Tube & Pipe
Wednesday | 21 July, 2010 | 4:29 am

Entrepreneurial spirit

By Michelle Martinez

July 2010 - Jay Hall didn’t set out to be in the fabrication business. But 20 years after the startup of Harco Metal Products Inc., Hall is creating big opportunities by combining old-fashioned customer service with an innovative, entrepreneurial-minded twist.

The Detroit-area native turned Tempe, Ariz.-based businessman sold his $1.3 million kitchen-cabinet business in the late 1980s to look for a business less linked to local economies and further up the supply chain.

When Hall first came across tube fabricating, the industry seemed too close to his industrial Motor City roots, he says. "But then I cut my lawn and opened up a lawn chair and rode my bike and saw three industries that [I could serve]," says Hall, president of Harco Metal Products.

  In 1987, Hall bought a business that cut, bent and threaded conduit for electrical contractors and quickly rounded the learning curve on the technical tools of the trade. Over time, adding sophisticated equipment allowed Hall to offer more services and broaden his customer base.

Last year, Harco added a Wafios BMZ 42 tube bender and an Accurex TubeInspect HD inspection machine. The bender allows production of complicated 2-D and 3-D workpieces in one pass, and the inspection machine provides a thorough analysis of the tube shape and flags bending machines when quick correction of out-of-specification parts is needed.

But the real boost came, Hall says, when he began to form deeper bonds with his suppliers and customers, discovering new markets for Harco’s capabilities.

"We changed both the approach that we took to customers, as well as the type of customers and the building and development of our infrastructure to include stronger skills in manufacturing," Hall says. "One of the real how we try to address concerns. Typically, there’s a lot more about customers that you’re not hearing if you’re only focused on one part. We start talking about the whole project and find every concern that they have and help them."

Jobs of all sizes
Solutions can range from small to very large. Seven years ago, when one of Harco’s largest customers, Heil Environmental Ltd., a Chattanooga, Tenn.-based manufacturer of garbage and recycling trucks, moved to Fort Payne, Ala., in a companywide consolidation effort, Harco decided to make the move too.

That Alabama location now handles more than half of the steel hydraulic lines for Heil’s plant. Since then, Harco has added services, such as just-in-time delivery, design assistance and vendor-managed inventory.

The U.K.-based Pro Earth Developments Ltd. is another example. The company makes the SandHopper and the Smart Bagger, tubular frames that make it easier for military personnel and civilians, such as construction workers, to fill sandbags.

Beyond bending the tube for the product, Harco struck a deal with Pro Earth to produce the entire assembly and package, store and distribute the parts for the company. "We have become their U.S. manufacturing and distribution arm," Hall says.

And, when an Internet search brought the Buda, Texas, division of global HVAC giant Danfoss to Harco’s door, the company responded to the challenge.

Danfoss Chatleff LLC needed to ramp up production of 100,000 parts a month quickly to meet customer demand. Danfoss was switching a customer from copper and brass to aluminum to help protect it from red metal price volatility, says Paul Schoeppe, purchasing manager at Danfoss Chatleff.

"Harco is supporting us very well based on the short lead time to get equipment, tooling, material and start volume production," Schoeppe says.

To meet Danfoss’ needs, Harco bought a new piece of equipment, installed it and began shipping parts in about six weeks, Hall says.

"We made a commitment, and we performed for that commitment," he says.

New deals bring growth
Harco’s revenue has more than tripled during the last three years, growing from about $2 million in 2006 to about $9 million last year. Hall expects the company to finish 2010 about even but says new deals on the horizon may add significantly to the company’s growth. He approaches the deals with a certain amount of entrepreneurial glee in turning a bid idea into growing enterprises. His goal is to reach $20 million in sales by 2015.

Hall says he’s on the cusp of taking an equity position in a Dallas-based company that targets big-box stores and large corporations. The deal could mean a quantum leap in Harco’s growth. Harco would handle the administrative, manufacturing and distribution of the product, "everything but the sales," he says.

When someone approached Hall with the idea of building paragliders--a back-mounted wing with an engine and propeller for the extreme sports set--Hall saw the opportunity for a fledgling cottage industry and got involved, spurring the company to about $500,000 a year in revenue at one point. Another "interesting little product" for Hall helps horse farms haul hay.

But big picture, being a part of the design and distribution brings real rewards, Hall says.

"The power behind what we’re establishing is that we become integral in the design, the marketing and distribution and develop long-term relationships that make our being a part of the team essential," he says. "It’s much different than bidding on price."

That’s precisely where most fabricators will find the most opportunity, says Peter Adriaens, a University of Michigan professor who studies entrepreneurism.

"Anything that has pretty low margins can be fairly easily outsourced," he says. "The value of capturing opportunities [is] further upstream, in parts and materials."

Leveraging relationships with suppliers has helped fuel Harco’s growth. Tube Service Co.’s Phoenix facility has been a long-standing supplier to Harco. Recently, the relationship has grown to include joint sales calls and special inventory strategies, says General Manager Terry Faley.

"Harco looks at their vendors as partners," Faley says. "We’re creating and developing inventory programs but also sharing information and pricing schematics to better service them."

Hall says one example is a small-diameter, thin-wall tube that he needed precut to order. Harco used to order about 3,000 of two hard-to-find sizes in a blanket order that the company would have to tweak month to month to make sure the material was on hand. These days, the material is stored at Tube Service and delivered on a just-in-time basis, Hall says.

"It’s given me greater flexibility and allowed me to react to my customer and cash-flow concerns," he says.

The big win is being able to leverage Tube Service’s material expertise to find new solutions for customers, Hall says.

"We find that our knowledge together is more beneficial to serving customers and ultimately leads to winning more customers," he says. MM

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