Morton Industries: A new start after 70 years in tube

Morton personnel review a tube’s design before production.

If you climb aboard a mining truck, the handrail that helps steady you likely came from Morton Industries in Morton, Ill., a top tube fabricator for some well-known mining, construction, and off-highway equipment brands—and not just handrails but also tubular structures and fluid conveyance systems outside and inside the equipment.

Considering how those markets have performed in recent years, it’s no surprise that the people at Morton have had to hold on tightly to those handrails, both literally and metaphorically. It’s been quite a ride. The company was sold, entered bankruptcy, was sold again, endured a plant fire, and then was sold yet again.

The decisions to sell the company made perfect sense at the time, considering the market realities the fabricator faced. Morton’s story shows just how challenging this market is, and yet also how resilient a fabricator can be facing those challenges. Today the company is back under local ownership. It has steadied itself, upped its quality and delivery game, and has prepared for a future of growth and long-term ownership stability.

Finding Its Niche

In the early 2000s the company, then known as Morton Welding, had been family-owned since 1946. In 2004 the owners decided to sell the family business to a private equity group. The organization eventually became a part of BHM Technologies, a group that also included two automotive suppliers, Brown Corp. and Heckethorn Manufacturing. It appeared at the time that the merger of the three companies would help all three better serve their customers—but the automotive market, of course, soon presented challenges.

The automotive downturn forced BHM into bankruptcy, even though Morton itself, the smallest of the three BHM subsidiaries, continued generating profits. In 2009 a group of investors, including the company’s original owners, local to Morton, Ill., bought the tube fabricator and renamed it Morton Industries.

“[BHM] spun us off to generate more cash, and we came out of it on our own pretty strong,” said Kevin Baughman, Morton’s director of sales and marketing.

With construction, mining, and commodity-related markets looking up (in stark contrast to the automotive market), Morton seemed to be in a good position. In 2010 it purchased Bradley Services Inc. (BSI), a structural tube fabricator of (among other things) handrails, including those used in the growing off-road equipment arena.

At this point, customers were asking about global expansion. Would Morton open a facility in Asia or in India? To streamline their supply chain, global OEMs wanted their suppliers to be global too.

Morton’s leaders knew they couldn’t expand globally on their own, so they considered the acquisition route and turned to Nelson Global Products, a company that focused on on-highway exhaust systems. NGP purchased Morton Industries in 2011, joining nearby Peoria Tube Forming Corp., which NGP purchased in 2010.

“[Nelson] acquired us because they wanted to have Caterpillar in their book of business,” Baughman said. “And they had facilities in China and India.”

An operator initiates the machine cycle at one of Morton’s laser tube cutting systems.

The company appeared to be again positioned to serve its customers and expand market share. However, not long after came another setback: The old BSI facility caught fire. But the company rebuilt and expanded into a 154,000-sq.-ft. building with new equipment. “The Morton team was able to rise from the ashes as a stronger company, with the support of Nelson Global Products and its customers,” Baughman said. “With tremendous support from employees, the Morton team did not miss any customer shipments.”

At this point Morton was set to become a major tube fabricator serving global customers—when the commodity bubble burst and demand for construction equipment took a nosedive.

“When Caterpillar sneezed, we caught a cold,” Baughman recalled.

Ultimately, the benefits of being part of an organization with locations around the world didn’t pay off. More than that, NGP continued its heavy focus on the on-highway commercial vehicle market; supplying off-highway customers just wasn’t its niche.

“Thankfully, a group [that consisted of] prior company owners recognized the value of Morton Industries,” Baughman said, adding that they stepped up and in early 2016 brought Morton, along with Peoria Tube, back again under local ownership.

This is how Morton Industries came to become what it is today, an organization comprising three legacy fabrication companies: Morton Industries, BSI, and Peoria Tube Forming Corp., all located in two manufacturing facilities in Morton, Ill.

It’s a far smaller organization, employing about 300, down from the 1,000-plus it employed in 2012. But over the past year company leaders have focused inward and reorganized the business to meet or exceed the expectations of current customers and, ultimately, grow the customer base.

