Products Finishing Exclusive: The 2007 Large Plating Job Shop Survey

Article From: Products Finishing, ,

Posted on: 12/1/2007

Faced with pressures of increasing globalization and downbeat market conditions, platers are taking a hard look at what they can do to outperform the competition.

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extra capacity

Many respondents reported extra capacity in second and third shifts.

losing business primarily to China and Mexico

Platers report losing business primarily to China and Mexico, though some pointed out that they are exporting products as well.

With $95 million in annual sales, 650 employees and 600,000 sq ft of facility space, Kuntz Electroplating is the largest independent electroplater servicing the global automotive industry.

And just over a year ago, the company was in distress.

The Kitchener, Ontario, Canada-based company, whose clients include premier industry players like Harley Davidson, BMW and Ford, had its bottom line tied directly to the struggling auto industry.

Kuntz’s revenues plunged from $127 million in 2003 to $91 million in 2005. By 2006, the family-owned business’s working capital was so low that they knew they needed to bring in outside help.

When the Kuntz family turned to Chicago-based Keystone Group as a turnaround consultant, the company was desperate to recharge its small margins.

The Perfect Storm

Kuntz’s situation, though far more dramatic than the experiences of most platers, is well known. Increasing global competition, demanding environmental compliance issues, U.S. market conditions and the skyrockting prices of raw materials have combined to create the perfect storm and leave industry players scratching their heads as to what to do next.

“When you talk about the issues that confronted us, they weren’t all that dissimilar to the issues that have confronted any auto parts supplier in North America,” says Terry Reidel, Kuntz’s president and COO.

The biggest factor, Reidel says, has been loss of business to China—an issue familiar to nearly all of our readers. In 2003, when Products Finishing last conducted its Large Plating Job Shop Survey, we said: “The question this year is, ‘How do we keep from losing business to China and other foreign competitors?’” Now, four years later, when only 8% of our respondents said they are not losing business to foreign competition, the question is slightly different: “What is your company doing to compensate for changing business conditions?”

The answers are varied, ranging from cost-cutting techniques to technology investments and lean manufacturing strategies. Fifty-five percent of respondents are focusing on new services, broadening customer offerings to get an edge.

“Companies are finding out that for some products, they’re better off having a local manufacturer, with capable, responsive, short lead times,” says Bill Schwartz, Senior VP of TBM Consulting Group. Schwartz works with manufacturing companies both domestically and internationally to help them improve productivity and increase growth. He says that although certain types of jobs will inevitably go overseas and globalization will steadily increase, the rush to have products manufactured cheaply overseas has most likely seen its peak.

“I think we’re headed toward a state of global equilibrium,” he says. “Costs are rising much more rapidly in India and China than they are elsewhere. To some extent, there is a leveling going on. We will be in a state where we will be manufacturing some products here, and they will stay here, and some things will be manufactured abroad and they will stay there. It will be a more stable state.”

Cautious Optimism

The platers who responded to our survey reflect this tentative optimism. An overwhelming number of respondents (92%) report either an improved or stable business forecast for the coming year, with many citing a concentration on new services and increased customer service.

“On a large scale, what companies have done is morphed their offerings and their services to produce offerings that meet changing market needs,” says Schwartz. “They may be bidding on smaller, higher-value projects, rather than high-volume commodities, where quality and delivery is really critical, and where customization is really important.”

Roy Neuman, office manager of Franklin Park, IL-based Belmont Plating Works, has seen a similar trend in his shop. “The biggest way we know that offshoring and outsourcing are going on is that there are not large jobs any more, or they’re few and far between,” he says.

According to Neuman, his company rarely sees a truckload of parts coming in to be plated in the same manner. Rather, the company focuses its expertise on one-offs and parts that require specialization.

“I think customer service is probably the biggest thing we have,” he says. “If you can get back to a customer right away and you go out of your way to please, then that makes a big difference.”

Schwartz agrees. “The response to the competition to needs to be about agility, flexibility and speed, being able to respond and deliver product quickly,” he says. “You can’t do that from China.”

