Beyond Tool and Die
To grow its business, BTD Manufacturing Inc. expanded its fabricating horizons
|BTD made its first investments in tube fabricating equipment, including a BLM-Adige 803D tube laser cutting system, in 2003. Now tube fabricating accounts for roughly 15 percent of its total business.|
The story is short, but not so sweet. Paul Gintner, CEO of Detroit Lakes, Minn.-based BTD Manufacturing Inc., tells the story of an upper Midwest machine shop owner who contacted him about possibly purchasing his small operation. Gintner had to tell the gentleman that his company wasn't interested. In all likelihood, the shop was headed for the auction block.
While the machine shop owner admittedly waited for government interference to stem the tide of manufacturing flowing to offshore sources, BTD had been forging ahead. The metal fabricating and forming company invested in new technology and training for its employees. The company now boasts annual revenues of $68 million, employs more than 400 workers, and owns more than 300,000 square feet of manufacturing and warehouse space.
Not so long ago, BTD was a small shop. In 1979 Erling Rasmussen and Paul White Jr. opened Bismarck Tool and Die Co. in Bismarck, N.D., to design and manufacture dies and fixtures. Over the next several years, the company moved to Detroit Lakes to be closer to its eastern North Dakota and Minnesota customer base and added stamping capabilities to meet the metal forming needs of its tool and die customers. By 1994 the company, which had added a turret punch press to supply short-run fabrications to customers, had grown to 80 full-time employees. In 1996 Otter Tail Corp. of Fergus Falls, Minn., purchased the company and added it to its corporate holdings.
But that's just the beginning of the story. There's a reason that the machine shop owner approached BTD as a prospective buyer—because the company is growing. Its corporate owners want BTD to stay on this path, and to do so, the fabricator will have to do many things well—both on the shop floor and in the front office.
It Looks Familiar, But ...
So what makes BTD different from other shops? To look at the operation, nothing really jumps out as extraordinary. If anything, the company looks like most other fabrication shops, just on a larger scale.
That scale is made possible because BTD is publicly owned. Otter Tail also owns a wind tower fabricator, an auto and truck frame-straightening equipment manufacturer, and a plastics processor among its manufacturing holdings. Those companies complement Otter Tail's other interests in the electric, health services, food, and construction markets.
"Strength of ownership has been huge for us," Gintner explained. "We have grown about 600 percent since [Otter Tail] bought us 10 years ago.
|These combine steps for an agricultural equipment manufacturer are an example of a complex assembly that BTD was able to produce more cost-effectively and at a higher quality than the original European source.|
Guided by its OEM customers and inspired with the potential to crack open a whole new market associated with tube fabricating, BTD has spent more than $5 million on tube cutting and bending equipment, including the purchase of a BLM-Adige 803D tube laser cutting system a, a BLM-Adige Dynamic 4 for bending 0.375-inch to 1.6-in. tube, and a Dynamic 5 for 1.5-in. to 3.5-in. tube. This investment helped further its relationship with recreational vehicle manufacturers Polaris Industries Inc. and the company's Osceola, Wis., fabrication operation, were achieving newfound production efficiencies with their own automated laser tube cutting machines.
"Growing in this business is a lot more difficult today," Gintner said. "Imagine you were a tubing guy years ago with a swage machine, a drill, and a simple bender. To jump to the next level, you are talking millions of dollars in equipment purchases. So, cost of entry is huge, and cost of growth is huge."
The Otter Tail investments appear to be paying off. BTD is expanding its tubing business, and its future looks bright. In one instance, BTD engineers were able to redesign a stepladder component for an agricultural vehicle application and win the business from one of the OEM's overseas sources. BTD engineers reworked the design to include parts machined from its machining division located in Pelican Rapids, Minn., and tubing fabricated in Detroit Lakes, followed by welding and assembly.
That approach allows BTD to go after what Gintner called "disruptive" markets, in which new product designs are rolled out every three years instead of every 10. Given the investment in technology and in people, BTD is able to seek out small- to medium-volume jobs that other fabricators, particularly in the U.S., don't or can't take on.
|Modern tube bending equipment takes a lot of the black art out of the fabricating process, but the advancements come with a price. BTD has spent more than $5 million on tube fabricating equipment over the last two years.|
Being on a firm financial foundation has allowed BTD to invest in ample warehousing space for its customers. In January 2003 the company opened a 40,000-sq.-ft. distribution center in Farmington, Minn., to make just-in-time deliveries to its southern Minnesota, Wisconsin, and South Dakota customers.
Whereas others look at inventory as evil, Gintner said BTD recognizes it as an opportunity. The fabrication company sees itself as an extension of its OEM customers, so it is necessary to be a "huge pull organization," he said.
If OEM customers want weekly, daily, or hourly deliveries, BTD will work to get the deliveries there. If OEM customers want to implement a returnable packaging program, the company will work with them to implement it.
