By: Bill Bregar
August 28, 2012
LAKE MILLS, WIS. (Aug. 28, 11:25 p.m. ET) — The Midwest is littered with huge, empty industrial buildings. Abandoned employee parking lots form a landscape that is barren, but for the harvest of weeds.
In Lake Mills, there’s a twist. Seljan Co. Inc., a rotational molder and metal fabricator with about 110 employees, is moving into a 500,000-square-foot behemoth where 1,100 workers once built refrigeration equipment for the frozen-food industry. The single-story complex has a dozen overhead cranes, a 32-foot-high ceiling with a powerful rooftop ventilation fan, and a large, brightly lighted area for finishing and assembly.
“It’s pretty awesome — every rotomolder’s dream,” said R. Dru Laws, who joined Seljan at the end of last year as vice president of the plastics division.
It’s so big, President Scott Seljan bought golf carts to get around. One large room houses two 100-horsepower air compressors. “We turned them on Friday and they started right up,” he said.
Scott Seljan and Laws explained company strategy during an Aug. 6 visit. Timing and economics led the family-owned company to purchase the iconic building known as “Big Blue” in Lake Mills, a town of about 5,000 people located between Milwaukee and Madison.
Now crews are repainting the blue outside walls, blacktopping the driveway and getting rid of the parking lot weeds. Scott Seljan said the previous owners took good care of the sprawling former home of SPX/ APC-Crepaco. Employment had dwindled down, until the doors finally closed four years ago.
The reopening is major news in Lake Mills. The Daily Jefferson County Union newspaper in Fort Atkinson, Wis., recently ran an editorial headlined “Thanks, Seljan!” that praised the firm for “giving the venerable manufacturing facility a new lease on life.”
Seljan will use 150,000 square feet of space for its current production, and reserve another 150,000 for future growth. Scott Seljan said the company plans to lease out another 150,000 square feet. Office space takes up the remaining 50,000 square feet — the office area is bigger than the current 30,000-square-foot headquarters factory, built by Seljan in 1998.
Seljan, a vertically integrated company that makes fabricated steel molds, runs five rotomolding machines and does metal forming.
“We really are a technologically driven company. We’ve got robotic welding. We’ve got lasers. We’ve got [computer numerically controlled] equipment all over the place,” he said.
Scott Seljan said business is strong. The company should generate sales of $7.9 million for the fiscal year ending Aug. 31. That is a 34 percent increase from the $5.9 million in sales for the prior fiscal year, reported in rotomolders ranking chart in this issue of Plastics News.
Sales are about evenly split between custom and proprietary.
“As a job-shop molder, we’re seeing [economic] growth everywhere,” he said. “Maybe we’re just lucky and we’ve got the right customer mix, but I don’t really think that’s the case. We do a lot of different things and we’ve got customers in every kind of business there is. And we’re not really seeing any downturn anywhere.”
The metals division, which has been housed in a leased building separate from the headquarters and plastics operation, will be completely moved in by Sept. 1. Seljan will install its sixth rotomolder, a Ferry RS-2200, by mid-September. After the other rotomolding machines are moved, one by one to minimize disruption, the plastics division should be moved by Dec. 1.
“We can’t afford to lose any production time,” Scott Seljan said.
The company does custom rotomolding and has some proprietary products such as Kolorcans waste receptacles and planters, and cremation urns for the burial industry through its division, F.H. Noble Co. Another major product: rotomolded tires for agri- cultural irrigation. The molder also has picked up some transfer work from larger rotational molders that are winnowing out small customers.
That diversity of core markets — waste cans, urns and irrigation tires — means business remains strong even during tough economic times, according to Scott Seljan. That was by design.
“I wanted to make sure that when the next recession hit, that we were in businesses that weren’t going to be terribly affected. So no matter what happens in the economy, people are going to have to eat. There’s just no way around that. Secondarily … people are going to make garbage. And finally at the end of the game, they’re going to die,” he said. “So what we did is, we tailored our business into those must-haves. As the population gets older, and increases, we’re covered.”
As the population rocks out, that helps too. Seljan has grabbed headlines by molding heavy-duty guitars for Guitar Hero’s arcade and tavern version.
In addition to fabricated molds, the company also makes some components for rotomolded parts in a small urethane molding operation, and through metal stamping. Seljan has an array of CNC equipment, including Amada laser-cutting and bending equipment, and equipment for wire electric discharge machining.
Seljan is a multigenerational family affair. In 1967, Kenneth Seljan started a tool and die shop in his Lake Mills garage. Soon, he bought a small building in town. The founder died in 1998, but the skilled machinist tradition lives on.
