Sunday, July 27, 2003

Survival through addition


Enterprise insight: Pride Cast has diversified since '83 start

By Jenny Callison
Enquirer contributor

[img]
Pride Cast Metals, Inc. Executive Vice-president Kenneth L. Bechtol (left) and President Thomas H. Hamm with a flow valve assembly cast in their Colerain Ave. facility.
(Michael E. Keating photo)
| ZOOM |
The decision, in 1983, to purchase a foundering Camp Washington foundry proved the start of an entrepreneurial adventure for two engineers. Their two decades of achievement were recognized last month when Pride Cast Metals Inc. won the "Client of the Year" award from the Senior Corps of Retired Executives (SCORE).

Beginning in the mid-1960s, Thomas H. Hamm and Kenneth L. Bechtol Sr. had spent their careers with Ohio Pattern Works (now OPW), learning every aspect of the company's metal casting operations. But a crisis loomed in 1981 when OPW decided to close the plant.

"Tom and I approached the president for the opportunity to purchase the foundry operations," Bechtol said. "It took two years to negotiate. We pooled what little resources we had and got pretty creative with funding."

They put their deal together with financing from the state, from Cincinnati's Revolving Loan Fund and from the Small Business Administration. Their first challenge as owners of the newly christened Pride Cast Metals was to recapture business for the foundry. Pride Cast continued to make aluminum and bronze castings for OPW and gradually took on other customers. But growth was limited.

"We quickly realized that to survive and grow, we needed to add value," Bechtol said. "So we added machining operations, and then more machines, and then assembly. The diversity gives us the ability to better manage our destiny."

One of the company's strengths is its pattern shop, a full-service operation that produces master, prototype and production tooling as well as fixtures for machining and assembly. Bechtol estimates that Pride Cast's inventory consists of more than 3,500 patterns.

"Basically, a customer can walk in here with an idea in his head and, with help from us, can develop a two-dimensional sketch into a three-dimensional pattern," he said.

Despite Pride Cast's innovations and sheer hard work, the company still encountered major challenges.

"We've lost some work to overseas competition. And there are increasing demands for higher quality from customers. Many of our customers have Six Sigma standards," Bechtol said, referring to programs instituted to further reduce costs and improve efficiency. "The challenge to American manufacturers is to manufacture at that level."

What Pride Cast needed was an additional source of revenue, and an opportunity came several years ago when OPW announced its planned divestiture of its Aluminum and Brass Kamlok Division. Since Pride Cast was producing those quick-disconnect coupling devices, sale of the division meant possible loss of substantial work. But since their company already had full manufacturing capability for Kamlok, Hamm and Bechtol decided to explore purchase of the line. And that's when SCORE stepped in.

"Tom Hamm called the SCORE office, and I was on phone duty that day," recalled SCORE volunteer Bob Conner, a former executive with OPW who had kept in touch with both former OPW engineers. "They saw that a significant segment of their business would be lost if Kamlock moved out of town.

"Since they were doing subcontracting for the parent company (OPW), Tom and Ken had the necessary manufacturing insight but they had never had a proprietary product, so they lacked experience in sales, marketing and a customer service operation that deals with end users."

Conner and fellow SCORE counselor Doug Martin recommended that the Pride Cast owners approach OPW about a purchase, and then coached them through the long negotiation process that led to the March 2001 purchase. For instance, they suggested that the Pride Cast team maintain a negotiation binder, which tracked all the points discussed and agreed to by the parties involved.

"You document everything," Martin said. "That way, memories don't conveniently change."

"Bob and Doug also helped us understand exactly what we were buying and helped us to focus," Bechtol said. "We were very good manufacturers and we knew how to cost out our operations, but we were less sure about marketing and pricing and other costs, and profit margins.

"We basically did a due diligence on this product line. Because of SCORE, we eventually asked OPW for more than what we had originally intended, which included Kamlok after-market components."

"They were very eager to follow through with practically all of our suggestions and they did it in a really first-class, workmanlike manner," Martin said. "They were open to frank discussions, with no hold-backs."

The SCORE counselors also showed Pride Cast's owners how to set the sales goals needed to recoup their Kamlok investment and how to develop a distribution network. Much to everyone's satisfaction, Pride Cast hit its 2001 Kamlok sales target of $1.2 million and has continued with solid gains since.

New relationships with government contractors have boosted more than Kamlok sales: Pride Cast is now manufacturing numerous petroleum dispensing-related components used in military operations overseas. The company has embarked on a joint venture with another Tristate manufacturer, and is exploring the development of other product lines.

"This is grassroots America right here," Bechtol said with pride, pointing to the plant's steady growth from 17 employees to 140. "If manufacturing people don't have jobs, nobody's going to be buying clothes, going to restaurants or shows."

Changing the mold

Although the core of Pride Cast Metals' operations dates to 1892, when the Ohio Pattern Works foundry was established, the company has had to expand and radically upgrade its capabilities in order to remain successful. Because many of the components it produces are used to dispense petroleum products, Ken Bechtol Sr. said that every item must exactly meet specifications.

Pride Cast now has about 35 customers for a wide range of products and services, which include casting sand and chemical analysis, quality control and testing of components, pattern-making, pressure testing and heat treatment. The company now stores and distributes stainless steel Kamloks, which are still produced by OPW.

Pride Cast Metals Inc. is at 2737 Colerain Ave. Information: 591-0069.

---

E-mail jcallison@zoomtown.com




BUSINESS HEADLINES
Goodbye to P&G, hello HP
Cheap money fuels sale of used cars
Business reform beginning to have impact
First prosecution under new accounting law looms
Reform's authors see a good beginning
Off-books activity restricted
Business notes
What's the Buzz?
Tristate business notebook

SUNDAY ENTERPRISE
Survival through addition
Self-publishing proves better route for some writers
Success often equals less cash