Helwig Carbon developing global partners, diversification as manufacturing changes
By John L. Campbell, for SBT
What would you do if your core business was shrinking due to advanced technology and a declining domestic market, factors over which you had no control? That’s the challenge facing the managers at Helwig Carbon Products in Milwaukee. Jeff and Jay Koenitzer, third-generation owners, must wonder how Walter Helwig, their grandfather, would have coped with such a dilemma. Celebrating its 75th year in business, the company prides itself in never having a layoff. Helwig’s grandsons are doing everything in their power to maintain that record.
Management researcher Jim Collins, author of Built to Last and his most recent book, Good to Great, loves case histories like the challenges confronting the Helwig management group.
The company manufactures carbon brushes, replaceable sliding contacts and vital parts of electrical products like motors and motor generators. Despite Helwig’s continuing capture of market share in both OEM and replacement business, changes in technology and the decline of manufacturing in this country threaten the company’s long-term growth.
The United States has lost 2.1 million manufacturing jobs since the first quarter of 2000; 88,000 manufacturing jobs in Wisconsin alone have been lost, according to the U.S. Bureau of Labor Statistics and the Wisconsin Department of Workforce Development.
Jay Koenitzer, Helwig’s vice president of marketing, winces every time he hears of another plant closing. In addition to the decline of manufacturing and an unsteady economy, improvements in technology have replaced the need for carbon brushes.
"They’re going to A-C brushless motors," Koenitzer explains during a conversation about the company’s management structure.
Like their grandfather and their father, the Koenitzers run a good company; but they’d like to be better, maybe even great. They’d like to be as great in the carbon business as Wells Fargo or Nucor are in banking and steel, some of the 11 great companies cited in Collins’ book. One of the author’s axioms states that good is the enemy of great. Being good stifles the drive necessary to step up to the next corporate level and be great.
Neither Jay nor Jeff has had much time to contemplate greatness. They’re preparing to avoid a drought threatening their business. They’re busy negotiating global partnerships and seeking diversification with new products their customers can use.
Helwig’s management pyramid has just two levels. Paul Casper is general manager. The rest of the management team is composed of four vice presidents and their human resource manager. Two vice presidents are the company’s owners, the Koenitzer brothers. Ron Carlson is vice president of finance. Skip Joers is vice president of manufacturing while Jennifer Martin is the human resource manager.
Jeff Koenitzer, who serves as vice president of engineering, has 27 years with the company. He’s also chairman of the board. Jay handles marketing and manages the sales department. Thirty independent sales representatives cover the United States for Helwig; many of them have been with the company 20 to 30 years.
"This year we’ll do about $28 million in sales; we do a much better job providing technical support and sales coverage than our competition," says Jay Koenitzer, explaining that most competitors are larger, foreign owned. Old-line carbon brush manufacturers like National Carbon, once a division of Union Carbide Corp., are owned by Morgan Crucible, a British company.
Prior to 1928, when Helwig Carbon Products opened in Milwaukee, all the carbon brush manufacturers were located in the East. Helwig’s son-in-law, John Koenitzer, joined the company, and the two of them produced several patented innovations. A brush holder that reduced carbon wear by applying a constant pressure on rotating contacts eventually became an industry standard.
"My grandfather’s management style was not characteristic of a Level 5 as described in Collins’ book," Jay explains with a smile. "It was his way or the highway."
Despite his autocratic flare, Walter Helwig pioneered employee bonus programs, rewarding those who produced the most. His incentives worked. To this day his grandsons respect their grandfather’s values of integrity and the golden-rule-manner in which he conducted business with customers and employees.
Both Koenitzer brothers agree that the management styles of an entrepreneur and managers of a corporation in its 75th year with 280 employees will differ. "We wear many hats here," says Jay, discussing steps they’ve taken to improve their management skills.
Recognizing the need for continuous education, they hired a full-time trainer four years ago. Every two weeks, they have training sessions, where they discuss business books and current philosophies. They’ve all either taken or been introduced to the Dale Carnegie course.
"Jim Collins’ book Good to Great raised my level of awareness," says Jay Koenitzer. "I didn’t realize you could be a Level 5 manager (the highest rating by Collins’ definition) without acting like a charismatic Jack Walsh from GE."
In an effort to give back to the community, Helwig managers encourage their employees to participate in activities such as the Next Door Foundation’s Walk for Kids, where on May 10, Casper was one of several leaders. In 1989, the company donated its old Milwaukee plant to the Next Door Foundation. The company supports St. Luke’s Hospital and the hospital’s chaplaincy program, part of Helwig’s giving a minimum of 4% of its profits to charities.
"Profits are necessary, of course, but we don’t focus on profits alone," Jay says. He agrees with the philosophy that if you take care of your customers’ needs, the profits will follow.
In its strategy to counteract a declining US market, Helwig has gone global, forming a partnership with Gerken S.A., a Belgium brush maker. Like Helwig, Gerken is a family-owned, third-generation company.
Packaging the combined raw material requirements of the two companies, the partners negotiated a long-term contract with SGL in St. Marys, Pa., a major supplier of raw materials known as carbon plate. As part of the deal, the partnership formed a new European company, E-Carbon, and acquired two of SGL’s facilities, one in Germany, the other in the Czech Republic.
"People like to buy locally," Jeff Koenitzer says, citing reasons for opening sales facilities in Canada and Mexico. With Jeff’s experience in brush technology, he’s planning to partner with machine shops in those countries, teaching them the technology of fabricating brushes and brush holders for Helwig’s foreign accounts.
Down-time in any manufacturing facility is costly. Jay Koenitzer explains how Helwig is able to ship products the same day an order is received.
"We stock about a 1,000 different brush styles, and ship 50% of the orders we receive the same day, plus an average of 40 rush orders for specialty items not in stock," says Jay, emphasizing the just-in-time service offered to customers. "In our computer, we have over 100,000 brush designs. If a customer calls on a weekend and needs replacement brushes, items not in inventory, we’ll do whatever it takes – call people in to work, just to satisfy their needs."
Under the agreement with Gerken S. A., Helwig Carbon will sell carbon products in the Americas along with Australia and New Zealand.
Gerken S.A. will serve the European, African and Asian markets. The two facilities acquired by E-Carbon will manufacture a variety of carbon brushes, pantograph carbons, trolley shoes and mechanical carbon products.
Helwig Carbon has put together a business strategy it can control, putting behind it those trends over which it has no control. Its partnerships have secured raw materials and added new products, as well as new territory. Half the globe is Helwig’s market, and the company has its antenna poised to take on new products that can make a good company great.
Vice president of marketing
Helwig Carbon Products
Education: Bachelor’s degree, Carthage College
Vice president. of engineering, chairman of the board
Helwig Carbon Products
Education: Bachelor’s degree, Carthage College; engineering degree (PE) MSOE
Company’s annual revenues: $28 million
May 30, 2003 Small Business Times, Milwaukee