One fabricator’s blueprint for growing its business

Only 12 years ago The FABRICATOR covered Detroit Lakes, Minn.-based BTD Manufacturing’s growing business. The fabricating company, which had its start as a tool and die shop back in 1979, was investing in tube cutting and bending equipment back then to serve the recreational and utility vehicle markets. It was a large fabricator that was making plans to grow even larger.

In 2017 BTD reached $200 million in annual revenue for the first time. That’s more than the $191 million in 2016 revenue that it reported as part of this magazine’s FAB 40 list last year and a big leap from the $150 million in 2011 that it reported as part of the 2012 FAB 40 list, the first year the company participated in the survey of large fabricating companies in the U.S. The company has been on an aggressive growth streak in recent years that’s not really been duplicated by competitors.

The most recent expansion target was the purchase of Impulse Manufacturing in Dawsonville, Ga. The 2016 acquisition got BTD closer to some of its Midwest customers that had set up shop in the Southeast and to potential customers the company had yet to meet. Before that in 2008, BTD acquired Miller Welding and Iron Works in Washington, Ill., a purchase that netted them a facility that could tackle heavy-duty fabrications, an area in which BTD didn’t have a lot of experience. From 2015 to 2017, it consolidated its manufacturing operations into an expanded facility (almost 400,000 sq. ft.) in Lakeville, Minn., and moved a warehousing operation that once was located in Otsego, Minn., into the Lakeville facility and its Detroit Lakes facilities, which recently expanded to add 90,000 sq. ft. of warehousing space.

What do all of these moves earn BTD as a metal fabricator? Management believes that it helps them to become an integral link in the supply chain with their customers.

“We are delivering right to the assembly lines of our customers in many cases,” said Paul Gintner, BTD’s president. “There is almost no difference than if they were making those parts. They aren’t sitting on tons of inventory. We are shipping the parts there for tomorrow, and they are using it up. We ship it there the next day, and they use it up again.

“We are almost seamless to their operations,” he said. “We are as integral to their own lines running as their own internal operations, which support those lines.”

That’s actually a model (see Figure 1) that BTD proved out with a major customer in the recreational vehicle space almost 20 years ago. It’s worked well, and now the company hopes to maximize efficiencies with its upper Midwest facilities and replicate the model in the Southeast. The Illinois facility is focused on larger projects, but it also acts as a hub for the 1,300-mile metal parts supply chain that stretches from northern Minnesota to northern Georgia. BTD controls the whole route because it owns the trucks. It’s about total control, from raw material delivery and part fabrication to finishing, assembly, and delivery.

The company has been growing in an aggressive manner, and its parent company, Otter Tail Corp., a publicly held company that also owns Otter Tail Power Co. and some other manufacturing interests, expects more. Management believes that it can achieve $250 million in annual revenues by 2022.

The steps BTD takes to maintain its culture even in the face of rapid growth is probably of more interest to metal fabricators of all sizes. That’s not something easily done at any level. BTD’s success to this point is why it was named the winner of The FABRICATOR’s 2018 Industry Award.

“In the eyes of the customer, we are trying to act as one BTD,” Gintner added, “whether you walk into a plant in Detroit Lakes or Dawsonville. We’re not going to be customer-specific at any site. When the customer comes in, we want the experience to be the same no matter which facility it is.”

This is how they are working to accomplish that goal.

High Ceilings, High Hopes

Gintner describes the front end and the back end of BTD’s business as the real differentiators when compared to its metal fabricating competitors. Ironically, to understand how BTD started this aggressive growth, you have to focus on the back end of the business first.

As mentioned previously, BTD discovered in the early 2000s that managing stocking programs for large OEMs was something that really captured the interest of customers and potential customers. The pitch was pretty simple: Why should you be carrying inventory when we can make deliveries of metal components and assemblies on a frequent or even daily basis?

What started with one company soon grew to include other companies. BTD management believes such a model can prove to be fuel for expansion in the Southeast, where OEMs haven’t been offered anything like it.

Many metal fabricators might view such an arrangement as business as usual. Stock management programs are not that unusual. After all, a job shop often is filled with “hot” work that has to be turned around for delivery to the customer the next day.