Turnaround

Kuntz Electroplating worked with Keystone to develop a turnaround plan that first focused on surviving the near-term, followed by making operational and organizational changes to strengthen its core business.

“There is no magic to this,” Reidel says of the company’s seven-month plan. “We had to sit down and take apart all of the input costs that we had for any particular product.” He recounts monitoring all of Kuntz’s polishing, plating and coating lines to increase productivity, and then reducing the company workforce by 15%. “We took out wasteful activities that happen when you don’t examine them really carefully,” he says.

Kuntz searched globally for less expensive component suppliers, and included metal surcharges as a standard part of all customer agreements to compensate for the increasing cost of nickel. Then the company invested heavily in robotics, especially in its polishing department, effectively cutting down on its manual labor costs—all strategic moves that allow Kuntz to be profitable even in the face of potential negative market conditions in the future.

The company reached break-even within four months, three months ahead of the schedule, and by July 2007 Kuntz had paid down long-term debt and obligations by more than $6 million.

“It took every one of our 600 people to watch what they were doing and work harder,” Reidel says. “And that’s how we’re still here today.”

A Closer Look

Certainly, not all of the companies we surveyed are in need of a turnaround. But what we heard time and again is that leaders are looking beyond the basics to stay competitive. They are hiring lean management consultants, ramping up training programs and adding customized services. The companies that will stay on top in the following years are those that continue to evolve, to map out organized goals and, as Reidel says, to be willing to constantly re-evaluate—to watch what they’re doing and work harder.

Companies That Participated in Our 2007 Survey

Able Electropolishing Co. Inc.
Chicago, IL
Employees: 145
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 2
Sq ft of facilities: 40,000
Plating Processes: Electropolishing, Passivation

Ajax Metal Processing
Detroit, MI
Employees: 60
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 160,000
Plating Processes: Zinc, Zinc Iron, Zinc Nickel, Tin Zinc, Chromate Conversion

American Electro Products
Waterbury, CT
Employees: 100+
Number of plants/facilities: 1
Sq ft of facilities: 50,000
Plating Processes: Copper, Gold, Silver, Nickel, Palladium Alloys, Electroless Nickel, Tin, Tin Alloys, Heat Treat

Anodizing Inc.
Ft Scott, KS
Employees: 10
Annual Sales Volume (in millions):
Number of plants/facilities: 1
Sq ft of facilities: 20,000
Organic Finishing: Anodizing, Powder coating, Polish, ETCH

Anoplate Corp.
Syracuse, NY
Employees: 215
Annual Sales Volume (in millions): >15
Number of plants/facilities: 2
Sq ft of facilities: 104,000
Plating Processes: Copper, Gold, Silver, Nickel, Zinc, Chromium
(hexavalent), Electroless Nickel, Electroless Copper, Tin, Tin Alloys, Cadmium, Black Chrome, Black Nickel, EN-PTFE, Anodize, Hardcoat
Organic Finishing: Dry Film Lubricants

Aluminum Coil Anodizing
Streamwood, IL
Employees: 125
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 2
Sq ft of facilities: 150,000
Plating Processes: Aluminum Anodizing by Coil
Organic Finishing: N/A

Belmont Plating Works Inc.
Franklin Park, IL
Employees:
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 1
Sq ft of facilities: 60,000
Plating Processes: Copper, Nickel, Zinc, Chromium (hexavalent), Chromium (trivalent), Electroless Nickel, Tin, Cadmium

BFG Manufacturing Service
Punxsutawney, PA
Employees: 140
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 2
Sq ft of facilities: 160,000
Plating Processes: Zinc, Chromium (hexavalent), Chromium (trivalent), Zinc alloys, Phosphate
Organic Finishing: E-coat

Bowers Manufacturing Co.
Portage, MI
Employees: 340
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 312,000
Plating Processes: Anodizing

Central Kentucky Processing Inc.
Lexington, KY
Employees: 100
Annual Sales Volume (in millions): 1
Number of plants/facilities: 2
Sq ft of facilities: 76K
Plating Processes: Nickel, Zinc, Chromium (trivalent), Electroless Nickel, Deburring

