Changes in strategy and product design have increased profit at Roscom Tektube Group LLC, a maker of PVC compounds and hose products in Croydon, Pa.
“We've made some real changes in what we do, and it's paid off so far,” part owner and President Nick Lynch said in a recent telephone interview.
Lynch definitely doesn't sound like an executive with a company whose sales fell about 40 percent from 2007-08, dropping to $33 million as the economy worsened. Roscom Tektube also had to cut about half of its workforce, leaving the company with 44 employees.
Changes at Roscom Tektube began in early 2008, when it consolidated its Tektube hose extrusion plant in Las Vegas into its 80,000-square-foot Roscom compounding site in Croydon, outside Philadelphia. This move allowed the firm to save $2 million in annual internal shipping costs, since Roscom supplies Tektube with most of the material it uses to make hose for the pool, spa and irrigation markets.
Another major way in which Roscom Tektube was able to save was by redesigning its flagship Neu-Gen-brand hose line. The new design uses less flexible PVC and more rigid PVC, Lynch said, allowing the firm to make a thin-wall product with better performance properties that can be sold for 20 percent less. The reconstituted Neu-Gen now accounts for 90 percent of the firm's hose sales, Lynch added.
Roscom Tektube also redesigned five of the six hose extrusion lines it brought from Las Vegas to allow them to make two hoses simultaneously. The move effectively doubled the machines' output, Lynch said.
On the compounding side, the company in January launched production of grades using up to 100 percent recycled PVC.
Grades using recycled medical-grade PVC scrap have been especially popular with customers that need some of the material's attributes, but also are looking for a lower price, according to Lynch.
Roscom Tektube entered tolling after being approached by several potential customers. The group included firms that had done tolling work with Prime PVC, a former Spell Capital LLC unit that closed its plant in Marion, Ind., after being sold in February.
Most of Roscom Tektube's tolling work now is focused on one of the firm's five twin-screw extrusion lines.
When the economy improves — and Lynch said sales in the irrigation and pond markets have shown signs of life — he hopes to recall some of the three dozen employees it had to let go.
“Because the compounds we produce are used as raw materials very early in the supply chain in a wide variety of industries, we generally see changes to the economy and business climate well before many other companies,” Lynch said. “This recent economic slowdown was no exception to that rule.”