BTD’s approach is different in that it stocks days’ worth of inventory in many instances, and often these are large parts and kits. The company recognizes that it doesn’t have the production capacity to be dedicated to these certain OEMs on a daily basis, so it looks at warehousing as a means to ensure a consistent supply of parts to customers while also maintaining consistent production flow in its facilities.

“If you can put a dollar in inventory or a dollar in capital, it’s still a dollar,” Gintner said. “But inventory I can flex. Once I buy a laser tube cutting machine, it’s there whether it runs every day or just 30 days a year.”

Robert Bradford, BTD’s chief operating officer, described it like this: “Your inventory is capacity.

“All of our machines have to service a lot of different customers,” Bradford said. “You are trying to create a buffer for that.”

Metal fabricators of all sizes can relate even if they don’t buy into the concept. How many times has a shop been afraid to move forward with hiring and purchasing new equipment because of uncertainties about a particular job that may be robust in the short term, but not guaranteed to continue past a year?

“If it’s short-term work, let’s spend the dollar in inventory,” Gintner said. “If it’s long term, let’s start looking at capital investments.”

It helps that the parent company, Otter Tail, buys into the business approach. Having racks upon racks of finished goods sitting on shelves can make accountants break out in hives. The on-time delivery, however, helps to soothe those worries. Over all its locations as of mid-December, BTD was averaging on-time deliveries 98.5 percent of the time.

A tour of the recently expanded Lakeville facility is an eye-popping testament to what this type of commitment means. The building, a former distribution center for a major lawn and garden equipment manufacturer, actually still acts as a major trucking hub in many ways. The new expansion added 24 doors to the existing 12 doors where trucks can pick up jobs headed for customers or other BTD facilities and drop off goods for further processing or empty returnable containers (a prime selling point for many OEM customers interested in maintaining green supply chains) (see Figure 2).

On the other side of the doors, row upon row of shelving rises more than 20 feet in the air, making the most of the 34-ft.-high ceilings. Material handling vehicles fit snugly into the tight rows, allowing workers to pull parts and create kits for outstanding orders, which are then situated in staging areas in front of one of the many doors.

Gintner said that 75 percent of the entire inventory will turn in 90 days. A large majority of that turns even more quickly, with most being in 30 days or less.

Plans call for something like this for the Dawsonville operation in the next year.

“Can you replicate the model down there that you have in Minnesota? Can you get the customer to pay for that thinking?” Gintner asked. “I think so.”

Putting a Face on the Front End

BTD is a large metal fabricator. There’s no denying that. As a result, it can be hard for it to compete with the smaller mom-and-pop shop, where the person maintaining a relationship with an OEM customer is also the one who happens to have his or her name on the sign out front. That’s why BTD is working to establish closer relationships with its customers.

“Intimacy and relationships still mean something in this industry. It’s not all transactional,” Gintner said. “We believe our best customers were relationship-built.”

Because BTD started out as a tool and die company, it’s always been able to speak authoritatively with customers about program costs and delivery times, particularly when they involved new-product launches. It was going to build the tooling, so it had no need to rely on outside input.

The fabricator has tried to replicate that approach with its research and development efforts in recent years, especially as it has expanded beyond its tool-building and stamping roots. BTD now has an R&D group of almost 20 employees, most of whom are located in Detroit Lakes, dedicated to prototype development and design-for-manufacturability issues. A good example of the work that this group can provide is a Lakeville cell where robots use self-piercing rivets to join metal components to create a lawn mower deck, which at one time had to be welded together (see Figure 3). BTD engineers pitched the customer on this type of assembly approach, and after seeing that the joints could meet real-world performance expectations and result in potential production cost savings, the customer approved the new design.

Also on the front end, BTD wants to ensure that it returns quotes quickly. That can be a challenge as the company quotes hundreds of jobs monthly. For example, in one month alone toward the end of 2017, BTD quoted $50 million worth of work, which is about 500 to 600 parts per week.

