Epco Machinery LLC has rebounded after the U.S. capital spending drought forced the equipment remanufacturer to make some major changes last year.
Steve Schroeder sat in a modest conference room at Epco's Fremont headquarters and recalled the dark days: Epco slashed its work force from 110 to 39 in December 2001 and January 2002.
``We had to cut costs. Unfortunately when the business stopped, we had to make some major layoffs. They couldn't have come at a worse time, with the holidays,'' Schroeder said.
Throughout 2002, Epco adjusted its remanufacturing business to meet customers' lower demand, grabbed more work relocating factories and got into a new area - building large thermoforming machines for its sister company, Brown Machine LLC. Epco and Brown are owned by Madison Capital Partners of Chicago.
Employment picked back up, to about 90 by the end of last year. The company hired back some laid-off employees, and also picked up skilled people laid off by a machinery company in nearby Tiffin, Ohio.
Schroeder said orders increased 20 percent from 2001, and sales and shipments improved 10 percent. Epco does not release sales figures.
Epco's diversity gives it some advantages as the U.S. market for new plastics machinery struggles out of one of its deepest downturns ever. Epco developed its factory-moving business a few years ago, playing on its experience moving machines from customer plants to Fremont for reconditioning. The Fremont factory, outfitted with machining equipment and overhead cranes, has been used to assemble Husky large-tonnage injection presses, Toshiba presses and Uniloy blow molders.
Despite its broad range of offerings, Epco still is best-known as a remanufacturer. That business has changed in recent years, Schroeder said. In the past, it was more common for customers to ship the entire press to Epco for a complete overhaul.
``With these limited budgets, they're not able to do a complete remanufacture, so we've seen an increase in our clamp-only business, injection units, control retrofits and what we call contract work,'' he said. ``A lot of that work is done either at the customer's facility, or they may send us the component, like the injection unit, and we'll do the work here.''
Schroeder said Epco's adaptable employees were the key behind the rebound. After the layoffs, he said, ``We sat down and talked to the employees and said that, collectively, we're all going to be doing more work than we have in the past. And we're going to have to find ways of cutting costs. All of our salaried people, we took a 5 percent pay cut right in January 2002.''
People were asked to do more than one job.
``If you were working in service as an administrator, you may also be helping [human resources], or you may also find yourself doing inventory. We cut back in shop supervision and asked some people to work more hours than they normally would. Our goal was to be in business at the end of the year, and try to strengthen the company,'' Schroeder said.
Schroeder started holding monthly meetings with employees. ``We were honest upfront. We told people why we had to make cuts. ... We let them know if we got orders and we let them know when we lost orders, and why,'' he said.
Schroeder also kept up communication with another group, reminding machinery manufacturers that Epco can assemble machines for them. ``We kept reminding them, never turn down an order above your capacity because we're there to help you,'' he said.
In the machinery downturn, the pitch sounds strange. But Schroeder kept knocking on doors.
Eventually, he found a machine supplier that did need production help - Brown Machine.
Fresh off a big order for thermoforming machines for an automotive customer, Brown did not have enough capacity in its factory in Beaverton, Mich. So, last spring, Epco started building the large machines in its back bay area, which has a 63-foot-high ceiling and a 100-ton crane.
The in-line, cut-sheet machines are giant, measuring 110 feet long, 40 feet wide and 22 feet high. When completed, Epco will take apart each machine, put the components on about a dozen trucks, ship them to the customer and assemble the machine again. ``We have to coordinate with the disassembly here and the truck and the delivery times. So it's a very, very major coordination project,'' Schroeder said.
Brown and Epco are not revealing the customer.
Schroeder and Brown President Dick Lacana said the relationship between their two companies will continue after the large automotive order is completed. Epco also is building Brown's smaller Titan line of machines.
``It's an immediate expansion of capacity,'' Lacana said. ``We can take a lot more business, and we don't have to put our customers in the queue.''
At some point, the manufacturing recession will end, and customers will have pent-up demand for thermoforming equipment, Lacana said. ``So you can expand for a huge order. You can expand for market expansion,'' he said.
Schroeder said Epco now is seeking remanufacturing work for thermoforming machines.
Larry Gies, president of Madison Capital, credits Schroeder and Lacana for fostering the joint effort. ``You always try and get sister companies to work together, but it's very rare that it's successful,'' Gies said. ``If it wasn't for them, it wouldn't work.''
Schroeder said Epco tries to respond to changing market conditions. ``We are a stronger company today than we were a few years ago, and it was a real team effort.''