Vail Rubber Works stays in the family with leadership change

ST. JOSEPH, Minn.—For more than 125 years, Vail Rubber Works Inc. has kept business rolling, through the Great Depression, the Great Recession and now a pandemic.

And through the ebbs and flows of economic uncertainty and volatility, the rubber roll cover manufacturing firm has kept its leadership steady—and in the family. It will do so once again, as the company looks to Vail Harding to serve as its next president.

Harding, 45, took the reins at the manufacturing firm on April 16, succeeding Bill Hanley, who served as Vail Rubber's fourth president since 1989. Hanley will remain as part of Vail Rubber's Board of Directors.

"If you're around for 125-plus years, you've seen almost everything," Harding said. "I am confident we will survive this current crisis. We've seen things turn around, and then turn around again."

Vail Rubber was founded in 1892 by William A. Vail, Harding's great-great grandfather. The company makes rubber and polyurethane roll coverings and steel cores, and serves the flat-rolled steel and aluminum industries and, on a decreasing basis, the paper industry, in the central southern and eastern U.S.

In the beginning, it was an idea to produce rubber railroad ties to soften rail travel that drew William A. Vail into the game. The idea did not survive, but innovation became part of the family bloodline.

William A. Vail had six children but only two survived, both daughters. This made it difficult to continue the Vail surname, Harding said. Harding's great grandfather, William Hanley, married one of the patriarch's daughters and became the company's second president.

William Hanley handed the reins to Joseph A. Hanley, Harding's great uncle, and he ultimately named Bill Hanley, Harding's cousin, to lead the company.

Enter Harding, now in his 22nd year with Vail Rubber. The industry veteran began with Vail at 23 years old as an applications engineer, growing up not far from the plant in St. Joseph. He still lives there today.

"Born and raised there," Harding said. "It's a small resort town on Lake Michigan. You can actually see the lake from our roof."

The town surges with visitors during the summer, more than doubling its population, while tourism wanes in the winter months, much like the paper industry did following the 2008-09 Great Recession.

Harding's initial focus at Vail was on that industry, in newsprint and fine print, making rollers that are used for conveyance for water removal, drying, "real niche-type finishing applications."

"The markets are cyclical. There was a real push in the mid-90s to increase our presence in the paper industry," Harding said. "When that declined, the metals industry came back. Having been around so long, long-term relationships have really helped. There is a fraternity to these industries, and those relationships have really allowed us to survive changes in that space."

But unlike the tourists at St. Joseph, the paper industry never completely returned after the 2008-09 recession. This pushed Vail Rubber's focus to where it is today, on the automotive and aerospace segments.

"We participate minimally in the paper industry today, maybe 10 to 15 percent of our sales," Harding said. "Our thrust is in automotive, we operate heavily in that market space. Along with aerospace, that is probably 90 percent of our business."

The Great Recession was a pivotal period for both the company, as it moved away from paper, and for Harding, who witnessed cost-cutting measures and staff reductions as Vail turned its attention to more promising market segments.

"In 2009, I saw an opportunity to establish myself," Harding said. "When the dust settled, and the cost-cutting measures and reduced staff were complete, there was some light at end of tunnel as we had a manufacturing facility planned for Alabama. They needed an engineer to head up a portion of the project. So I got out of sales (applications engineer fell under the auspices of the sales branch) and into engineering."

Harding's last role before becoming president at the primarily domestic roll cover supplier was as vice president of operations.

Harding's executive team will include Matt Hanley, vice president of sales and technology; and Brian Nimtz, vice president of finance.

"We're very pleased to announce Vail's promotion and confident that, with his leadership and experience and the support of his strong management, sales and production teams, Vail Rubber will be in good hands as we move further into our second century," Harding's predecessor Bill Hanley said.

Pandemic hits hard

Like many other suppliers at Vail Rubber's spot in the supply chain—those companies lagging behind the general economy in that auto and airplane makers determine the economic atmosphere—the company "was able to see this coming," Harding said.

"We foresaw this," Harding said. "When Detroit announced plant closures, we anticipated this because there were indicators early on that there would a be a slowing."

Even so, the slowdowns ultimately hit Vail Rubber.

"Our business fell off 30 percent almost immediately," he said. "We had a good first quarter, and April was fair."

More difficult cost-cutting decisions loomed for Harding during the first month of his presidency, but the company was not without experience in handling economic uncertainty, and Harding leaned on the company's response to the recession.

"I assumed the presidency in April, right in the heart of the pandemic," Harding said. "We had a fairly well laid out playbook as to cost reductions, and this made a difficult task a little easier. But it's a fluid situation, there are still some who are furloughed."

Of Vail Rubber's 115 total employees between the Alabama and Minnesota sites, 25 still remain furloughed. All did so voluntarily, according to Harding. A staggered recall is the most likely possibility in bringing those workers back, Harding said.

"A lot of uncertainty is in the market, and we had to make decisions with that level of uncertainty," he said. "We had to reduce the work force to a level that maintained minimal operations. We run 24 hours a day, so this was a huge shift in thinking."

Harding added that he does not expect the rubber roller cover market to normalize until late next year, perhaps even into 2022.

"This is driven by growth rates in the auto industry," he said. "As they ramp up, their usage of our products will increase in a linear fashion. About 25 percent of our work force has been furloughed, and they are almost all production positions. We are very lean as it is, but we did not want any reductions in our technology group."

Third facility becomes reality

Vail Rubber plans to start manufacturing operations at a third, 58,000-sq.-ft. plant in St. Joseph, just 10 minutes south of Vail's 65,000-sq.-ft. headquarters. This $10 million facility will join a 14,000-sq.-ft. Axis, Ala., manufacturing plant that was built in 2012.

Ultimately, Vail Rubber will have about 137,000 square feet of space across its three facilities, Harding said.

"We started construction in the middle of last year on the second St. Joseph site," Harding said. "This marks an expansion into the flat roll metals industry (aluminum and steel). We needed a local presence for this, as it mirrors our markets in Michigan with polyurethane extrusions and cast polyurethanes."

Vail Rubber said it plans to add between 10 and 15 employees with the commissioning of the second St. Joseph plant, although initially employees will be moved from the St. Joseph headquarters to the new site, and the openings at the company's headquarters will be backfilled there.

"This is an unprecedented investment for us," Harding said. "We made the decision to do this when the financial forecast was so strong. Trends supported this. When it is operational, we will develop material handling processes that will really set us apart."

Harding said Vail Rubber's ability to make all its products in-house, which will be the case at the new plant, makes the company unique.

"I think our team has been in agreement for a number of years that the technology services group on the rubber side offers everything in-house for customized, formulated and compounded material, giving us the ability to form a roll covering specific to a customer's request," he said. "What differentiates us is our level of control that we maintain over the product."

Looking ahead, Harding noted that he is excited about the capacity, efficiency and technology levels at Vail Rubber, as well as the competition between steel and aluminum producers.

"We have outgrown our space," he said. "As these metal suppliers compete, they've made each other better. Aluminum forced steel to produce stronger, lighter products to compete. We've enjoyed an increase in operations because of this. We will weather this storm (with facility shutdowns), and it will be very exciting to be a roll cover producer, post-COVID-19."

Like his familial predecessors before him, Harding said he will value inclusivity and collaboration as he leads the company during its second 100 years.

"I want group thinking," he said. "In preparing for this role, likely the last job I'll ever have, we will lead with transparency, consistency and continuity. If we can do that, our business will thrive and employees will benefit. Information breeds power and confidence—that's how I want our employees to operate."