Crankshaft maker spins a success story
Friends told Gerold Pankl that Southern California was just about the last place to build custom-made parts for racing engines. Manufacturing was in decline. Employment was dropping. Engineers were leaving, and America didn’t take the time to nurture new craftsmen.
Pankl said his company, SP Crankshaft, has proved them wrong.
In his 6-year-old shop in Irvine, Pankl and 30 employees build crankshafts for an exclusive clientele that includes luxury auto brands, world-class racing teams and the defense industry. With exotic and eccentric curves rising from the crankshafts’ axis, they resemble modern art rather than the tame versions found in a typical car.
“A good design also looks good,” Pankl said. “Every piece should look like art. Then it’s right.”
But Pankl’s business is more than an isolated success story. It’s emblematic of a new type of small and lean manufacturer in California — far removed from the large workforces that once served the defense, aerospace and automotive industries.
Companies like SP Crankshaft also help explain why manufacturing employment, still an important segment of the state’s workforce, hasn’t rebounded, experts say.
In October, for example, 1.24 million people were working in manufacturing, according to state labor statistics. That was a decline of 7,100 positions from October 2009.
Employers in the sector are very wary of taking on new hires, said John Husing, an economist who recently interviewed the chief executives of more than 80 Inland Empire manufacturers. He heard a consistent refrain.
“Because these companies have had to become much more efficient, they are producing the same amounts with fewer employees,” Husing said. “The economy is going to have to recover at a much faster pace to convince them that it is time to hire more people.”
Even companies that are doing measurably better these days are reluctant to take on sizable numbers of new employees. And, in Pankl’s case, training new workers takes so long and costs so much that a big bump in hiring isn’t likely.
“It takes a year or two to find the right person for this kind of work,” Pankl said. “Then it takes another one to three years to train them on how to use the tools and machines. It’s very costly.”
Specialty manufacturing has grown significantly in California over the last 30 years, said Jock O’Connell, principal consultant at Clark Street Group, an international economics consulting firm in Sacramento.
“This can involve very high-tech components, which require extensive training or very high skill levels,” O’Connell said. “It’s not like you can just hire someone off the street to help out in production for a few weeks.
“If this kind of company was to see a major uptick in orders, they would probably try to squeeze out more production without adding substantially to their labor force.”
Crankshafts epitomize old-school industrial processes; the crankshaft, pistons and connecting rods are the three most basic parts of internal combustion engines. But some companies offer a high-tech version that begins as a solid cylinder of steel and ends up as a first-class component that can be exported for great profit.
To make one with the precision and high tolerances required by race cars, Pankl said, “we use very complex designs and very complicated heat treatments. They will spend three to four weeks in a furnace. They can’t be made in a typical assembly line.”
The crankshafts cost $6,000 to $26,000.
Pankl’s family history contributed to his zeal for making some of the best automotive parts. But he never had the desire to follow his grandfather, Karl, or his father, also Gerold, into racing, especially after he watched his father get badly injured during a race.
He remembers being with his grandfather as a child and feeling that he was “always surrounded by cars. Our family also had one of the biggest driving schools in Austria,” said Pankl, who was born in Bruck an der Mur, Austria, and received a degree in mechanical engineering.
Pankl founded his first company, Pankl Precision Technics, in 1985. It was later renamed Pankl Racing Systems and became one of the world’s largest suppliers of racing components and helicopter drivetrains. Pankl also holds several patents for engine and transmission components for racing.
In all, Pankl has founded 13 companies in Europe, China and the U.S. Most, like Pankl Aerospace Systems in Cerritos, are run under the umbrella of Pankl Racing Systems. Pankl runs SP Crankshaft as a separate company, one he hopes will net $6 million this year.
During a recent tour of his Irvine factory, Pankl said each of the company’s crankshafts requires up to 200 steps before it is finished, a process that can take up to six months. Custom-made grinding machines that cost $1.5 million each slowly work the metal. Small, delicate hand tools resembling a dentist’s instrument are used to cut paths and holes for oil.
One machine can be used to examine a surface that feels smooth to reveal what looks like the rough edges of a sharp saw blade. Another is so sensitive that speaking too loudly near it affects its performance.
“Nothing is more precise than a cut of a jewel,” said Pankl, who then stopped and considered what he just said. Perhaps he went too far with his analogy? Just the opposite.
“No,” he said, “this is more precise than jewelry.”
