More than metal

Most people couldn’t name one company in metro Milwaukee that specializes in metal-related manufacturing.

But a lot of people in the Milwaukee area have heard of Grafton-based Kapco Inc., whether it’s because of the company’s radio ads during Milwaukee Brewers games (featuring spokesman and former Brewer great Robin Yount), programs that the company sponsors at Milwaukee Bucks games or one of the many charity or community-related programs that the company is involved in.

“Kapco has become the engine that allows us to do many other things,” said Jim Kacmarcik, president and part of the second generation of his family to work in the company. “It comes from my mom and dad. I have a strong Christian background and believe that everything I’ve ever been given is not mine. It’s God’s. I am simply a steward of those gifts for a temporary time.”

Kapco is a full-service metal component manufacturer. While its roots are in metal stamping, the company has added fabrication, bending, robotic welding, painting and related services since early 2000.

Kapco’s customers are some of the best-known brands in the military contracting, construction and industrial equipment, recreational vehicle, fitness equipment, electric motor and generator industries. In 2010, the company added 14 new customers in those industries.

Many metal stamping, fabrication and welding shops struggled or closed during the Great Recession, but Kapco has seen significant growth in recent years.

Its sales grew about 30 percent in 2010 and grew about 19 percent in 2009.

The company hired 52 new employees in 2009 and more than 60 in 2010, bringing its total employment to 260.

Kapco now occupies a total of 275,000 square feet of space in Ozaukee and Washington counties and a 20,000-square-foot distribution facility in Mexico.

In March, the company will begin operations in the Polaris plant that is being closed in Osceola, Wis., northeast of the Twin Cities area. The company expects to employ 60 to 70 people in Osceola when it begins production.

Kacmarcik is serious about charity. His company helps run programs that donate thousands of presents to area children every year, it gives away hundreds of tickets every year for professional sporting events and its employees take part in numerous community projects. But he is just as serious about taking care of his company and its employees.

“It’s just a matter of the more successful our business is, the more I give back to folks,” Kacmarcik said. “We’ve got to make sure that’s where the focus is, because it gives me great pleasure as it does with a lot of our team members.”

No debt

While many of its competitors struggled or even closed their doors in recent years, Kapco has been able to continue growth because it is able to deliver a growing range of services at low costs with high quality, Kacmarcik said.

“(Our growth has been) in a tough environment and a tough industry,” he said. “This type of industry, durable goods, is the type of thing people tend to give up first (in a recession). In general, in our industry, there has been a shrinkage and consolidation.”

The company has no debt, allowing it to pay cash for new machines and acquisitions. That zero debt balance also allows it to maintain relatively high pay levels and employee recognition programs while delivering low customer costs.

“Most (companies) need to pay a bank every month. That money’s not doing them any good going to the bank,” he said. “We’re blessed to not have that situation as a result of our hard work and good fortune. That then allows us to buy the fastest equipment possible. With the ability to not have debt and the ability to buy state-of-the-art equipment, you have a pretty powerful formula that most people dream about. That’s the launching pad that allows us to move forward and hire great people. Great people don’t come with the cheapest wages.”

Kacmarcik learned the zero debt philosophy from his father, Tom Kacmarcik, who founded Kapco in 1972. Kapco’s growth has been slow and methodic over the years. The company has acquired new equipment, buildings and even companies only when it can afford to and can find them at a price it is able to pay with its own reserves, Kacmarcik said.

For example, Kapco entered the metal fabrication business in late 2001 by buying its equipment at an auction. Kacmarcik thought he would buy two or three pieces of equipment but wound up buying the whole lot that day.

“At some point in time, every business person needs to spend money to make money,” he said. “You have to take risks. You have to believe in yourself, and I believed in us. I have great people. If I do my job and I provide them with great tools and put them in a non-burdened position as a company, then I can take my time setting this equipment up.”

Since 2001, Kacmarcik and his senior managers have purchased additional fabrication, tube bending, machining and related equipment. The company determines what to buy by talking with customers about their needs, and by looking at available suppliers. If a supplier isn’t found nearby that is cost-effective, Kapco starts looking for equipment.

Because of the company’s strong financial position, it almost always pays cash for the equipment it buys, Kacmarcik said.

