Area companies thrive through innovation

January 22nd, 2012

News Coverage:

Area companies thrive through innovation

By Matt Getts mattg@kpcnews.net

Sunday, January 22, 2012, 1:00am

AVILLA — Do one thing, do it very well.

Or not.

Many businesses in northeastern Indiana have tackled tough economic times by broadening their horizons through manufacturing new products or offering additional services to new markets — in effect doing many things well.

For some, the expansion of offerings is the result of long-term planning in research. For others, the new product or services have come about rather quickly.

One common thread, according to economic development professionals, is foresight.

“The companies that I see that are successful, they have a strategic plan, they have a vision,” said Ken McCrory, executive director of the DeKalb County Economic Development Corp. “It’s not happenstance. It’s all well thought-out.”

The ability to break from the status quo is critical, according to David Koenig, executive director of the Steuben County Economic Development Corp.

“The only constant is change,” Koenig said. “It is imperative to any company’s long-term growth to be looking at the horizon. If they aren’t, somebody else is. That’s why we are fortunate in this area to have a strong history and culture of innovation.”

Four area businesses provide case studies behind the different paths and visions that lead to innovation and vision in northeastern Indiana — Miller Poultry in Orland, Team Quality Services in Auburn and Indiana Phoenix and Avilla Motor Works, both in Avilla.

Indiana Phoenix

When Joe Elkins was brought in as a consultant approximately five years ago, Indiana Phoenix was doing what it could to compete with the big boys in manufacturing front-discharge cement mixers.

At the time, the company also was remanufacturing some mixers when a customer called for it. Many of the most expensive components still had life in them — including the engine — when a mixer started to go bad after seven or eight years.

Indiana Phoenix would harvest all the usable parts off an old truck, refurbish them to make them like new, then install a new frame, new wiring, a new cab and a new mixer.

Elkins said that was what the company should concentrate on — remanufactured trucks, known in the industry as gliders. Instead of $200,000 for a new unit, gliders cost roughly half as much.

Elkins made such a good pitch to the two owners, they asked him to come on as general manager.

“Once they realized the advantages, they said, ‘Let’s go for it,’” Elkins said. “I had two guys who had the patience to let us reinvent ourselves.”

Elkins said the idea had grown in his own mind after talking with employees.

“The guys on the shop floor helped shape the direction of the company,” Elkins said. “There’s some wonderfully, wonderfully skilled people here.”

When the economy slipped into a recession and companies started cutting back on capital expenditures, Indiana Phoenix was there with a low-cost alternative.

“It looks like a brand-new machine and costs half as much,” Elkins said about the company’s product. “Being able to save $80,000 to $100,000 a truck became very important.”

Creating a niche in an industry otherwise dominated by goliaths has paid dividends. A year and a half ago, Indiana Phoenix had 36 employees. Today, the company employs 73 workers.

The company reinvented itself yet again in the fall of 2011, when it decided to make large vacuum-trailer trucks that are used to haul water in oil-drilling operations. A demand already existed in the industry, Elkins said, and it will help Phoenix keep its work force active during the down times in the cement-mixer business.

“Our product is seasonal,” Elkins said. “People buy mixer trucks the first part of the year. When our mixer business contracts, we are able to expand our vacuum-trailer business.”

The idea didn’t really crystallize until August, and the company already is manufacturing vacuum truck components in its Avilla plant.

Implementing new business plans quickly is a big plus, Elkins said.

“In this day and age, you have to be able to spin on a dime,” he said.

An expansion at its Avilla plant will be finished soon, and the company will see its production capacity increase to the point that Indiana Phoenix also will begin to produce new front-discharge mixers for Navistar Inc. under its Continental brand.

Indiana Phoenix also has contracted out its services to manufacture a hot-patch drum for the road-sealing industry.

It all plays into the company’s strategy.

“This is the culmination of a lot of hard work, strategic planning to put together a successful business model,” Elkins said. “To take something and reinvent it into a successful business — that’s fun.”

Avilla Motor Works

Avilla Motor works also has evolved with the times, and has grown from its roots as a one-man shop to a three-employee operation with four part-time drivers.

Jeff Watson began his company in June 1997.

“We just did auto repairing then,” Watson said.

In January 2005, Watson purchased a tow truck.

“My initial plans were just to do towing for Avilla Motor Works,” Watson said. “I wanted to offer the convenience to our customers.”

Soon, Watson’s business was on the rotation for impounding vehicles for area police departments. He added a 12-ton wrecker, then a 20-ton wrecker to handle diesel engines.