This type of service is possible because of the close relationship that BTD enjoys with some of its bigger customers. The customers commit to an order size, and BTD can manufacture the job economically, knowing that the customer will pull from the batch over a specific time period, most likely over one financial quarter. In fact, many of the OEM customers share their forecasts—sometimes 52 weeks out—with BTD.
A Closer Look
So it looks like a fab shop, smells like a fab shop, and sounds like a fab shop. What's the big difference with BTD? A closer look at the inner workings of the operation reveals the differences are the obvious reasons for the company's success.
The Toolroom. BTD employs more than 50 people who work to design, build, try out, and debug tooling for its own short-run jobs and those of outside customers. The recent acquisition of Performance Tool & Die Inc. of Lakeville, Minn., added 23 more employees, who specialize in manufacturing medium-size to large progressive dies for large OEM customers with high-volume stamping needs.
|BTD handles mostly small to medium-sized jobs, but it has one cell dedicated to fabricating disk brakes, which it supplies to all-terrain vehicle manufacturers.|
For a company that once had "tool" and "die" in its name, it should come as no surprise that BTD is staying true to its roots. In a way, it has because the company has always maintained its toolroom, now with dedicated wire EDM and CNC vertical machining centers. However, it's only been recently that the company turned its attention back to the outside world.
"We are re-entering the market because we see a niche out there for a good tool and die shop," Gintner said.
The key to success in this area is the ability to provide a short turnaround time. Lead-times of 16 to 18 weeks aren't going to be competitive enough. BTD aims for a 10- to 12-week lead-time.
"There seems to be a lot of work there if you can compete in that lead-time," he added.
To maintain employment levels in the toolroom, BTD works to educate its own employees. Through a relationship with the local vocational training school, BTD supplies the equipment and rents the room, and the school provides the instructor, who teaches a curriculum approved by BTD. The employee can work a second or third shift, go to class during the day, and apply the skills learned in class in the shop in the same 24-hour period. Upon completion of the studies, the graduate is guaranteed a job in the toolroom.
The Shop Floor. Stamping helped to build the company, and it remains a huge part of BTD's business. The company owns 24 presses ranging in size from an 800-ton to a couple of 45-ton Komatsu presses, 13 coil straighteners, 12 coil feeders, and two coil feeder/ straightener combination machines.
But as the company moved beyond metal forming and pursued more fabricating business, the most recent investments have come on the punching and cutting side of the shop. BTD updated its Mitsubishi 3015 LZP laser cutting system to complement its 3015 LXP and 2512 LXP, also from Mitsubishi, and purchased two Amada 3610 electromechanical turret punch presses.
"It's new technology, new speed," said Gintner. "It's all about cost. It's all about driving out inefficiencies. How can you get more product out?"
|Paul Gintner, BTD's CEO, holds up a tube with holes and copes cut by a laser cutter. The company expects its tube fabricating activities to pick up in the coming years.|
The automated work center gets product out seven days a week. That weeklong approach to fabricating has helped BTD be competitive with its pricing structure.
For example, if a fabricator were to price jobs based on the capital costs, a laser cutting center, which is a large investment, could add significant cost to a job estimate. So BTD spreads the capital cost over a seven-day week instead of a five-day week. Essentially, the lights and building expenses are paid for during regular Monday-through-Friday operations, which leaves Saturday and Sunday as "premium-performance" days. The only real cost is for an employee to operate the work center.
"The other thing that a seven-day workweek does for you is that it creates another shift," Gintner added. "We have a problem in that people here don't like to work second and third shifts.
"The weekend shift gives people flexible schedules. They work three days, and they are off four," he explained. "They look at the weekend schedule and say, "Hey, that's great. That fits my family. I only have to pay for day care on Friday.'"
The weekend and off shifts are perfect cultivating grounds to unearth future company leaders. The employees often make decisions because they are the only ones around. What happens if a customer has a rush job? What do you do with an early delivery of material? Who covers the job responsibilities for someone who called in sick? Answers must be given to these and countless other unexpected job-related situations, providing opportunity for staff to showcase their abilities.
Gintner said the company provides leadership training to employees who aspire to move up in the organization, and the experience gained during these off shifts is hard to duplicate in a classroom.
|Welding is another area in which BTD has expanded. The company estimates that welding accounts for approximately 16 percent of its business.|
Peppered on the weekend and the weekday shifts are members of BTD's "elite" team, employees who have been cross-trained on several pieces of equipment. This team of six to eight people welds and operates tube benders, laser cutters, press brakes, and turret punch presses. Wherever a bottleneck occurs in the operation, a member of the elite team assists in that area until the job is complete.
"We are trying to get this place to the point where we can have the best of the best here all the time," he said.
That same approach is being applied to the stamping operations in Plant 1. Employees are cross-trained to operate the presses and coil handling equipment on that side of the street.
The Front Office. Changes and updates aren't limited to equipment and people on the plant floor. The front office has proven to be one of the most logical places to incorporate more intelligent changes.