“The strength, the nucleus of our metals business is due to the fact that we all started our careers as tool and die makers,” said Scott Seljan, Kenneth’s son. He is a journeyman toolmaker. So is his brother Jeff Seljan, who heads engineering, and Jeff’s brother-in-law Scott Woerpel, vice president of the metals division.
In the early 1980s, Seljan began making fabricated molds, picking up rotomolding customers. Scott Seljan became general manager in 1995 when his father retired, and then became president and CEO when Kenneth Seljan died.
Before the founder passed away, company officials had already decided to build a larger facility, reasoning that 30,000 square feet of space was plenty for the growing molds and metalworking business. But then global economic forces hit the company, which began molding in 2000.
“That’s why we got into rotomolding,” Scott Seljan said. “In 1997 and ’98, we had five of our 10 largest metal accounts move their work to China. And we got into rotomolding because we were into building molds. And I had to look at our business and say, what could we do that the Chinese aren’t going to do better than us, or cheaper than us. They didn’t do anything better than us. They did a lot cheaper than us.”
Becoming a molder cost Seljan some mold business, as other rotomolders did not want to buy from what they considered a competitor. “It was a big gamble. But we didn’t have a lot of options,” he said.
A series of rotomolding acquisitions and product launches followed. Seljan bought F.H. Noble in 2003, then launched Kolorcans (a metal version came out later). Seljan can customize the trash receptacles with a company logo or city name, and make smaller quantities in custom colors.
The acquisition in 2010 of Mach II Co., which is run as a separate business, brought in a major new market of large rotomolded tires for pivoting farm irrigation equipment. Mach II had been Seljan’s largest customer.
In the giant new building, Mach II will get its own dedicated finishing and warehouse area, with a separate loading dock.
Scott Seljan said the drought has boosted the irrigation business, and the demand for hollow, white wheels molded in Lake Mills. “Sales increased to the point where we felt purchasing this new plant was justified,” he said.
And the strategy worked out. “Rotomolding was truly never affected by the Chinese,” he said.
Luxury of space
The current facility was built for metals, not rotational molding. It soon became crowded, forcing company officials to find space a mile away to house the metals division. Rather than driving his truck back and forth, Woerpel bought a mo-ped. It now has 5,000 miles, one mile at a time.
Metal fabrication and rotomolding both take up a lot of space. To load and unload one 56-foot-long metal part for a tractor trailer off the delivery truck, crews had to work in the street and use forklifts to finagle them in and out of the building. Another new part measures 14 feet long.
Rotomolding machines are large, but so are the molds and the finished parts.
“Molding is a funny business, that for every additional machine you put in, you need a lot of additional support space,” he said.
Originally, company leaders planned to double their current building’s size, to a total of 60,000 square feet. Seljan had kept his eyes on the empty Crepaco complex. It was being maintained well during the shutdown.
The building’s broker stopped by as Scott Seljan was writing up an offer to buy adjacent land from the city. He had lowered the price, Seljan said. “We wrote a strong offer. They countered it inside of 24 hours, and I accepted it as soon as I read it. Their counteroffer was fair. So I didn’t screw around,” he said.
Seljan closed on the building July 17.
Giving a golf-cart tour of the cavernous building, Seljan pointed out how trucks now can drive right up and park inside.
“It’s going to be a much safer, and a seriously more efficient environment than what we have now,” he said, sitting in his office. “Like currently, in this facility, we have to put parts on a pallet and drive them outside into the lot, and let them sit. Then when the truck comes, we’ve got to drive back out in the parking lot, pallet by pallet, drive all the way back into the factory.”
Not much fun, especially in the winter.
Now, for some larger customers, the new building has room to stage six truck trailers, all inside.
Given half-a-million square feet of space, Dru Laws made a classic understatement: “We’ll never have to turn down a potential customer because of space constraints.”
But he said that happens all too often. “They want us to provide a product in such volumes. Well, we just can’t swallow it in our current building.”
Scott Seljan said the company is already planning to get new metal and plastics business in the new building — including larger metal parts, an expansion of metal oil-filter production. Higher labor costs in China are driving some of the metals work back to the U.S., he said. In plastics, Seljan said he wants to expand molding of refuse cans. And the firm is talking to new customers.
“By this time next year, we anticipate having at least 10 machines molding parts,” including larger sizes of rotomolders, he said.
A new landmark building is important. But Seljan said the real key is long-term, dedicated employees. The toolroom foreman has been there for 28 years. Ten years for the production foreman. Seljan praised the company’s skilled welders, toolmakers and molding employees.
“One thing I learned early in my career is that when you’re a smaller, technically oriented company, the equipment is less of an issue than the people running it. So we looked at our people early in the game as our strongest asset,” he said.