this better myself.’”

It’s a common feeling among entrepreneurs, but many launch their own firms only to find themselves falling victim to unexpected problems. For J-tec those problems weren’t related to bad products or customer service; it was instead about the bad economy. The recession could have killed the firm if it weren’t for a chance meeting four years earlier.

In 2005, just before launching his new firm, Peterson went shopping for a fork truck at a nearby equipment refurbishment company (a tad ironic, considering the “go fork-free” slogan for J-tec’s current product lines). A friend of Peterson’s, the owner of that refurbishing company, knew a young entrepreneur in the area, Joe Knepp, who had just launched a machine shop called Knepp Industries. “He said, ‘You’ve got to meet this guy,’” Peterson recalled.

Figure 2
Vice President Joe Knepp (left) and President Jon Peterson founded J-tec Industries in 2005.

Peterson’s new company would need someone with an engineering background who was savvy with ProENGINEER (now PTC Creo Parametric) modeling software (see Figure 2).

“So we started talking about joining forces,” Peterson said, “and within a month we worked up a plan and merged our companies. Joe came onboard and became part of J-tec. As business partners, we started our journey.”

The two purchased a 7,500-sq.-ft. abandoned steel fabrication and manufacturing facility in East Peoria. The place was in a sorry state, with deteriorating walls and a dirt parking lot pitted with holes. It was the kind of place news crews film to illustrate the perceived struggles of U.S. manufacturing.

“The property was so rundown that it had become a local eyesore,” said Jon McKee, director, marketing and communications. “With the sold sign posted, neighbors in the nearby residential areas showed up in numbers at a city planning meeting to protest the sale and voice concerns about operations at the site resuming.”

The sale went through anyway. And by 2006 the building had transformed, bucking that “struggling U.S. manufacturing” stereotype. The parking lot was paved, the area outside landscaped—all telltale signs of a thriving business.

Custom Returnables

At first Knepp’s custom machining work kept the shop busy, but within a year the returnable-packaging business became all-consuming.

At the time J-tec did have some machining and assembly capabilities, but most of that was used for prototype work. They sourced much of the cutting, bending, and welding work to local fab shops.

Then in early 2008 the company added a third building that doubled the available space. The expansion increased its prototyping and assembly capabilities, preparing for what the partners thought would be even more growth ahead.

Rebirth

Of course, the growth didn’t happen. After the phone stopped ringing in late 2008 and early 2009, the two entrepreneurs were sitting in their newly renovated offices. They had just let everyone go, and they stopped taking a salary.

“We were really at the bottom of the barrel,” Knepp recalled. “We were looking at each other and wondering what was going to happen next.”

Figure 3
J-tec still fabricates various custom carts, but it also now builds and stocks several standard cart models.

At the time they wanted to get about as far away from the industrial market as they could get, and so they focused on organizations that were still spending money: local governments and schools. Knepp came to Peterson with a design idea: a portable light tower that could be used for school and community events. The two worked on a design and built a few prototypes.

But before that product could really get off the ground, the phone began ringing again. By the end of 2009 and the beginning of 2010, large agricultural equipment players were getting busy again, and they needed new returnable racks for their new part and subassembly designs.

At this point the two decided to diversify J-tec’s focus and perform not just prototyping and assembly in-house, but all fabrication, including plasma cutting, bending, and welding. Still, the company didn’t transform into a job shop that happened to also produce packaging products. Instead, it kept its focus on developing custom returnable racks for its customers.

As Knepp recalled, “It was a slow process. As business started coming back, it seemed natural for us to do our own production.”

The Start of the Cart Business

As is so common in manufacturing, one thing led to another. In 2010 one customer, which worked with J-tec on returnable racks, asked if the company could design a specialized cart system that could promote single-piece flow in a value stream and minimize fork truck mileage.

J-tec designers and engineers then produced its first mother-daughter cart system. It entailed three different daughter carts that fit inside two different mother carts. A tugger pulled a train of these carts and stopped at an assembly station, where workers would remove the daughter carts, perform the operation, and then return the daughter carts to the mother carts. All pieces needed for an assembly moved as a “single piece” in a value stream.

Once the carts arrived at final assembly, all pieces would arrive together, and assemblers would have everything they needed, spending no time searching (a classic lean waste) for one or two pieces that went missing. Soon word-of-mouth sparked others to call about a similar system, only a bit different to meet their needs.

