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Micro-manufacturers are replacing old giants
Like monuments to a distant age, the foundries and smoke stacks of the Lehigh Valley remain, towering over rolling hills and spacious farmlands.
While some continue as job sites for the Valley's work force, others await the wrecking ball, long since abandoned.
The business models they represent are equally archaic, swept aside by the new dynamic of manufacturing: In order to survive, manufacturing companies must operate with leaner staffs and strive to become leaders in specialized niche markets.
"They either have to modify and meet the needs of the marketplace or they're roadkill," said Bob Wendt, regional coordinator for the Lehigh Valley Economic Development Corporation.
The process began in the early 1990s, Wendt said, with smaller, "more nimble" micro-manufacturers replacing dinosaurs like Bethlehem Steel as the new face of the Lehigh Valley. Companies like Techno-Bloc, which produces decorative paving stones at its Pen Argyl plant shrink-wrapped on pallets ready for distribution; Longevity Coatings, whose thermal-spray process done at its tiny East Allen Township plant secured it a manufacturing contract with NASA; and EcoTech Marine, a manufacturer of cutting-edge aquarium pumps owned by recent Lehigh University graduates who employ fewer than 20 people. Everything is done in-house, and they've recently adapted their patented product for use in pedicure spas.
"It's not the Bethlehem Steel business model anymore with thousands of workers," Wendt said.
One by one, the mega-employers of years past have gone, with smaller manufacturers taking their place. HindlePower, located in Easton, is a prime example of a lean manufacturer that has succeeded by offering specialized products backed by solid customer service.
A supplier of single-cell chargers, power consoles and distribution stations for the utility and power generation industries, it has avoided scaling back in recent months, HindlePower President Bill Hindle said. He feels his company of 65 employees is somewhat immune to a worsening economy due to the nature of the customers it serves -- primarily electric utilities like First Energy, American Electric Power and Met-Ed. As long as consumers need to throw a light switch or plug in the coffee pot, there'll be work to be done at the 40,000-square-foot plant.
While business in 2008 was bad for many companies, HindlePower ramped-up production, bringing in temporary staff at year's end.
The company values customer service, with staff often finding problems and fixing them before the customer has had a chance to call. Last year, product warranties were extended from one to five years.
Hindle takes a unique tack in maintaining an effective work force. He's eliminated time clocks, preferring the honor system to keep employees productive. He's pumped money into the work space, adding windows to the production area for natural light and providing spacious break areas. Even the rest rooms reflect his philosophy -- with marble tiles and framed art more likely to be found in an upscale restaurant than a manufacturing plant.
"Most industry doesn't tap the potential of the American worker -- instead of allowing people to prosper and grow, they squeeze them into cubicles and fixed units," he said.
Rather than scaling back, Hindle hired two engineers last year to keep his company on the leading edge of product development.
Hindle's greatest success might come from his newest offering, designed to sell in a downsized economy.
The EPIC series -- an acronym for Engineered Power and Integrated Center -- is an "all in one" power switching station that combines components which customers previously had to cobble together.
Seven feet tall and 30 inches deep, the modular cabinet is stackable with room for add-ons. And as power companies trim engineering staff, Hindle calls the EPIC "recession-proof."
To him, it's the proverbial sauce without the multiple cooks to spoil it.
Before, customers needed to integrate a charger, battery and disconnect switches with a distribution panel, requiring multiple assemblers. Now, all the work is done beforehand.
"They would have had to acquire those and put them together," Hindle said.
He points to another new product -- a remote communications chip used to interface with a power source up to 100 miles away -- as another example of progressive thinking. The company sank $250,000 into developing it, and Hindle says he's yet to recover the cost. But he's confident that he will.
"Sometimes you have to get rid of the conventional investment return philosophy and focus on what doors it will open," he said.
Puritan Products has grown steadily since forming in 1987, outgrowing a 2,500-square-foot facility in Easton and another of 12,000 square feet in Allentown. In 1998, the company established its current 50,000-square-foot Bethlehem home.
A provider of specialty chemicals for the biotech industry, Puritan is constantly evolving to meet the stringent, ever-changing guidelines of the Food and Drug Administration.
"The industry cannot afford to work with companies whose operations are not in control," Puritan President Louis Di Renzo said.
And, like HindlePower, Puritan is protected from economic downturn.
"It's a recession-proof industry -- there will always be sick people who need medicine," he said.
With 34 employees, it has embraced "lean and agile" principles, Di Renzo says, closely managing inventory to optimize available space and reduce material brought in at a given time. The result: enhanced safety and efficiency, and better cash flow.
"We didn't have to tap into our credit line as much," Di Renzo said.
Like other area companies, Puritan has utilized LVEDC, Manufacturers Resource Center and Ben Franklin Technology Partners for grant opportunities and technical assistance.
Other companies are branching-out to hedge against further declines in the economy.
G.J. Oliver, Phillipsburg, N.J., and Effort Foundry, located in Bath, are looking to the nuclear power industry to broaden their market profiles.
Both employ about 70 workers and haven't scaled back production due to the worsening economy. Instead, they've upgraded infrastructure, with G.J. Oliver adding a fabrication assembly plant and high-tonnage crane capacity within the last year to its 800,000-square-foot complex, and Effort Foundry building a 2,500-square-foot finishing room for grinding metal castings and 500 square feet of additional shipping space. That takes the company beyond 40,000 square feet, mostly for production.
G.J. Oliver makes steel fabricated vessels, pumps and compressors for the oil and utility industries and Effort Foundry manufactures propellers, pumps and valves used in generators and compressors, firing casts in 60 different alloys.
"Anywhere from a pound to under a ton," Effort Foundry Chief Executive Officer Charlie Hamburg said.
G.J. Oliver is preparing to make steel compressors for producing nuclear power and hiring a quality control manager experienced in the industry.
"To cover ourselves if oil and gas slow up," G.J. Oliver President John Oliver said.
Production actually picked up in 2008 because, as the price of gasoline dropped, oil refineries began upgrading critical infrastructure before the pendulum swings back.
Effort Foundry is now certified as a vendor to power suppliers, and the company is looking to take advantage of recent interest in upgrading and rebuilding nuclear power facilities, foundry President Bill Easterly said.
And like G.J. Oliver, the company made infrastructure upgrades in recent months. The foundry reaped a robust cost savings over the last two years by mechanically and thermally reclaiming sand it would have previously hauled off to landfills. This was made possible by replacing outdated sand mixers and blasting equipment, Easterly said.