“We can be opportunistic from that perspective,” he said. “When you’re sitting back and carefully analyzing all of your options and not getting too excited about jumping down one road, it gives you a lot better opportunity to make the right, smart decision for the whole company.”

Osceola opportunity

In December, Kapco acquired the metal stamping division of the soon to-be-closed Polaris plant in Osceola, which is northeast of Minneapolis/St. Paul, Minn. Polaris announced in the spring of 2010 that it would close the facility, putting more than 500 employees out of work. The company said at the time that it hoped a supplier would acquire the facility.

Kapco’s Grafton headquarters is located more than five hours away from the Osceola plant, and the company currently does not have any customers in the Twin Cities market. But the facility’s metal stamping operations play into the company’s historic strengths, Kacmarcik said.

“It’s right down the main stream of stuff we do, like metal stamping 101,” he said. “There appears to be a nice workforce there.”

Financial terms of the acquisition were not disclosed. However, the terms did include a provision that Kapco would become a Tier 1 supplier to Polaris.

“That’s the one thing we’re focused on. We have to get that right,” Kacmarcik said.

Kapco may eventually serve other customers in the Twin Cities market and could bring some of its other metal capabilities to the Osceola market. However, Kacmarcik said the company will not accept any other customers or add capabilities there until he believes it is serving all of Polaris’ needs.

“We need to take things one step at a time, make sure it’s right and that I can move forward from the same place I’ve always been – a place of strength,” he said. “I’m not trying to build brick and mortar or be big. I’m just trying to do what I do very well and be excellent at it.”

People focus

Kacmarcik is quick to say that his company’s success is largely due to the quality workforce he’s been able to attract. Part of Kapco’s corporate philosophy is “Kapco Blue” – a culture that creates employee loyalty, teamwork and community involvement while recognizing employees for achievement.

Part of “Kapco Blue” is the company’s events for employees and their families. During the work day, Kapco will hold cookouts and occasionally bring in musical entertainment. It has also held special events to pamper female employees and team-building casino games for workers.

“I might have no debt and I might have the fastest machine, but if I don’t have the right people tending and taking care of them, I’ve got nothing,” Kacmarcik said. “I’d rather have better people than better machines because people can make machines do things that they weren’t necessarily made to do.”

Kapco’s employees also are very involved in the company’s community outreach programs, which deepens the connection with the company, Kacmarcik said.

“Our whole office staff and our plant workers begin to say, ‘This is great that we’re able as a company to do these things because it makes me proud to be here,'” he said.

Community focus

Kapco is involved in numerous community improvement and charitable programs. In 2009, the company’s charity Hometown Heroes – Family Edition helped coordinate more than 1,000 volunteers that renovated and expanded the home of a Grafton family. The family is headed by a single mother of three children who was diagnosed with breast cancer; two of her children have cerebral palsy. Kapco received national attention when Dateline NBC did a feature on the project.

For the last five years, Kapco has partnered with AM 620 WTMJ in the annual Kids2Kids Toy Drive, which collects about 10,000 toys for children of low-income families in southeastern Wisconsin. The company’s headquarters in Grafton becomes a central collection area for the toys. Its employees and their families not only donate toys, but also help spread the word about the event and corral the many donated toys.

“We’re not a big believer of giving X amount of money to a charity,” Kacmarcik said. “We want to be involved. Here, we’re kind of a conduit and a steward of these toys. The idea isn’t about Kapco or WTMJ or a business organizing another toy drive. Our approach is, let’s teach our kids the true meaning of giving and paying it forward while we’re also proving toys for other people.”

The company takes part in two programs with the Milwaukee Bucks. Its Homecourt Heroes program recognizes people who make a difference in the lives of other people in metro Milwaukee during Bucks home games, and the company’s Community Corners program gives tickets to community groups that take kids from low income families to games.

“We’re trying to help people, providing tickets to groups for kids that could never go to a game,” Kacmarcik said.

Kapco’s focus on charitable giving and improving the community in southeastern Wisconsin has created a virtuous circle, in which employees feel good about the company and some customers become attracted to the company in part because of its philosophy.

“I’ve had a lot of clients say, effectively, in the last couple of years, ‘I can do business with a lot of folks but I’m doing it with you because I know that by doing so I’m going to help others,'” Kacmarcik said. “The philanthropic spirit, the community spirit of giving to employees and employing people in these times, that’s what is turning my trigger. That’s what drives me.”

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