Lines Broadened to Survive a Triple Trauma
Dick Youngblood, Star Tribune
By the end of the 1990s, sales at Kurt Manufacturing Inc. had reached $180 million and its employment was up to 1,150 workers.
Whereupon clients who accounted for nearly 60 percent of the company's sales took their business offshore, and recession and the Sept. 11 terrorist attacks slammed into the economy. By the end of 2003, Kurt's sales had plunged to $77.5 million, and its employment followed suit, dropping to 480.
"We weren't sure we could survive," said Bill Kuban, CEO of the Fridley manufacturer of high-end machined parts and assemblies for industrial clients and for some of its own proprietary products.
Unlike hundreds of other Minnesota manufacturers that have disappeared since 2001, however, Kurt not only survived, but it has made a significant comeback thanks to an entrepreneurial surge that has added both new products and a broader customer base.
The upshot: Sales have climbed 45 percent since 2003, to $112 million in fiscal 2007 ended Oct. 31, while full-time employment is up to 600.
It's still a long way from the peak, Kuban acknowledged, but he's no longer fretting about failure. Indeed, the company is investing $10 million in a new Coon Rapids plant that will open in June to make its proprietary line of industrial vises, which contributed $18 million to 2007 sales.
"It's the first significant investment we've been able to make in eight years," he said. The company operates six other plants in the Twin Cities area and in Nebraska and Colorado.
There's a passel of Minnesota manufacturing companies, ranging from small to sizable, that have not been as fortunate as Kurt, according to Dennis Hoff, a partner in the firm of Hoff Hilk Auction Services, an online business that auctions capital equipment for companies that are closing.
Hoff estimated that his company alone has handled 400 sales for Minnesota manufacturing companies since 2001, "and we do maybe a third of the total" for the state.
Kurt Manufacturing, founded in 1946 by Kuban's father, Kurt, was sailing through the hypergrowth of the 1990s with a client base that included some big names in the aviation and defense industries.
There's Boeing Corp., for which it still supplies gearbox assemblies, landing gear components and structural parts, and a division of Textron, for which it builds crankcases for small aircraft. Kurt also supplies electronic ordnance and ammunition components for Alliant Tech, Textron and Lockheed Martin.
But there was one threat: With more than half of its sales tied to one product line -- computer disk drive components -- the company was "very vulnerable" when it lost the business to overseas manufacturers, said Executive Vice President Steve Carlsen.
The recovery that Kurt management has built since 2003 rests on a much broader foundation. Consider:
- The company long has supplied components to hydraulics manufacturers. But since 2003, it has focused on expanding its own line of hydraulic couplings and high-pressure hoses. The result: Sales of a line of about 800 products have been growing 20 to 25 percent a year since 2004, reaching $8 million in 2007.
- Several years ago, Kurt landed a contract to manufacture cycling trainers, devices that suspend the rear wheel of a bicycle so it can be used for indoor exercise. After the company invested in equipment to handle the order, however, the client went bankrupt. Rather than write off the investment, Kurt officials decided to develop their own trainers. The result: a 2007 gross of $2.5 million, up 25 percent from $2 million in 2006, with sales growing even faster this year.
- A byproduct of Kurt's machining process is metal chips immersed in coolant that is both expensive and toxic. So, with an eye toward both savings and the environment, the company developed a compactor that squeezes out the coolant for reuse, leaving a harmonica-sized chunk that can be recycled cost-effectively into the base material.
"That means you don't have to go back for iron ore to make steel or bauxite to make aluminum," Carlsen said. And the result: The company saves about $12,000 a month on the coolant and grossed $400,000 last year on the sale of compactors to other manufacturers. Sales are expected to top $600,000 this year.
The company also has broadened its client base significantly, primarily in the electronics and oil and gas industries.
And Kuban is one very relieved CEO.
"We may be a lot smaller company," he said, "but we made it; we survived.
"A lot of others didn't."
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Dick Youngblood • 612-673-4439 • yblood@startribune.com
© 2008 Star Tribune. All rights reserved. Republished here with the permission of the Star Tribune. No further republication or redistribution is permitted without the express approval of the Star Tribune.
