During the recession, officials of DLH Industries Inc. kept right on investing in automation and all-electric injection presses, through the sharp downturn in its biggest market, formed automotive tubing.
“We kept pushing forward,” said John Saxon, chairman and CEO.
Now DLH is poised to reap the benefits as the economy picks up. The Canton company is diversifying within automotive — adding more automakers to its roster of customers — and also outside of automotive, by making moves into markets such as medical, lawn and garden equipment, and refrigeration.
DLH also is getting into profile extrusion, a departure from its historical core business of tubing for air and fluid handling.
Saxon said that, over the last few years, DLH has spent several hundred thousand dollars to add automated tube-forming equipment, developed by its own engineering staff.
“We did not go into such a shell in 2009 that we ceased all investment in continuous improvement,” Saxon said. “We knew we were coming out of it. We were going to be a little uglier on the other side, but we were coming out of it. So we continued to make investments in our processes and our automation.”
DLH is a major supplier to General Motors Co. and Chrysler Group LLC, turning out assembled tubing systems such as windshield washer harness assemblies, sunroof drain and guide tubes, and vacuum brake-assist assemblies. GM named DLH a 2009 Supplier of the Year, the third straight year the company has won the award.
Saxon said DLH design engineers are based at technical centers of GM and Chrysler.
DLH also sells to Ford Motor Co. and some of the Japanese transplants. To expand its reach into the Southeast — a growing automotive, heavy-truck and medical-products region — DLH in April signed up Walton Co., a manufacturers' representative in Hilton Head, S.C. Saxon said the company also exports to several countries, such as China, Russia, Brazil, Germany and Mexico.
DLH extrudes tubing and injection molds the fittings, then assembles the complete package and ships directly to automakers or Tier 1 suppliers. In Canton, the company runs six extrusion lines and 30 injection molding machines that range in clamping force from 55-165 tons — 10 of them are all-electric Milacron Roboshots.
The company opened an assembly plant in nearby Carrollton, Ohio, a few years ago.
The brutal automotive decline in 2009 hit DLH hard. Saxon said the company had some “significant layoffs” and now employs 280 people. CSM Worldwide reports that full-year auto sales sank to a 39-year low at 10.4 million units in the U.S. and 12.6 million for all of North America.
CSM of Northville, Mich., thinks auto sales will rebound this year to 11.8 million in the U.S., and to 14.2 million in North America. CSM credits “an enormous pool of pent-up demand.”
Saxon said DLH hopes to rebuild employment levels. But a few key areas were never included in the recessionary layoffs.
“We maintained full strength in our process engineering ranks. We continued to keep our product engineering staff employed and working on new things, and in some cases new customers brought exciting opportunities to us,” he said.
Saxon said DLH's annual sales range from $27 million to $32 million. That includes $13.5 million in estimated extrusion-related sales in 2009 — 90 percent of that from tubing and 10 percent from profiles.
Humble beginnings
The five-building DLH factory complex stands near a sprawling Timken Co. steel mill. In Canton, Timken certainly gets more attention. But in its 35-year history, DLH has quietly gained a local reputation as a steady employer. The privately held company has a stable, long-term ownership group.
Saxon credits founder Doug Houck for fostering a core business culture of commitment to quality, customer service and continuous improvement. Saxon joined the company in 2004, as Houck began transitioning into retirement.
DLH started out in 1975 as a one-press custom injection molder. The next year, Doug Houck added his second employee, his brother. Doug and Vern Houck added injection molding machines and manufacturing space.
According to a story published in the Canton Repository, the Houcks faced an early setback when General Electric Co. moved all its television set work to Singapore in 1978. DLH lost its biggest customer for injection molded parts.
But Doug Houck had the company on solid financial footing and soon General Motors asked DLH to become a supplier.
Another pivotal year came in 1981, when Houck bought an extrusion line and created Genex Mold to improve quality and delivery by making its own injection molds. The company added computer-aided manufacturing/design in the late 1980s and early 1990s.
Today, Genex makes molds, extrusion tooling and fixtures for assembly and tube-forming operations, working closely with the automation side.
Saxon said that, at the time, Houck's strategy of doing everything in-house went against the prevailing business tide of outsourcing and moving work to low-wage countries.
“Well, he resisted outsourcing and went with vertical integration. He resisted offshoring and said: 'We're gonna compete and we're gonna be damn good at what we do,' “ Saxon said.