The next generation of its homegrown manufacturing execution system (MES), built onto its Microsoft Dynamics AX enterprise resource planning (ERP) software, will move beyond shop floor control functions to include job quoting. The new job quote functionality is meant to “lean out” the quoting effort, according to Gintner. Instead of having the estimator create the quote outside of the ERP system and then having someone else manually type the same information into the ERP software, the estimator will now be able to create the quote and the information will be shared with the ERP software automatically. Additionally, the quotes that are created will have a bill of materials that is ready to be shared with the shop floor. This new MES module is expected to go live in early 2018.

“We need to make our funnel bigger,” Gintner said. “Instead of 6,000 new parts being entered into the system this year, we want to enter 8,000 new parts this year. We have to scale the model not for speed, but for capacity.”

Same Metrics, Same Systems

How important is it for BTD to operate the same in all of its locations? The tale of early days of the Dawsonville facility provides the answer to that question.

After buying Impulse Manufacturing in the summer of 2016, BTD allowed its new acquisition to continue to run its own ERP software. That’s not how it would have liked to begin the takeover process, but it was believed it might help to contribute to a smooth transition process.

While it may have been less stress for those used to the traditional operations in the Georgia facility, BTD management wasn’t quite as relaxed. Because the facility wasn’t relying on the sales, inventory, operations, and planning tools being made available to other BTD locations, it was not performing according to corporate expectations. On-time deliveries, for example, were a ways off from the 98 percent rate the Minnesota and Illinois facilities maintained.

In the middle of 2017, BTD fully implemented the corporate IT system into Dawsonville. “When we did that, everything changed,” Bradford said.

With simple access to the corporate forecasts, the Georgia facility had a better idea of what should be produced for the day. Instead of just running the jobs that showed up the day before, the shop floor could focus on what was needed at that moment. In a matter of months, the on-time delivery rate started to climb toward the 90 percent range.

“We can now pick up on the BTD execution playbook and say, ‘Here’s how you play the game,’” Gintner said. “We’ve been building on that for the past three years.”

All locations in the BTD family are judged by key metrics associated with safety, quality, delivery, and productivity. An annual strategic planning meeting helps to derive strategic objectives for all of BTD Manufacturing. Those objectives are fleshed out into plant goals, which are then documented on bulletin boards (see Figure 4) that are located in every manufacturing department in every BTD facility. (The Managing for Daily Improvement boards, or MDI boards, keep track of the status of different continuous improvement projects, departmental news, and general company information.)

The company relies on a lean tool called A3 problem solving. While the name is derived from the standard paper size on which meeting notes might be made, the actual process is not unlike any other systematic problem-solving technique that other manufacturers, including Toyota, might use. It basically involves getting a team of employees together to investigate a production challenge, discover what is causing the problems, develop processes or identify tools to improve the situation, determine how the resolution can be incorporated into daily activities, and conduct a follow-up investigation at a later time.

Conversations occur on a regular basis to ensure the work is being done to achieve local goals, which inevitably boost efforts to reach companywide targets. Shift meetings put everyone on the same page for what’s expected over the next several hours. Daily operational meetings occur to go over issues from the previous day and to plan for the day to come. Weekly continuous improvement meetings are held to keep tabs on projects going on in each facility. Monthly business alignment meetings give facility leaders a chance to review all aspects of the individual manufacturing locations. Quarterly meetings of facility leaders, which are held at each of the manufacturing locations on a rotating basis, allow for the exchange of best practices and general observations about the customer base and marketplace.

Most of the conversations occur in each facility’s Compass Room. (The name is derived from the fact that this meeting place helps a group maintain its “true north,” a fixed, unchanging point that helps people to stay focused on the real goal in the face of confusion or exhaustion.) In these rooms, a visitor might see plans and updates for a companywide project, such as reflowing production, or updates on smaller group projects. For now, a facility such as Dawsonville doesn’t have a dedicated room for these types of continuous improvement activities, instead relying on a section of the break room, but future plans call for creating a room dedicated to these planning purposes.

“This regular opportunity or cadence in communication becomes a standard way for how we communicate. It’s key to how you drive improvement through the enterprise,” Bradford said.

If standard communication channels make sense, standard work procedures and tools make even more sense. That’s why it’s so important for all locations to have access to the same customer management, business, and operational tools. The evolution of the company’s MES is a good example of just what that can mean to the organization.