BTD has committed to electronic data interchange with its customers whereby orders are placed and products are shipped, most often without a phone call ever being made. This translates into savings for both the fabricator and the customer.
"That's what our customers love—low cost to do business with low levels of personnel involved in the process," Gintner said.
The company's enterprise resource planning (ERP) software is the technical backbone of the system. Forecasts and orders are dumped into the systems, and the ERP system generates the jobs for the shop floor. Once a job is complete, the ERP system generates an electronic notice informing the customer that the delivery is on its way.
Earlier this year BTD installed Axapta software to help monitor financial data and assist management in making better business decisions. During the implementation phase, the company was on the phone more than usual with its customers, but the work will be well worth it when the real-time data that's gathered is put to good use.
"We have to know today, "Did we make money?'" Gintner said. "We don't have hidden cost. Every part gets priced for what it is. So, at the end of the year, we analyze all of our parts. We know how much it costs to make every component—what it costs to weld it, what it costs to paint it. We keep track of it all. So we don't quote a job once and then call it good.
|BTD purchased its first press in 1984, and stamping activities helped it to grow its business over the next 15 years. Today the company has 24 presses ranging in size from this 800-ton Komatsu with air cushions and a 120-in. by 60-in. bed down to a 45-ton Komatsu capable of 200 strokes per minute.|
"We need to do this because our customers are always asking us for cost improvements," he continued. "You have to capture that real-time savings so that you can get that savings out to the customer."
The Warehouse. As stated previously, BTD isn't afraid to act as the warehouse for a customer. The company has dedicated more than 1.2 million cubic feet of storage space to the strategy.
Look closely at some of the pallets used in the warehouse, however, and you will see aluminum pallets mixed in with the more common wooden pallets. RHINO designs and markets these aluminum pallets. RHINO also happens to be a division of BTD.
As more fabricators consider the idea of launching some sort of product line independent of its bread-and-butter job shop business, BTD unexpectedly walked into its next opportunity.
BTD needed a quality pallet to ship products to clients, so it designed an aluminum pallet. The pallets were designed to be durable, lightweight, and fire- and bug-resistant. Clients liked them so much that they requested a stock for their own businesses, and RHINO Aluminum Pallets was formed.
Beyond Today's Developments
Pushed by its owners' desire for growth, BTD will continue to take a critical look at its shop floor, front office, and distribution operations. Such an approach promises to make change a permanent part of the landscape in Detroit Lakes and , perhaps, elsewhere.
In early 2005 Gintner joined other fabricators on a Fabricators & Manufacturers Association-sponsored tour of Chinese stamping and fabricating shops. He wanted to get a firsthand look at the manufacturing force that seems to be the topic of conversation in many U.S. manufacturing facilities.
"I didn't come back fearing them as much as I might have," Gintner said, "but I did recognize that there might be an opportunity for partnership—to tap that labor force. They seem to have a great work ethic."
The big concern is understanding the true cost of doing business overseas. Sure, the manufacturing cost is as cheap as anywhere on the earth, but how does the fabricator guarantee on-time delivery and quality if it is not involved directly in the everyday manufacturing activities in China?
Gintner said there is as much risk as reward when it comes to overseas sourcing of metal fabrications. For some of BTD's customers, the risk outweighed the reward, and they are bringing manufacturing back to the U.S.
If the road doesn't lead overseas, BTD's future may await somewhere in the Sun Belt. The company hasn't undertaken any formal discussions about pursuing such a growth strategy, but Gintner said it is a possibility.
This is an ongoing story, and BTD's owners and employees hope the ending isn't written any time soon.
BTD Manufacturing Inc., 1111 13th Ave. S.E., Detroit Lakes, MN 56501, 218-847-4446, fax 218-847-4448, www.btdmfg.com
Amada America Inc., 7025 Firestone Blvd., Buena Park, CA 90621, 714-739-2111, 877-262-3287, www.amada.com
Axapta, Microsoft Business Solutions, 1 Lone Tree Road, Fargo, ND 58104-3911, 701-281-6500, 888-477-7989, www.microsoft.com/businesssolutions/request_more_info.mspx
BLM Group USA Corp., 46950 Magellan Drive, Wixom, MI 48393, 248-560-0080, fax 248-560-0083, www.blmgroup.com
Komatsu America Industries LLC, 199 E. Thorndale Ave., Wood Dale, IL 60191, 630-860-3000, fax 630-860-5680, info@ kaic.com, www.komatsupress.com
Mitsubishi Laser, MC Machinery Systems Inc., 1500 Michael Drive, Wood Dale, IL 60191, 630-860-4210, fax 630-860-4718, www.mitsubishi-world.com
Otter Tail Corp., P.O. Box 496, 215 S. Cascade St., Fergus Falls, MN 56538-0496, 866-410-8780, www.ottertail.com
The FABRICATOR is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971.