In June 2011, Watson was contacted by an Indianapolis-based company that rents large industrial generators to companies that use them at job sites, hospitals, festivals, construction sites and factories. The company was looking for a quality business that could haul its generators.

Watson said he was skeptical at first, because the Indianapolis firm was so large compared to his own repair/towing business. When he got a second call, however, he looked at the economic landscape and decided to take a chance.

“As fuel prices continued to rise, I could see the tow trucks slowing down,” Watson said.

He purchased a semi to haul the generators, making a capital expenditure when many businesses were hunkering down in the recession.

“I was just looking for things outside the box to help the business expand,” Watson said. “We didn’t know what to expect.”

The hauling business did not start until the year was half over and still constituted 17 percent of Avilla Motor Works’ gross sales.

Towing makes up 22 percent of sales, and the auto repair business is still king at 61 percent.

But the extra income has come in handy, both in keeping workers busy and in providing fringe benefits.

“Without that 17 percent last year, our employees wouldn’t have had health insurance,” Watson said. The business may have helped workers keep paid vacations and paid holidays, as well.

Along with the capital investment, Watson has seen his insurance rates jump $4,000 in one year because he’s had to expand his coverage. He has also seen an increase in paperwork due to regulations involved in the trucking industry.

The capital investment and extra insurance have paid off, but Watson admitted it wasn’t an easy decision.

“It’s nerve-wracking,” he said. “Every day I get up, my goal is to make Avilla Motor Works successful. Without taking chances in business, you never grow.”

Watson plans on purchasing an additional semi this year to help in the hauling business.

Watson’s decision to expand his company’s services hasn’t just ensured paydays for his workers. It means he’ll be buying more supplies from the local hardware store, more tires from Tireville, and he’s contracted with Compliance Advantage LLC in Kendallville to keep up to date on regulations.

“When a small business grows, other small businesses grow,” Watson said. “It helps them, too. When we do well, everybody gets to make a living.”

Miller Poultry

A large producer of raw chicken for the grocery industry, Miller Poultry in Orland has ventured into the pre-cooked grocery market with three varieties of chicken sausage.

“It’s a totally different market than what we’re in now,” said Sally Durbin, the company’s administrative coordinator. “”It’s been a learning process.”

Miller Poultry began a slow introduction of its low-fat, gluten-free sausage in last fall. It plans a big push this spring in time for the traditionally strong sausage-selling months of May, June and July.

Durbin said the idea of creating the company’s pre-cooked offering has been approximately three years in the making.

Miller Poultry experimented with several companies before finally deciding on a company that was able to produce the best-tasting product. The work is done off-site, but allows the company to enter an entirely different market.

Of course that means creating some new contacts, because the people who deal with raw meats at grocery stores aren’t always the ones who deal with pre-cooked meats.

“It’s a whole different section of the grocery store,” Durbin said.

Putting together a new product line wasn’t easy. A lot of research went into the decision before the company went forward.

“They’re tough choices to make,” Durbin said, but she added Miller Poultry is always trying to find ways to expand its business.

Team Quality Services

A good opportunity is a good opportunity, no matter the overall economic climate, according to Chris Straw, president and chief executive officer at Quality Team Services in Auburn.

Straw’s company had been providing quality control services for industrial and automotive companies. His January 2011 decision to start his own laboratory instead of contracting for lab services has been a boon, allowing Quality Team Services to expand into the medical and aerospace industries.

In-house, his company now can provide testing measurements as precise as 0.00005 of an inch, meeting stringent aerospace and medical-field requirements, widening the company’s client base.

Timing worked to the company’s advantage, Straw said. Walt Maurer had been working with the lab Quality Team Services had contracted. Maurer’s lab was moving to Texas, and he called Straw and urged him to bring the lab in-house.

“The timing was right,” Straw said. If he didn’t snatch Mauer up, he was going to go elsewhere. Bringing the lab would allow the company to grow even in tough economic times. It would give Quality Team Services a leg up on the competition when economic fortunes changed.

“You’re better positioned than anybody else,” Straw said. “It’s got to be calculated, but you’ve got to be able to take that risk.”

Whether new opportunities are self-generated, such as at Miller Poultry and Indiana Phoenix, or come at the request of an outside company such as the experience at Avilla Motor Works, all three businesses were able to take advantage and had the vision to take chances in a down economic environment.

“Flexibility is a key,” McCrory said. “You need to be ready.”

Koenig said the economic vitality of the region depends on companies’ ability to think outside the box.

“Without it — innovation — individual companies and our collective fate are sunk!” Koenig said in an email message.

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