In 2017 the Lakeville facility had continuous improvement activities targeting scrap reduction. One of the focus areas was press brakes (see Figure 5). Using the MES, engineers were able to create standard operating procedures (SOPs) for each of the brakes, starting with the basic setup. This led to the creation of training documents for new press brake operators.

With specific setup instructions and step-by-step visuals of the bending sequence for each job available on monitors near the brakes, in addition to implementation of the new SOPs, operators achieved a substantial improvement in scrap reduction, saving more than $22,000.

Building up the Talent Base

“We are trying to make these jobs simpler and simpler,” Gintner said. “You have to scale your volume of people up if you want to grow.”

That’s the commonality that affects almost all metal fabricators. It’s easy to boost productivity if you can just buy a machine tool with automation, but how do you find the right person to operate that $1 million piece of equipment? Once you find a talented employee, how do you keep them, and how do you find more of that type of individual? Can you create them?

BTD knows that if it is to grow, it needs people to take on new and different responsibilities. That’s why the company is pitching careers, and not just jobs, to potential employees.

“That’s what attracted me here: the growth mindset,” said Chad Berg, director of operations for the Lakeville facility. “Most of our competitors are small and not growth-oriented. Growth is heard in every conversation held around here.”

Berg actually started out as an inspector in the quality department. Today he’s running a plant with more than 300 employees. Gintner said he’s a 30-year BTD veteran and has had about every job you can have in the company.

“We all have a journey. We just didn’t get plunked into this spot,” Gintner said. “We want to share those stories. We want people to think, ‘How did that occur?’”

For starters, all shop floor employees have the opportunity to progress in their current positions. All jobs are structured to have three levels of progression. For instance, an employee in the stamping department can progress through three operator levels, a setup operator, and then a stamping press lead. Designated trainers are assigned to work with different functional areas to facilitate this employee growth. According to Doug Small, BTD’s vice president of finance and human resources, the trainers’ primary job is to help employees advance their knowledge, skills, and abilities.

“We’re enabling our leaders to act as real leaders,” Small said.

To support the growth of more leaders in the organization, BTD has launched a Leadership Essentials program that focuses on developing enterprise, facility, department, and team leaders. People that have been identified as demonstrating traits that make them candidates to rise in the organization are presented with developmental plans and supported with training events, online learning resources, and mentoring. The goal, again, is to create a common language of leadership that is familiar to all BTD employees, no matter which facility they work in.

“We’re not just focusing on top leadership of the company, we’re bringing this to the whole company,” Small said. “We want all leaders to improve.”

Gintner said that this type of development program addresses the shortcomings of just throwing someone into a leadership job because they are good at something.

“They get thrown into it, and they realize that they have to do a lot more things. They also realize that they haven’t been taught to do some of those things, such as now supervising former peers,” Gintner said. “That’s a difficult transition, and we want to coach them so they can handle that and other situations correctly.”

Becoming a Full-line Supplier

Over the years BTD learned that the more it could do for a customer, the more likely it could grow that business with the customer. The reason from the customer’s perspective was simple enough: It has to cut only one invoice, and it doesn’t have to handle multiple vendors. As a result, BTD has progressively seen part quotes evolve into quotes for whole programs.

It’s one of the main reasons that BTD is now in the finishing business (see Figure 6). It just happened to do it in a big way and in a short amount of time. It added a powder coating line with several special features to the newly expanded Lakeville facility in the summer of 2015, and it acquired another new powder coating line—which was only 6 months old—with Autophoretic® coating (A-coat) capabilities with the Impulse Manufacturing purchase. BTD went from limited coating experience to operating two sophisticated lines within a calendar year.

“We just had to learn how to paint,” Berg said.

On the Lakeville line, as the engineers and line operators gained more experience, they introduced changes that make the line more productive. The conveyor was lowered about a foot where parts are loaded or unloaded to make it less of an ergonomic challenge for employees who aren’t 6-ft. 4-in. tall. Part hangars were redesigned to increase the density of parts, so that more parts per rack could be powder coated.