East Side Plating Inc.
Portland, OR
Employees: 163
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 5
Sq ft of facilities: 134,000
Plating Processes: Copper, Gold Nickel, Zinc, Brass, Electroless Nickel, Tin, Tin Alloys, Brass, Cadmium, Laser Part Marking, Polishing, Vibrating
Organic Finishing: Powder Coating

Electro Chemical Finishing
Wyoming, MI
Employees: 250
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 3
Sq ft of facilities: 100,000
Plating Processes: Copper, Nickel, Zinc, Brass, Chromium (hexavalent), Chromium ( trivalent), Electroless Nickel, PVD
Organic Finishing: Organic clear coat

General Metal Finishing Co.
Attleboro, MA
Employees: 95
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 2
Plating Processes: Copper, Gold, Silver, Nickel, Electroless Nickel, Tin, Tin Alloys, CU/SN/ZN, Ebonol-c

Genles Plating
Los Angeles, CA
Employees: 60-120
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 1
Sq ft of facilities: 30,000
Plating Processes: Copper, Nickel, Chromium (hexavalent)

Gold Tech Industries
Tempe, AZ
Employees: 42
Annual Sales Volume (in millions): 2-5
Number of plants/facilities: 4
Sq ft of facilities: 42,000
Plating Processes: Copper, Gold, Silver, Nickel, Chromium (hexavalent), Electroless Nickel, Tin, Tin Alloys, Passivation, Conversion Coating (Chromating)

Hytek Finishes Co.
Kent, WA
Employees: 280
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 100,000
Plating Processes: Copper, Nickel, Zinc, Chromium (hexavalent), Electroless Nickel, Tin, Cadmium
Organic Finishing: Primer, Top, Coat, Dry-lube

Industrial Metal Plating
Reading, PA
Employees: 65
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 1
Plating Processes: Aluminum Type II Anodizing, Gold and Clear Chromate on Aluminum

Jagemann Plating Co.
Manitowoc, WI
Employees: 125
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 1
Sq ft of facilities: 75,000
Plating Processes: Copper, Nickel, Zinc, Chromium (hexavalent)

Omni Metal Finishing Inc.
Fountain Valley, Ca
Employees: 110
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 4
Sq ft of facilities: 50,000
Plating Processes: Copper, Nickel, Zinc, Chromium (trivalent), Electroless Nickel, Tin, Cadmium

Precision Plating Co. Inc.
Chicago, Il
Employees: 140
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 65,000
Plating Processes: Copper, Gold, Silver, Nickel, Palladium Alloys, Electroless Nickel, Tin, Tin Alloys, Tri-metal

Professional Plating Inc.
Brillion, WI
Employees: 140
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 85,000
Plating Processes: Zinc, Chromium (hexavalent), Chromium (trivalent), E-Coating/Powder Coating/Ceramic Coating

Providence Metallizing
Pawtucket, RI
Employees: 160+
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 50,000
Plating Processes: Copper, Gold, Silver, Nickel, Chromium (hexavalent), Tin, Brass,
Organic Finishing: Conventional, Powder coating

Quality Rolling and Deburring Co. Inc.
Thomaston, CT
Employees: 100
Annual Sales Volume (in millions): 5-10
Number of plants/facilities: 1
Sq ft of facilities: 115,000
Plating Processes: Gold, Nickel, Palladium Alloys, Zinc, Chromium (hexavalent), Chromium (trivalent), Tin, Vapor Degreasing, Alkaline Cleaning, Vibratory Finishing, Passivation

Sumco Inc.
Indianapolis, IN
Employees: 175
Annual Sales Volume (in millions):
Number of Plants/facilities: 1
Sq ft of facilities: 130,000
Plating Processes: Copper, Gold, Silver Nickel, Palladium Alloys, Tin, Tin Alloys

Superior Powder Coating Inc.
Elizabeth, NJ
Employees: 150
Annual Sales Volume (in millions): 10-15
Number of plants/facilities: 1
Sq ft of facilities: 120,000
Plating Processes: Powder Coating, Electrocoat

 

 



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