Industry veteran heading South Dakota startup

WATERTOWN, S.D.—Glacial Lakes Rubber & Plastics L.L.C. has opened its doors in Watertown. Now the firm hopes it can fill a void left in South Dakota's manufacturing industry.

Glacial Lakes already has secured a partnership with Vibram to supply a portion of its boot soles for commercial and military application. Robb Peterson, Glacial Lakes' owner and CEO, said the firm has other contracts in place to supply molded rubber parts.

And it won't be shy in securing more.

“There's not an industry we're going to back away from,” Peterson said. “We're taking the technologies we have in place right now and using them to the best of our ability to try and fill that capacity up.”

Glacial Lakes is starting up in the same year that Quadion L.L.C.—which does business as Minnesota Rubber & Plastics—decided to phase out its Watertown manufacturing facility. Minnesota R&P said in December 2013 it planned to close the plant after being present in Watertown for more than 45 years.

Minnesota R&P said it projects the facility to be completely shut down by the end of 2014, leaving about 180 without jobs.

Peterson served as general manager of that plant, and he saw the shutdown as an opportunity to do something he'd always wanted to do: start his own business and utilize what he knew as a deep talent pool to do something in Watertown.

“When Minnesota said they were going to shut down that facility, we talked about what that meant for me personally and the company,” Peterson said.

“I didn't want to leave here. I've got two kids in high school. It was a better idea to stay here and start my own facility, something I've wanted to do for awhile.

“When they decided they were moving most of these jobs down to Mexico, we wanted to do what we can to re-employ these people,” he added.

Right now, Glacial Lakes only employs a handful, but Peterson said he hopes to increase that number to a couple dozen by the end of the year and see employment shoot well beyond that by the end of 2015.

“We're hopeful that Glacial Lakes will be a huge success and be able to hire a lot of those employees back over time,” said Craig Atkins, president of the Watertown Development Company. “But like anything, it's a startup, so it's going to take awhile for it to get to the level Minnesota Rubber was at. But we're excited about the opportunity that Robb and his team bring to take a bad situation and turn it into a great opportunity.”

Peterson brings an engineering background, having worked around the world during his 12 years with General Motors Corp. He then shifted to the operations side when he joined Freudenberg-NOK in Spencer, Iowa, to help with its plant turnaround work for about two years before joining Minnesota R&P in 2010.

“Robb Peterson is the key to putting the firm together,” said Pat Costello, commissioner of the South Dakota Governor's Office of Economic Development. “He has a significant amount of experience in that industry. He recognized that South Dakota is a great environment for starting a business, and we're excited about being able to partner with him to create jobs in the state of South Dakota.”

Glacial Lakes operates out of an 11,000-sq.-ft. facility, but Peterson doesn't expect the firm to be there very long with the way business is coming in.

“We expect that we'll have to move into a larger building,” Peterson said. “Right now we have the capacity to run three shifts if we want to. We can run large tools as well as small tools.”

If the prior history of the building is any indication, Glacial Lakes should experience rapid growth. Locally it's known as the “good luck building” for the multiple startups it has housed that later relocated into bigger facilities. Dakota Bodies and Rising Star Hydraulics being two examples, Peterson estimated those companies now operate in buildings anywhere from two to three times the size.

“Each of those businesses has moved a couple of times since starting out in this building,” Peterson said. “We hope to be another notch in that success story.”

But now the firm is focusing on building the rubber side of its business and plans to get into manufacturing plastics. Currently it buys and resells plastics as needed on the local market, but if customers approach Glacial Lakes and want a certain type of process, Peterson said the business will allow the firm to purchase certain equipment to break into those markets.

Peterson said demand is high for rubber and plastics materials made in the U.S.

“A lot of companies want to put the "Made in the USA' stamp on their products,” Peterson said. “That's what we're going to hang our hat on. We're made in the U.S. We're not going to outsource our products, and we're going to be homegrown and homemade. There are plenty of opportunities in those markets for that kind of vendor, especially in defense contracting and government contracts.”

Manufacturing is a big part of the state's employment. Atkins said in Watertown advanced manufacturing accounts for more than 20 percent of the city's work force.

“For our community, manufacturing is a very big deal, as it is for all of eastern South Dakota,” Atkins said. “We've seen a transformation in the manufacturing industry where it's become high-tech and advanced multi-million dollar pieces of equipment, and they need more than just a basic education to be employees and operate. As a result, our companies have increased the wages that they're able to pay these employees, and it's really enhanced the quality of life across the board.”

South Dakota provided Glacial Lakes work force training dollars, a reimbursement of $10,000 on a matching basis with the company, meaning Glacial Lakes had to spend $20,000 to train 20 employees to receive $10,000 from the state.

“We keep it pretty simple,” Costello said. “That's part of our philosophy with regulatory as well. In industries with federal regulations, we accept those, but we don't expand on them. Many states start with the federal stuff and then expand on them. We try to keep things very simple and easy for businesses to understand and utilize.”

Atkins said that as Glacial Lakes continues to grow, his firm and the South Dakota government will be in a better position to help the firm.

“Our hope is some day that they will come back to the Waterfront Development Company to provide some land to build a new building and accommodate future growth,” Atkins said.