For jumping into powder coating for the first time, the company didn’t settle for a simple line in its Lakeville facility. The line has an automated, seven-stage pretreatment system; a Wheelabrator blasting machine that sits off the main conveyor line; a Nordson powder primer booth, where a primer layer can be added as part of a two-coat powder application; an oven that cures the primer to a gel consistency prior to receiving the topcoat; a Nordson automated powder booth with 14 automatic guns (seven per side), two manual spray guns for touchup, and a multihopper color-changing system; and a curing oven. The line can accommodate parts 15 ft. long, 6 ft. tall, and 4 ft. wide.

Berg said continuous improvement efforts have helped to increase the productivity of the system. With the introduction of SOPs and more training, operators are now more efficient in blowing out the booth; cleaning out the “kitchen,” where the powder hoppers are changed out; and purging the lines between color changeovers. Such activities have resulted in a 25 percent reduction in color changeover time for the automatic booth and a 68 percent reduction in the primer/manual booth.

The Dawsonville line is a much more vital part of the manufacturing operation, according to Bradford, because almost 80 percent of the parts fabricated in the facility are also finished there. Lakeville is hoping to attain that same level of value-added activity, but it’s nowhere near there yet.

The reason customers in the Southeast want that BTD finish on the parts coming out of Dawsonville is that the two-coat finish is designed to prohibit rust. In the A-coat line, parts are deposited into a pool of paint where chemical reactions cause the coating to adhere to the substrate, and a powder topcoat provides a thorough coating combination, even on tubes.

“There aren’t a lot of systems like we have,” Bradford said. “You might see it at an OEM facility, but you won’t see many job shops with those types of systems.

In addition to the A-coat system, the Dawsonville line has an automated, 11-stage pretreatment system; a dryoff oven; a Nordson automated powder booth with eight automatic guns (four per side), two manual spray guns for touchup, and a multihopper color-changing system; and a curing oven. The line is designed to handle parts 9 ft. long, 5 ft. tall, and 42 in. wide.

Gintner said that finishing services are opening the doors to new opportunities for the metal fabricator. A focus on offering more assembly capabilities will do the same (see Figure 7). Currently the Dawsonville facility is building display cabinets that are stamped, assembled, powder-coated, and delivered to a power tool manufacturer, which then only has to hang its tools in the cabinet at the store. Gintner said he believes that more customers will look for that type of complete service and that BTD will be positioned to take advantage of those job programs.

Changes Continue

Gintner laughed when asked how people react to the changes occurring at BTD.

“If they don’t like change, they don’t tend to stick around,” he said.

The pace of change isn’t likely to slow down anytime soon. The Georgia facility probably will look dramatically different in the coming years as BTD plans to add more warehousing and manufacturing capabilities, such as stamping and robotic welding. Lakeville and Detroit Lakes will continue to work on efficiencies as the former settles into its role as the laser cutting (see Figure 8), bending, and tube processing center of excellence and the latter focuses on stamping, although it still does some fabricating at the site. The Washington, Ill., facility will look to grow its heavy-duty fabrication business with an eye on the construction market rebounding in a big way in the near future.

The fabricator also is doubling down on its efforts to reach out to the next generation of metal fabricators. It has obvious relationships with community colleges, such as Dakota County Technical College, Rosemount, Minn., and Lanier Technical College, Oakwood, Ga., to recruit recent vocational talent, but it also is exploring more connections with high schools and even middle schools. Gintner said middle schools hold a lot of promise because he believes those students are still open to new ideas.

“If you get the middle school kids interested in these types of careers, you have a better chance to get them through the system and working toward engineering or manufacturing jobs,” Gintner said.

It’s not just about prepping these students for careers at BTD, Gintner added. It’s good for manufacturing in general in these local communities.

That broad scope and long-term vision have helped BTD grow from its humble origins as a tool and die shop into a major metal fabricator with a multistate footprint. As Daniel Burnham, an architect and city planner who left his mark on Chicago, once said: “Make no little plans; they have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work.” For this fabricator, it’s better to be big and growing, for its employees and for its customers.

BTD Manufacturing, www.btdmfg.com