Industry pundits and laymen alike hail the great consolidation of the industrial coatings industry. Indeed, the landscape has changed dramatically in the last 10 years. In 1997, there were 1205 coatings manufacturers in the U.S.; today the number hovers around 1100 and is shrinking fast.1
Lately you need a scorecard to keep up with all of the mergers and acquisitions. Not a week goes by when I don't encounter a former colleague and have to pause to recall which company currently employs them.
Some of the biggest transformations have involved the small to medium size enterprises. If they're not filing bankruptcy or liquidating, they are often swallowed up by larger, publicly traded firms. Most of these smaller companies are closely held, family run businesses with second or third generation descendents managing the operation.
But while some have faded off into oblivion like the surface of an epoxy on a test fence in Florida, others have stepped up to the challenges and found a way to succeed. Environmental Coatings, Inc. (ECI), Grand Rapids, MI, is one of those companies. Over its nearly 40-year history, ECI has faced up to the ever-changing landscape of our industry and has actually survived and flourished.
A History of ServiceECI got its start by a young chemist in 1968. Jim McAlister had distinguished himself as an innovative technologist at Guardsman Coatings located in Grand Rapids. Itching to strike out on his own, McAlister left Guardsman and initiated his quest to become an industrial coatings manufacturer. His first operation was set up in the building of a former service station, and his wife, Helen, took care of the books from their home.
Eventually the company grew. To capitalize on the concentration of office furniture manufacturers headquartered in western Michigan, ECI entered the very demanding office furniture industry - a move that became the company's biggest commercial achievement. The company was built on a blend of state-of-the-art technology and impeccable service. Relationships with customers were executed on trust, and supply agreements were typically consummated with a handshake. Most of ECI's customers were regional in nature. Being able to deliver to a one-day ship point and also provide rapid-response technical service established strong loyalty.
As with everything in life, however, nothing stays the same. The market evolved. Customers got bigger. Competition got tougher. Pricing pressures mounted. And the technology changed.
When ECI's customers started converting their finishing lines from paint to powder coatings, the company bit the bullet and entered the world of powder coating technology in 1993. The early days were marked with fits and starts. The road was a bit bumpy at times. Learning the intricacies of powder manufacturing and formulating proved a tough challenge. Finding the right people to manage its fledgling powder operation was also difficult. Eventually a strong team of technologists was formed.
The most significant event in the company's history was the passing of Jim McAlister in 1996 after a bout with cancer. His son, Michael, was only 28 years old at the time and was faced with assuming the total responsibility of running the organization. The learning curve was steep and not without its trials and tribulations. Mike had to learn the ropes quickly, but he also realized that he had to run the business consistent with his values and personality. Over time he became knowledgeable of the industry and operations. Under his leadership, while numerous other family-owned coatings companies have disappeared, ECI has achieved a 50% growth in sales over the past seven years.
Keys to SuccessSo how does ECI do it?
ECI's entire organization is customer focused. Every system the company implements emanates from a customer's point of view.
Mike McAlister says the three most important aspects of running a coatings company today are measuring and controlling costs; hiring and keeping the best people; and providing excellent, not just good, service to your customers.
Technical Service. Mike's precepts are exemplified in the manner in which ECI's employees face their day-to-day tasks. When many companies have slashed or eliminated their tech service departments, ECI has kept a strong cadre of experienced customer service technicians. According to Mike, one of the strongest reasons to offer this service is the lean organizations its customers have been forced to run. In years past, customers had large process engineering staffs that could baby-sit their application lines. Nowadays it is often incumbent upon the coating supplier to help maintain and control the finishing process.
ECI not only strives to provide the latest in technology, but also unparalleled service. Regular finishing line audits are performed covering not only the coating application area but also the pretreatment line and ovens. Furthermore, coating material inventory is carefully managed by ECI's salespeople. This allows the supply chain to run a little more smoothly and minimizes the need for rush orders.
Flexibility in Operations. ECI's powder plant manager, Larry Lacroix, realizes the need for his production effort to be responsive to customers. "You need to be flexible enough to react to your customer's needs," he notes. This means that communication between key people must be streamlined, and teamwork is essential. When a critical order is placed, the technical manager, plant manager and sales team are immediately notified electronically. Within minutes, the production schedule is reviewed and modified. The whole team is then informed, along with the customer.
Of course, being flexible doesn't mean operating haphazardly. ECI is ISO 9001 certified and religiously heeds the procedures and policies embodied in its quality programs. Ron Henderson, ECI's operations manager, is responsible for the quality programs, including maintaining the ISO certification. He carefully guided the creation of the company's procedure manuals. His philosophy is to have meaningful and well-written practices that are flexible enough to respond quickly to customer needs.
Technology. The company was started just before the Clean Air Acts kicked in on a national level. Technology back then revolved around low to medium solids alkyd-based enamels. Products had to change to comply with evolving stricter emissions regulations. Accordingly, ECI's technology has advanced from low solids to higher solids, waterborne and powder coatings. Most recently, ECI has added ultraviolet (UV) curable technology to its repertoire. Most of ECI's coatings formulators have been with the company for more than 20 years. The powder group is newer and is staffed with industry experts who have several decades of experience.
Acquisitions. In 2002, ECI acquired Akzo Nobel's sporting goods coating technology business. These coatings serve a niche market involving finishes for bowling lanes and equipment. This business has done well and has allowed ECI to expand into other related industries.
Just recently ECI completed the purchase of the assets and business of Stewart Brothers Paint Co. of Alliance, OH. According to Mike, this company's technology will help augment ECI's growth in other niche market
Universal PrinciplesSo what is Environmental Coatings' secret for survival? It's really no secret at all. Keep your eye focused on your customer, build a strong team of experienced and dedicated personnel, and keep your costs under control. These principles can help any company in the finishing industry succeed.
SIDEBAR:Borroughs Corp., a key ECI customer, needed to increase the first pass transfer efficiency of its powder coating lines. Carl Cranmore, the ECI tech service representative for Borroughs, jumped into action. First he formed an interdisciplinary team of production and engineering people. The team started by documenting line throughput and transfer efficiency. Cranmore soon realized that the part density on the customer's line could be significantly increased.
Partnering for Improved Powder Coating Efficiency
In fact, Borroughs was able to halve the distance between parts racks, thereby doubling the part density passing through the powder booth and oven. Application and oven parameters had to be adjusted to accommodate the increase in throughput. By increasing the part density, the first pass transfer efficiency of the powder application system also increased significantly because there was less dead space between parts.
John McDonald, a quality control supervisor at Borroughs, reports that the powder transfer efficiency has significantly improved. He has taken the program a step further by implementing gun adjustments that minimize overspray to non-critical surfaces.
All photos by Kim LaCroix.