And so a new product line was born. After designing a few more custom cart systems, Knepp and his engineering team completely redesigned the product to make it more flexible and sturdier, with the mother and daughter carts connecting with a new kind of mating device. And the company gave it a brand name: the CarryMore® Tugger Cart System.

The next year operations managers at another major company bought into the concept, but they wanted the cart system to be slightly smaller so that it would take up a smaller footprint. Then other customers came calling with similar requests. They liked the basic concept, but they needed the system customized to meet the needs of their application.

For several years the company grew on this largely custom business. And in 2013 it purchased a second 60,000-sq.-ft. manufacturing site about four miles away from its original location.

Figure 4
After launching standard product lines two years ago, the company began dedicating certain welding cells to specific product families.

From Custom to Standard

At this point the product line began to evolve. Until about two years ago J-tec operated largely as a custom manufacturing operation with the traditional departmental arrangement: a machine shop with milling and turning; cutting department with a plasma and waterjet; a bending department with three press brakes; a welding department; and an assembly area.

But as the company designed more cart systems, patterns emerged. However disparate, most cart applications seemed to require certain components. From those the company began offering standard cart product lines, which are built to stock (see Figure 3).

The company’s manufacturing methods have had to change with this. For instance, certain welding cells and assembly areas are dedicated to specific product lines (see Figure 4). It also upgraded its weld fixturing to better accommodate specific product families.

J-tec engineers still design plenty of custom carts. After all, every assembly operation is different, so the market for custom carts has big potential. Still, the standard products cover many of the most popular, low-hanging-fruit material handling applications.

Outside the standard product line, custom carts often don’t handle straightforward applications. And so the carts are highly engineered. As Knepp explained, this has meant that his team of six engineers are delving into systems that incorporate more design and prototyping work. Because of this, these custom products require longer turnaround times, sometimes between six and eight weeks.

Managing Growth

Just four years ago custom returnable racks represented the largest part of J-tec’s business. It was its bread-and-butter work. Now the racks represent just 20 percent of annual sales. Carts make up the lion’s share of sales; about half are custom systems and about half standard products.

Now the company is managing a highly complex production situation. In one sense it remains a build-to-order company, processing custom returnable racks as well as custom carts. In another sense, with its four standard cart product lines, it has become a build-to-stock manufacturer.

On top of all this, J-tec’s workforce has doubled in just two years. New workers need to be trained. New managers—including a new production manager, scheduler, and materials manager—need to be brought up to speed. The company is implementing a new enterprise resource planning (ERP) system to gain a better handle on its inventory. It’s also implementing new sales forecasting to determine how much to build to stock and when. All the while the sales growth continues. In early 2015 the company purchased yet another location, an 80,000-sq.-ft. facility just across the street from the location purchased in 2013.

Just as it’s ironic that the company’s founders met through a fork truck (and other equipment) refurbishment company, it’s also ironic that the company does not widely use its tugger cart products in its own production—though it does regularly use its manual pushcarts where it makes sense to do so (see Figure 5 and 6).

As Knepp explained, “We do use our own products, but since we just went through this latest massive expansion, we haven’t had a chance to settle in.”

Until recently, for instance, the company just hasn’t had room for a tugger to pull a train of carts.

Figure 5
A few of the company’s own carts are used in the laser cutting department. The company purchased its first laser cutting machine in 2015.

Moreover, until a few years ago, production was largely custom with highly unpredictable demand, effectively the same as a job shop. Sources added that once they do settle in, J-tec’s own hybrid production, part custom and part product line, will likely prove to be a good testing ground for new products.

And new products is where Peterson sees future growth: lift tables, racking systems, really anything that could help make OEMs and other customers more efficient. “We have a lot of people with a lot of ideas,” he said, “and a lot of salespeople in the field introducing us to new problems that need to be solved.”

That harks back to how J-tec and a lot of other fab shops across this country got their start: with a bad problem and a good idea, both lucky enough to come together at the right time and place.

Photos courtesy of J-tec, 201 Carver Lane, East Peoria, IL 61611, 309-698-9301, www.jtecindus tries.com.

Figure 6
One of the company’s carts delivers material to a welding cell.

About the Author
The Fabricator

Tim Heston

Senior Editor

2135 Point Blvd

Elgin, IL 60123

815-381-1314

Tim Heston, The Fabricator's senior editor, has covered the metal fabrication industry since 1998, starting his career at the American Welding Society's Welding Journal. Since then he has covered the full range of metal fabrication processes, from stamping, bending, and cutting to grinding and polishing. He joined The Fabricator's staff in October 2007.