Manufacturer reinvents itself to clean up in its industry
11.29.09 | By DONNELLE ELLER • Des Moines Register • email@example.com
Scranton, Ia. - Scranton Manufacturing Co. knows about surviving tough times, leaders of the family-owned company say.
The 1980s farm crisis pushed Chief Executive John McLaughlin to reconsider making cattle gates, horse feeders and other ag-related products.
"It killed us," said Mike McLaughlin, John's son and company president. "We were struggling to find things to do."
By 1984, John McLaughlin - whose son by the same name is a meteorologist with KCCI-TV (Channel 8) in Des Moines - decided to buy New Way Refuse Trucks, a Des Moines garbage truck manufacturer, and move the operations to Scranton in Greene County.
"You could say the farm crisis was good for us," the company founder said. "It got us into a product that's stable, and we've been able to grow."
A willingness to reinvent the company has led the father-and-son team to add an eclectic mix of products - mobile veterinarian clinics, a trash compactor line, embroidery and screen printing company, and 427 roadster kit cars. The men believe the products, built primarily on the company's expertise in iron and fiberglass, will help the business emerge from the current recession poised for growth.
"You don't sleep some nights wondering if you made the right decisions," said Mike McLaughlin, who asked company executives to take a 10 percent pay cut and 200-some workers to cut back to four-day weeks to help weather the recession.
"Through our acquisitions and lean manufacturing, we're setting ourselves up for tremendous growth. We just have to stay strong and profitable."
Helping the company through the downturn are joint ventures established more than a decade ago with two Chinese companies to build New Way garbage trucks for the Asian market. Scranton, the first U.S. refuse truck manufacturer in China, supplied 280 trucks to Beijing for the 2008 Summer Olympics.
Although hard to see initially, the company's diverse products give it supply and work synergies, leaders said.
For example, McLaughlin International - the maker of leather and vinyl holsters for law enforcement - will build the seats for the Hurricane Motorsports car kits. Also, Scranton will use scrap metal from building New Way garbage trucks in the roadster frames.
Another common theme among the companies: Several were distressed when Scranton bought them.
For example, Bowie Manufacturing, the maker of veterinary mobile clinics in Lake City, had been closed three months when Scranton purchased it. The company rehired 11 workers in 2007 and has built employment to nearly 40.
The McLaughlins said they believed the companies could perform well with Scranton's lean manufacturing approach, aggressive marketing and worker initiative.
Mike McLaughlin, who joined the company in 1991, said Scranton adopted lean philosophies to help it find ways to accommodate rapid growth a few years ago. Manufacturers use lean to speed production, reduce waste and cut costs, and better use existing space.
But, he said, the lean approach also helps Scranton better survive the recession, which has flattened the company's sales.
Walking around the Scranton plant's 160,000 square feet, the company president pointed to use of lean methods.
A large frame used in production can rotate a 17,000-pound-plus garbage body so welders easily can work on them, he said.
It all unites - reducing worker strain and injury, cutting multiple patterns from one iron piece, placing tight controls on supply inventories.
"It just makes the plant a better place to work," Mike McLaughlin said.
Lean manufacturing also helps keep workers passionate about making the operations and the products better, the McLaughlins said.
That's crucial, because father and son believe Scranton's workers - with operations also in Lake City and Atlantic - make all the difference with clients.
"They'll talk with a worker for 20 minutes about production," said Mike McLaughlin. "Clients can see workers love their job and take pride in their work."
The company also is able to react quickly to client requests for changes, something they said is more difficult for large garbage truck competitors, such as Heil and McNeilus.
"That gives us an edge," John McLaughlin said. "We can kick an idea around, and in a couple of days implement it."
Plenty of research
Scranton is willing to take risks. It has invested a year of research and development and $1 million to produce a line of automated garbage trucks. The McLaughlins said early interest for the equipment - prototypes are being tested now - is strong.
"We think we have a real winner," said Mike McLaughlin, who estimated the new products will add $10 million to 15 million in the next three years to the company's sales. Production is being scaled up, with plans to launch in the first quarter of 2010.
The company plans to kick off sales in early 2010 of its Hurricane Motorsports kit cars, a niche product with a loyal following.
Car enthusiasts can spend $18,500 to $31,000 on the kit car, depending on how much work they want. Altogether, a car can cost as much as $90,000 after installing an engine, transmission and other equipment.
"It's an expensive hobby," John McLaughlin said.
Looking ahead, the McLaughlins said they plan to keep looking for new ideas and products.
They're weighing joint partnerships in India and possibly Egypt. They expect expanded production of their automated garbage trucks.
The chief executive said his son told him when he started at the company that he wanted to produce more than 1,000 garbage trucks a year. At the time, the company was making 40 annually.
"I thought he was crazy, but he did it," John McLaughlin said. "There's a spirit and drive to grow the company."
More information about Scranton Manufacturing, New Way, and New Way China can be found online at www.scrantonmfg.com and www.newwaytrucks.com