Leadership transition
Around 2000, Doug Houck decided DLH needed to expand its management team and plan for the company's future after he retired. His brother Vern died of cancer in 2004.
Houck hired an executive recruiting firm. His instructions: Candidates had to be experienced in extrusion and injection molding, with some background in automotive, currently a company president and under the age of 40. Saxon jokes that it was a short list.
But Houck wanted to get it right. After about three years of searching, he contacted Saxon, who was president of Bunzl Extrusion Inc.'s operations in Columbia, S.C., and Philadelphia. Before Bunzl, he had worked at accounting firm KPMG. He is a plastics guy with an accounting degree and an MBA.
Houck and Saxon met together over a period of several months. “The short-term, quarter-to-quarter and month-to-month management style was something he just absolutely, adamantly rejected,” Saxon said. “And that was the key to why he wanted somebody of my age. He wanted the experience so he wasn't getting someone green, but he wanted the young guy who was going to have a long-term horizon. He wanted to make sure that I wasn't looking at this as a stepping stone, but I was looking at this as a long-term commitment.”
The company also promoted Matt Reese, a 25-year DLH veteran, from assembly division manager to vice president of manufacturing. Houck has retired.
Saxon said he believes in a collaborative environment, making decisions together with employees. “There's people who helped build this business, and the business cannot be separated from those people, and it cannot be separated from those core values,” he said.
Technology tour
Saxon showed off several manufacturing improvements during a tour in Canton.
One building is dedicated to injection molding, which runs three shifts: a first shift with employees and second and third shifts that run unstaffed, fully automatic. DLH uses Enterprise IQ, IQMS' enterprise resource planning software, to monitor the molding operation.
Over the last three years, DLH has added 10 Roboshot presses. Saxon said when older hydraulic presses get retired, the company replaces them with all-electrics. For its benchmarking, DLH officials went right to the top, visiting Delphi Corp.'s flagship plastics plant in Vienna Township, Ohio, near Youngstown, where more than 100 Roboshots mold connectors.
DLH has robots on its injection presses. In the extrusion area, Zumbach laser and digital micrometers constantly measure diameter and roundness, recording the data. The tubing must be perfect, so it fits with injection molding components.
In an example of lean manufacturing, DLH has set up some secondary operations in-line with the extrusion.
DLH also is advancing the tube-forming process by instituting auto-forming. Each tube must be customized to meet the required use. Traditionally, employees load lengths of tubing onto a table that shuttles them through a series of stations, where the tubing passes under heat guns — which eat a lot of electricity.
For auto-forming, DLH has set up automated equipment that heats tubing by induction heat — a major reduction in energy consumption and labor content, Saxon said. Auto-forming allows DLH to control quality and consistency more precisely.
Employees do the final assembly, adding clips, grommets and connectors to the formed tubing. Fixtures ensure that every component can go in only one way. Each finished assembly gets tested for leaks and flow and checked by vision systems.
Automation and design and engineering services cost money, but Saxon said they help DLH stay ahead of competition, both from U.S. players and those in Mexico. Offshore competition from Asia is minimized because formed tubing assemblies do not nest well in a container, he said.
“There are times when people that see the amount of automation we're doing think that, well, you're just doing that to cut heads. No, you're not,” Saxon said. “You're trying to do that to keep up with foreign competition and to grow your business. If you can do that, you actually grow your head count.”
Diversifying DLH is another ongoing strategy. When Saxon arrived six years ago, products for General Motors accounted for more than half of the company's total sales, so winning more work from other automakers was an obvious strategy.
The long-term goal of DLH leaders is to branch out beyond automotive. For example, DLH is designing plastic components for a knee brace. Saxon said the customer was looking for a precision-tolerance injection molder that had good secondary operations.
“We've barely touched the surface on non-automotive [original equipment manufacturer] applications,” he said.
Meanwhile, DLH continues to develop new automotive applications, including vacuum brake-assist boosters, vacuum engine-mount systems and a battery coolant manifold for electric cars. DLH also has developed tooling for flexible and rigid profiles.
“We're selling ourselves today based on process capabilities, and the fact that we have a fully capable engineering and design service ability. So we can take your plastics needs and adapt them,” Saxon said. “We happen to have a specialty in air and fluid handling, but we can transcend that.”
Saxon said DLH employees want to build a company for the next 35 years: “Things change in the market, and it's the adaptable, nimble companies with good engineering resources and good manufacturing — particularly a vertically integrated one like ours — that are going to be successful.”
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