Return on investment

Racine Metal-Fab Ltd. added more employees and bought additional equipment last year, even though the company sustained a decline in revenue.

The firm’s management team believes the company is positioned to see a return on those investments in 2004.

"We’re already seeing increases this year," said Racine Metal-Fab president Kim Nichols.

Racine Metal-Fab is a metal fabricating job shop that primarily manufactures light-gage aluminum parts. About 95% of the company’s business is with lighting companies. Racine Metal-Fab specializes in the production of reflectors for large lighting systems, such as those at sports stadiums.

The reflectors magnify and direct the light produced by light bulbs.

Like many U.S. manufacturers, Racine Metal-Fab slumped in 2003. The company’s $6.5 million revenue last year was down about 8% from 2002.

"Our customers were hit with a drag in the economy," Nichols said.

However, during the last six months of 2003, business improved and continues to pick up momentum in the first half of 2004.

"Our larger customers were under the gun (last year) to reduce inventories," said Al Coulthart, technical representative for Racine Metal-Fab. "Their inventories have been depleted. Now they’re finally getting back in the buying mode."

Unlike many manufacturers that have reduced employment, Racine Metal-Fab is adding more workers. The company added four positions last year, to bring total employment up to 52, and is planning to add two more positions soon.

In addition, the firm spent $600,000 on new equipment last year, including a $400,000 Amada Apelio laser turett combination machine. The machine uses a laser to cut and punch holes, or a combination of holes, in a metal part. The machine can do work that previously had to be done on several different machines, which took up more space, and can do the work faster.

During the last year, Racine Metal-Fab has begun implementing lean manufacturing processes to improve efficiency. For assemblies, the company implemented a Kanban system, which creates a method for replenishing parts that is easy to track and speeds production by making sure enough parts are always available.

The company also created two cells that cluster machinery, improving the production process.

"I think many of the larger plants (implement lean manufacturing practices), but I don’t think it’s common in the smaller plants," Nichols said.

Efficient manufacturing makes it easier for the company to meet the needs of its customers in a timely fashion, she said.

"We will always look for ways to improve," Nichols said. "We’re working to educate ourselves on the practices that are available and incorporating it into our manufacturing plant. We’re starting slowly."

Racine Metal-Fab’s second-biggest customer is Musco Lighting of Oskaloosa, Iowa. Musco has built lighting systems, featuring reflectors made by Racine Metal-Fab, for several high-profile sports venues and movie sets.

The well-known sports venues include several NASCAR tracks, Lambeau Field in Green Bay and the Kohl Center in Madison. Musco’s lights and Racine Metal-Fab’s reflectors also illuminated the World Trade Center site after the Sept. 11, 2001 terrorist attacks.

Last year, Musco installed temporary lights, with Racine Metal-Fab reflectors, at the Milwaukee Mile. Musco will install permanent lights at the racetrack this year, again featuring Racine Metal-Fab reflectors.

Nichols said Racine Metal-Fab’s employees take extra pride in being part of high-profile projects.

"They love knowing where they fit in," she said. "They love knowing where that part ends up. ‘Hey, our reflectors are up there.’ It gives you a sense of pride."

While business slowed as the U.S. economy staggered, Racine Metal-Fab managers took the time to work on a strategic plan and long-range vision for the future of the company.

"We took the down time to position ourselves to sustain growth for the future," Nichols said. "You want to see some steady, controllable growth."

The company’s managers want to expand the company’s customer base to serve other industries.

"We know we’ve got a lot of expertise here that can be transferred to other industries," Nichols said. "The next step is to identify what are the best (industries to serve)."

Like many manufacturers, overseas competition will always be a concern for Racine Metal-Fab. So far, the company has not been affected greatly by foreign competition, because Racine Metal-Fab manufactures products that meet a specific need for customers at a lower volume that is not appealing to overseas operations.

"Hopefully with our quality and our costs we will manage to compete," Coulthart said.

The company strives to maintain its competitive edge by doing anything possible to meet the needs of the customer, Nichols said. Often, a part that a customer needs can be produced in one day.

"We work off of their deadline and not ours," Nichols said.

Jim and Marge Madson, Nichols’ parents, founded Racine Metal-Fab in 1968. Jim has since passed away, but Marge still owns the company. The company was one of the 51 largest women-owned companies in Wisconsin in 2000.

Nichols worked as the controller for Racine Metal-Fab for 11 years. She left the firm for 10 years and returned to become president four years ago. She said the employees deserve credit for the company’s success.

"We’ve been working very hard," she said. "It’s a really great little business."

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