A month after the announcement that sister firms Demag Ergotech GmbH of Germany and Strongsville-based Van Dorn Demag Corp. are becoming a single injection press company, details are emerging about what the new Demag Plastics Group will look like.
``Our goal, by K 2004, is to have a completely harmonized, integrated product line [worldwide],'' said Bill Carteaux, who leads the U.S. side at Van Dorn.
He and Demag Ergotech leader Helmar Franz will share top leadership as co-executive managing directors of Demag Plastics Group.
A few common products will be on display in June at NPE 2003. NPE visitors will be able to see one key early product: a unified controller that will replace the Van Dorn Pathfinder and Demag's NC4.
``That'll be one of the first things that we come out with, so our customers will have a common control platform on all product lines,'' Carteaux said.
Carteaux, 43, quickly has made his mark on the Strongsville unit. He came to Van Dorn Demag in 1998 as vice president of marketing, after an eight-year stint as a top executive at vertical injection press maker Autojectors Inc. The following year he was promoted to vice president of sales and marketing.
This past July, Van Dorn Demag promoted Carteaux to president and chief executive officer, replacing William G. Pryor, who retired. Just one week later he and Franz announced their companies - both units of the giant Mannesmann Plastics Machinery AG - would create a much more unified structure for the North American market. Then in late August, Carteaux announced Van Dorn Demag would lay off about 40 people.
``I was hired to make sure that Van Dorn was a long-term, going concern and would continue to serve our customers like we have for the last 56 years,'' he said.
The latest news, cementing the full merger, came out Nov. 19. Demag Plastics Group is creating a single company with assembly plants in Strongsville and two in Germany, at Schwaig and Wiehe. The company also has plants in Chennai, India, and Ningbo, China, in partnership with other machinery makers.
In a wide-ranging interview Nov. 26, Carteaux described some moves the company will make to combine product lines. He also confirmed that Van Dorn is selling a machining plant in Duncan, S.C., and a former technical center in Strongsville, and he talked about potential acquisitions backed by MPM's new owner, Kohlberg Kravis Roberts & Co.
Demag Plastics Machinery had 2001 sales of $319 million - $219 million from Demag and $100 million from Van Dorn. Officials claim that puts DPM in the No. 2 spot in the world in terms of injection press sales, after Austria's Engel Vertriebsgessellschaft mbH.
For the full-year 2002, sales should be about the same or slightly lower, company officials said.
Carteaux said the company is almost ready to finalize the sale of the Duncan site, but he declined to identify a buyer until the deal is closed. The new owner will continue to run the 25-employee factory and supply Van Dorn and other customers. The plant machines parts such as toggle components, platens and some items for injection units.
Van Dorn is retaining a second South Carolina metalworking factory, in Fountain Inn, that makes screws and front-end barrel components, and does subassembly of injection units.
Carteaux said the decision to sell Duncan was made before the partner firms started to put together Demag Plastics Machinery.
``For us to be a strong company in the future, like we are today, it doesn't make sense for us to own Duncan. That's why we made the decision to sell it. Now with Demag Plastics Group it really fits together because we didn't need that capacity. As we look at building components and subassemblies at any of our locations, where it makes the most strategic sense, that's where we're going to do it,'' he said.
Final assembly will happen at the plant closest to the end customer.
Some industry observers speculate that domestic machinery makers, under pressure in the weak U.S. market, may try to reduce costs by sourcing major parts, even subassemblies, from low-wage regions such as China.
But Carteaux said Demag Plastics Group factories in India and China will continue to supply their home markets, not export to North America, at least for the near future.
``Our goal is not to move our component and subassembly work to Asia, because I don't think the quality is there today,'' he said. He plans to tour the India plant in February.
Also, Carteaux said whoever is picked to fill the still-open chief operating officer position will play a key role in global sourcing decisions.
In addition to the Duncan machining operation, Van Dorn also stuck a for-sale sign in front of the 7,500-square-foot former sales, training and demonstration building across the street from its Strongsville headquarters. Carteaux has moved those operations into its year-old service center, which is 10 times bigger and has higher ceilings, so it can hold larger presses.
``It's got a new lab in it that's almost as big as that whole facility across the street. It just doesn't make sense for us to keep it,'' he said.
The money is better spent on new product development, he said. Many of those new products will continue to emerge from engineers in Strongsville - despite the elimination of some engineers in layoffs last summer. Carteaux said the company moved engineers to be closer to the customer, sending some to the service center to work more closely on aftermarket business. The cuts eliminated some positions that did not add value to customers, he said.
The center's spare parts and service operations are an important chunk of business, since the company claims to have more than 30,000 Van Dorn presses running at customer plants today.
Carteaux said the combined press maker will continue using the engineering services of Infosys Ltd., a firm in Bangalore, India, that slashes product-development time by using engineers around the world in a kind of virtual, 24-hour workday. Infosys engineers helped Van Dorn Demag design its IntElect all-electric press and the two-platen Caliber machine, and now they are helping develop the common controller in time for NPE.
Identifying elements
Carteaux also sorted through the machine lines of the two sister companies and talked about how they will merge into one.
The Van Dorn name will continue to be used on presses sold in North America, while machines sold elsewhere will be called Ergotech. For now, the company will maintain dual headquarters in Schwaig and Strongsville.
Van Dorn will continue to offer its HT toggle press, with a four-point toggle. Demag presses use a five-point toggle - the same design Van Dorn used for the IntElect. In total, both firms now offer five different toggle platforms. But at some point, a single design will prevail.
``We want to have one toggle platform for all of the machines that use a toggle. So that would [mean that] some of the basic machines, the multicomponent machine and the El-Exis, as well the future generation of the HT, would all be based off a single hydraulic platform,'' Carteaux said.
Van Dorn will take the lead for the company on vertical presses, with its Newbury and Praxis machines. One change will come in the El-Exis S high-speed machines, which will be increased to a top clamping force of 1,100 tons to meet U.S. demand.
Initially, the IntElect will be assembled only in Strongsville, to meet U.S. demand for all-electric presses. The two-platen Calibers will continue to come in clamping forces up to 4,400 tons.
In hydraulic presses, Van Dorn's Cadence is made in Germany. The Cadence name will changed, but the press will remain the same. The U.S.-made Spectra midsize hydraulic press will be phased out in favor of the Caliber.
In 2003, meanwhile, the company may make an acquisition to beef up its aftermarket business, Carteaux said.
While New York-based KKR supports deals to make the company stronger, Carteaux said KKR did not dictate the sale of the buildings, or the layoffs. He termed those moves a ``reallocation of resources'' to needs such as new products and improved customer services.
``Those were things that I knew we needed to do to be stronger as an organization and better serve our customers. And yes, it's great that KKR thinks those things are really good, because it did cut some costs in different places. But it really wasn't focused on that. It was really to add value to our customer base,'' he said.
Much has been made of the merged company's ability to serve global players. But Carteaux said smaller Van Dorn customers, with only U.S. plants, also will benefit.
``We're able to bring them more technology today than ever before because now if they need a multicomponent press or they need a high-speed machine, in addition to the general-purpose machines they bought from us in the past, we can do that for them,'' he said.
