Kenson Plastics Inc. is a niche company, and that's fine with Chris and Dave O'Leary.
The brothers, along with their father, John O'Leary Jr., bought the small plant in Warrendale from the founding Gahagan family in 2008. Kenson specializes in low-volume, complex parts and subassemblies such as housings for medical diagnostic equipment. The 22-employee company combines thermoforming and computer numerically controlled routing with precision CNC milling and assembly.
We're not selling thousands of anything to anybody. And most of the stuff that we are selling, they really, really care what it looks like, and it has to be really precise and functional, Chris O'Leary said.
Most of what Kenson Plastics makes has to fit into a finished product, such as a monitor on an expensive piece of equipment for medical or electronics. Kenson simply can't send out bad parts customers would notice even a slight imperfection, the brothers said.
We happen to be a machine shop where our medium's plastic, he said. The company boasts strong technical employees and makes its own tooling and fixtures. Kenson's low-volume production also is highly flexible.
Done right, specialty manufacturing, quality, delivery and customer service create intimacy with customers, John O'Leary said. And when you do that, you create a very high cost of switching. So now you're an integral partner with that customer, he said.
The O'Leary family is well-known as the former owners of Tuscarora Inc., a foam protective packaging giant that was based in nearby New Brighton, Pa. John's father, John O'Leary Sr., founded Tuscarora in 1962. It went public in 1988, growing to about $300 million in sales with 40 factories, by the time the family sold it in 2001.
Tuscarora makes end caps and other packaging from foamed and thermoformed paperboard and wood for customers in industries such as telecommunications, consumer electronics and appliances. At first glance, a giant packaging maker has nothing in common with a job shop like Kenson Plastics.
But according to John O'Leary, everything Tuscarora manufactured was targeted to cushion the specific end product, whether a stereo, car part or refrigerator.
His sons were looking to buy a business, and Kenson stuck out as a good opportunity.
It doesn't take you very long to realize there are really fundamental aspects of the value-add here that are very similar to Tuscarora: There's engineering talent. It's all custom. It tends to service large, sophisticated, very demanding customers, he said.
Although John is the president, he has no active role in Kenson's operations. He works as a packaging consultant and serves on the boards of several companies.
His sons run the company, Chris as vice president of operations and Dave as vice president of sales and marketing. The brothers both worked at Tuscarora's Colorado Springs, Colo., plant.
They outlined their strategy during a Sept. 7 interview at Kenson Plastics.
Now, two years after buying the company, the O'Leary brothers are aiming to raise Kenson's profile. It started with two events in September, by exhibiting for the first time at a trade show Medical Design & Manufacturing Midwest in Rosemont, Ill. and entering two parts in the parts competition at the Society of Plastics Engineers' Thermoforming Conference in Milwaukee.
But Kenson Plastics was already well-known to key customers, largely through a word-of-mouth reputation built by the former owners.
In 1972, pattern maker Ken Gahagan Sr. founded the company in his basement, making interior parts for Cessna aircraft. The company began to pick up work for medical diagnostic equipment makers in the Pittsburgh area, moving several times to larger manufacturing space in the Pittsburgh area. The founder named the business Kenson (Ken's Son) for his son, Ken Gahagan Jr.
They built the Warrendale factory in 1985. The big innovation was figuring out how to use three- and five-axis CNC milling machines to trim plastic parts, instead of their traditional use to cut metal. That differentiated Kenson Plastics, and the orders steadily flowed in even though the Gahagan's had no sales force, not even voice mail.
Still, the phones kept ringing.
Ken Jr. steadily upgraded the equipment. So far, the O'Learys have not added to the stable of machines: four thermoforming machines (one Comet, a CAM, and two others built in-house), two five-axis Motionmaster routers and six three-axis milling machines.
Beefing up Kenson
Chris O'Leary said they bought a solid operation. It had a lot of really highly skilled people doing very difficult things, he said.
But a lack of organization and information technology kept the company from growing, he said.
The family bought Kenson Plastics in late 2008, the early days of the Great Recession. Business slowed down, but that gave Dave and Chris some breathing room to make needed improvements.
They painted the building, fixed up the offices, added an air-conditioned break room and built a technical center. They shifted equipment to create a smooth flow of work and materials immediately increasing productivity.
One major change has been major investments in information technology. Under the former owners, each job had a paper file with changes written down, or lost, Dave O'Leary flipped through a 2-inch-thick file. That was a weak point, he said.
Every time a job came up, they would have to relearn certain parts of the job because it wasn't documented correctly, things like that. You'd have to have a five-person caucus to figure out how to cut this part. We can't afford to do that, he said.
Ken Gahagan Jr. made some forays into creating a quality system. He bought a coordinate-measuring machine. But overall, organizing information remained a problem. The O'Learys set up an enterprise resource planning computer system. Now all the mechanical drawings are on the computer, including updates on any changes.
In a job shop, you live and die by that organization, because each job is different. It's the intricacies that will kill you, Chris O'Leary said. If you don't have the framework in place, and people communicating in that same language, then you're out.
Technically adept employees have always been a strong point at Kenson Plastics, where the average tenure is 21 years. The new owners bought three seats of Mastercam X4 computer-aided-design/manufacturing software for the four–person engineering staff, and trained them on it.
The ERP system organizes how jobs should move through the various operations in the plant. In a typical application, the core part is thermoformed, then goes through a router and on to a CNC milling machine, which creates locating surfaces.
Smaller parts, called blocks, are cut by hand and finished by milling. The blocks are manually glued in place, and then the entire subassembly goes back for a final milling step.
That combination of precision thermoforming and machining, with skilled employees, is the cornerstone of Kenson Plastics. The updated CAD software means the company can make changes to the CNC milling of existing parts, such as moving connector pins to new locations, enlarging openings or moving other things around often for only a programming charge of a few hundred dollars, Dave O'Leary said. Customers often make several revisions on a new product. More changes follow with succeeding generations, he said.
The process is well-suited to medical suppliers that need a relatively small number of parts for a specialized piece of diagnostic equipment, or a new product seeking approval from the Food and Drug Administration, he said. A package of tools for 20 parts may cost $100,000 at Kenson much cheaper than the price of injection molds.
It's just not a millions-type of business unless you get into the disposable part, John O'Leary said. Take big enormous things like MRI machines. How many of them do they make? Now that thing's bigger than this room, and it's all encased in plastics. It's very high-precision, but it's extremely low volume.
The O'Leary brothers are looking beyond strictly low-volume medical diagnostics, as Kenson Plastics takes aim at small-production needs of brand-new products that eventually will go to injection molding.
It's one step beyond a prototype, but maybe before you go to the full commitment of an injection molding tool, Chris O'Leary said.
We can help you make those parts, allow you to make any changes, and then you actually go to production say, your millions of production parts in China with a proved-out business. And by the way, we sold you a thousand parts, so we're happy. And you're happy.