SEBRING, Ohio—Salem-Republic Rubber Co. is nearing the completion of an expansion that will add capacity, make operations more efficient and allow the firm to be more competitive in certain markets.
The maker of large-diameter hose and calendered goods invested about $1.7 million to demolish one area of its Sebring operation and replace it with a new structure, according to President Drew Ney.
Salem-Republic took out its prior shipping/receiving and raw materials inventory storage area and constructed a 22,515-sq.-ft. steel free-span build¬ing. The area will house the firm's subassembly material equipment as well as a new large-bore hose work station.
It will be supported by a refurbished 8-foot by 56-foot autoclave that will be in its own, new 2,560-sq.-ft. steel building that will go up in the near future.
The company will be able to make hose configurations up to 72 inches in outside diameter, compared to the previous limit of 54 inches, Ney said. This will help the manufacturer in its quest to get a greater foothold in the floating dredge hose market.
Salem-Republic plans to add three more hose-building work stations in the near future adjacent to the autoclave, giving the firm 12 in all. The project also included a 20-ton, 1,800-sq.-ft. bridge and monorail crane system to move product around the factory more easily, and a 60-foot monorail that is half in the building and half over the shipping dock. This new infrastructure will greatly cut the labor involved in loading hoses onto a flatbed semi-trailer, he said.
"With a lean approach in the design for this project, the building will greatly enhance work flow and materials management," Ney said.
New part of history
Salem-Republic celebrated its 40th anniversary last year, and the new building brings its workplace into the new century, according to company officials. The structure gives the company 68,000 square feet of manufacturing space and 190,000 square feet overall.
But a large portion of that is a warehouse building that dates to 1908, Ney said, while the other manufacturing facility, constructed in 1948, has roof supports located every 22 feet and just 12 feet of head space.
"We've had to design to a very difficult limitation, especially when we're making 50-foot products," said Ney, whose father, Andrew, was the founder of the company.
"It's a credit to our engineers and our manufacturing people that we have been so successful. You can't believe how we've had to move product around. This is going to give us a huge advantage in terms of work flow with the clear span. It's going to be a significantly more advantageous work space."
Engineering Manager James Grossi said the new building improved many different facets of the operation, from expansion growth and efficiencies to a more streamlined shipping and inventory department. Starting from scratch is tougher than it sounds, he said, because so many details have to be addressed.
"You're going from the way we did things because of what we were given, to anything goes to make it the best it can possibly be," according to Grossi.
"It's difficult to do, but the rewards are huge," the executive said.
From a sales perspective, it will give Salem-Republic the freedom to aggressively pursue the large-diameter floating hose market, among some other products, said James Dunchuck, vice president of sales and marketing. "We had some limitations with our previous vulcanizer that would make it difficult at best to do large-diameter floating dredge hose," he said.
Revenues for the Sebring-based firm grew about 30 percent combined during 2011 and 2012, and Ney expects sales to climb another 30 percent by the end of 2015. He declined to disclose exact sales totals.
The company made significant gains in the mining market the last couple of years, an arena often dominated by hose in the 30- to 42-inch internal diameter range, Dunchuck said.
"Our ability to get throughput for those types of hoses is something that this addresses. We can now load flatbeds via overhead cranes, and we have bay doors that allow us to take hose via overhead cranes and put them right on a flatbed," he said. "Before, this had to be accomplished with three men and a couple of forklifts. The loading time and labor requirements alone that are addressed by some of these additions are huge to us."
Ney said the boost in mining-related business comes from both new accounts and current customers growing. He also believes it's no secret why his company is succeeding: "Excellence in customer service, excellence in engineering and excellence in manufacturing. We've made a science out of it."
Most of the company's business is handled through distributors, but the manufacturer built some connections with OEM accounts, Dunchuck said. Salem-Republic also benefits from its expertise in building the large-diameter hoses.
"When diameters get large enough we get calls from competitors asking if we'd like to quote on something in excess of 30 inches or 36 inches because we have these capabilities," he said.
The addition will allow the company to reconnect with some of the markets where it has lost market share, Dunchuck said, such as the municipal and industrial vacuum market. "We see this as an opportunity through increased throughput and increased efficiencies to reposition ourselves in that market," he said.
Lowering lead times is another benefit of the expansion, the sales vice president said. "Lead times are often more important than price," Dunchuck said. "The market ultimately determines the price for any goods that you're offering. If you can offer the products in a much quicker manner, it allows you to capitalize on some more profitable opportunities."
Salem-Republic strives to have lead times in the three- to four-week range, but that can't always be the case depending on work load, he added.
Ney said the company historically has been opposed to debt—his father's philosophy was to never borrow money—but that the low interest rate and competitive construction costs were too good to pass up. Salem-Republic participated in an Ohio loan guarantee program that enhances the interest rate significantly based on hiring and job maintenance.
The company plans to hire five to 10 employees in the next 12-18 months and as many as 20 over the next couple years, he said. Its current head count is 52.
Given the nature of building large-diameter hose, the firm needs a skilled work force, meaning it can't just bring in staff from a temporary agency when orders surge, Dunchuck said.
"We need to develop the book of business that allows us to keep the skilled employees in their positions long term," he said. "The worst thing that can happen is we bring in employees, we invest in training them and then we can't retain them."
Salem-Republic products are used in a variety of other industries, including steel, industrial process and aviation. It also has been seeing good results from its calendered tank lining products, a market it entered within the last two years.
"The tank lining business has sustained itself and is paying for itself," Ney said. "We would love to have more tank lining business and we intend to get it."
Dunchuck said tank lining is a good market to be in because the cost is based more on material than labor. It also brings future growth potential, he said, because Salem-Republic represents a viable third source to the two companies that currently dominate the market.
About two-thirds of the firm's business comes from industrial hose, with calendered goods and products for aviation ground support equipment accounting for the rest.
"Our diversity has been a large part of the secret to our success and our growth," Ney said. "We're diverse enough when one industry goes down, another grows, so we are never hindered by any one market having a slump."
And he sees no reason Salem-Republic won't continue to see more growth and higher profits. "I think we're in a unique spot of maturity and strength in personnel that we have never been in our history," the company president said. "This facility is just so exciting, so dynamic, so inspiring. I think it's going to revolutionize us."