A Team Approach

When you talk with an account manager at Morton, chances are that person once operated a machine or wielded a welding gun. They have experience not only in tube, but also in sheet metal fabrication, a capability Morton ramped up in 2008 to reduce the need for outsourcing sheet metal work for its tubular assemblies.

“We’ve had a lot of success giving people from the shop floor opportunities to grow,” Baughman said. “I actually started out as a welder. I then got into continuous improvement, worked in quality and engineering, and then moved into the sales role. Another one of my counterparts used to be a press brake operator on the shop floor. Another person on our team used to be a welder; another was a quality inspector; a few others were machine operators.

“We have the manufacturing shop floor knowledge,” Baughman continued. “Customers come to us for that. We all can give them technical feedback about how parts are actually produced, how they can reduce scrap, and how [Morton] can produce parts quicker and at a lower cost.”

Quality personnel pull up a 3-D model for tube inspection.

That said, Baughman conceded that Morton hasn’t always been the easiest company for customers to work with, mainly because of the way the fabricator was organized. Sales, engineering, purchasing, and other functions all operated in their own silos.

“There was just a lot of bureaucracy and red tape,” he said.

Starting last year, company leaders aimed to fix this problem. Instead of locking each department away in its own silo, Morton now has cross-functional teams dedicated to specific customers, and each team has the resources to answer any question the customer might have. The team’s knowledge spans the entire process chain, from sales, estimating, engineering, and purchasing to quality and shipping.

Perhaps most significant, one team now dedicates itself to business development, which works with various new customers. As Baughman explained, this not only fosters client relationships and gives people a single point of contact, it also presents opportunities for advancement. The more the customer base grows, the more advancement opportunities there are for team members.

The idea goes as follows: A new customer initially works with the business development team. Eventually, as the relationship matures and customers send Morton more work, one person from the business development team breaks off to lead a new cross-functional team dedicated to that growing customer (or group of customers).

A Plan for Every Part

The company has two TRUMPF tube lasers, one Mazak tube laser, as well as a flat sheet laser and a 6-axis 3-D laser, both from TRUMPF. In the coming years it also will be looking to invest in more cutting, bending, welding, cleaning, and painting technologies.

But before purchasing new equipment, managers knew they needed to perfect work flow. To that end, Morton upgraded its enterprise resource planning (ERP) system, to Infor SyteLine, so it could adapt to the company’s push toward having “a plan for every part.” It’s a strategy that hasn’t always been implemented in the right way, especially considering the fabricator’s high product mix. The average lot size is fewer than 30 pieces.

Baughman described the problem as a race in which everyone needs to cross the finish line at the same time. Previously every runner (or part for an assembly) took off after the starting gun (order release) at the same time. Of course, some runners were faster than others; that is, some parts of an assembly took longer to produce. “If I run a 10-minute mile and you run a 4-minute mile, and someone else runs a 20-minute mile, how can you expect all of us to cross the finish line at the same time?”

Today parts are released at different times based on capacity levels and processing times of different equipment and processes. Lot sizes are also carefully controlled for optimal part flow.

As Baughman explained, “We’re batching some parts, like sheet metal flanges or brackets. Tubes may be produced in smaller lots; and final assembly is pulled through in just-in-time fashion, concurrent with customer demand. We set a plan for every part based on the customer’s build strategy and on what the customer gives us for a demand signal. Ultimately, we make sure our strategy aligns with customer needs.”

A workpiece is cut on the company’s 3-D cutting laser.

New Focus

Morton came back under local ownership last year—its 70th anniversary. Baughman called 2016 “a year of stabilization … We had customers who were getting ready to exit. We visited them, told them of our new ownership, our plans for turning things around, and our commitment to future opportunities. The reaction from our customers has been tremendous.”

The new approach has paid off. Morton expects to end 2017 with $45 million in revenue, but Baughman said even that is a conservative estimate. Long term, Morton has plans for strategic expansion in other areas of the country, including the Southeast and Southwest.

Still, no matter its future, Baughman said that its customer focus will remain intact—with a plan for every part.

Photos courtesy of Morton Industries, 309-263-2590, www.mortonind.com.