Dearborn Mid-West Conveyor Company

Mind over materialsDearborn Fabricating & Engineering Corp. and Mid-West Conveyor Co., two companies founded in 1947, merged in 1995 to become Dearborn Mid-West Conveyor Company. John OÔÇÖHanlon speaks to company president Frank Warmoth about the challenges facing the materials handling industry today. Dearborn Mid-West has spent most of the last 20 years as part of a UK industrial group, Tomkins plc.   But less than a year ago, in November 2007, Tomkins divested the conveyor manufacturer to a New York private equity group, Knox Lawrence International, and Frank Warmoth was promoted from his job as general manager of the bulk materials handling division based in Kansas.This was a sound business, with revenues of $200 million in 2007. WarmothÔÇÖs confidence that this will be exceeded by at least 10 percent and perhaps as much as 15 percent this year says much. He has certainly had a busy year to date. A new CFO, Robert Young, has joined the company to reflect the reality of life as an independent entity, and the Website is being redesigned to represent the company as it is today. ÔÇ£Eighty percent of our work used to be for automotive customers, but weÔÇÖre much more diverse today. And weÔÇÖre going to put an online store on the Website so that the aftermarket can be better serviced,ÔÇØ he says.The bulk materials handling business is a very important growth area. Dearborn Mid-West serves coal-fired power generation, which has been making many changes to meet CAIR (Clean Air Interstate Rule) requirements to reduce sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions in 28 states east of the Mississippi. CAIRÔÇÖs recent reversal in the US Court of Appeals doesnÔÇÖt really matterÔÇöthese changes will continue. ÔÇ£WeÔÇÖve benefited from some fuel-switching projects involving, for example, low-cost or low-sulfur fuels, petroleum coke generated by the refineries, and even some spinoff business from the growing ethanol industry,ÔÇØ says Warmoth.The January 2008 move of the strategically important mail and parcels handling business from Kansas City to the automotive and industrial facility at Taylor, Michigan, helped rationalize the business, says Warmoth. Past managers have thought it best to combine the operations and culture of Kansas and Detroit; he sees it differently. ÔÇ£IÔÇÖm trying to run the organization so that Tony Rosati, who leads the industrial and automotive in Detroit, and Sudy Vohra at the Kansas City bulk materials handling operation can develop their businesses as autonomous profit centers. TheyÔÇÖre doing that very successfully.ÔÇØ So where is the extra 15 percent coming from? ÔÇ£We see the contraction of the auto industry as a temporary setback that has enabled us to recapture business in markets that we abandoned in the past in order to focus on the car industry.ÔÇØ Appliance manufacturers, truck makers, tractor plants, airplane and even motorcycle manufacturers are all potential growth customers. One great advantage, says Warmoth, is that Dearborn Mid-West is well known and respected in all these sectors.He would also like to take advantage of expansion in postal and parcel services as competition increases. Since moving the mail and package handling business from Kansas to Detroit to take advantage of available engineering and manufacturing resources, DMW has gone aggressively after a stream of large projects being developed by the likes of FedEx, UPS and the US Postal Service, all of which have developing mechanization programs. The auto industry may be stagnant, but itÔÇÖs not dead. As a long-term supplier to Ford, Chrysler and General Motors, Dearborn Mid-West is still fulfilling contracts for the first two and is looking again at foreign manufacturers like Nissan, which it worked with upward of 10 years ago. The reality is that many auto plants have moved south, and the logical thing is to follow them. ÔÇ£WeÔÇÖre looking at acquisition as a route into the Mexican market. WeÔÇÖve done installations there in the past for both Ford and GM. ItÔÇÖs a big move for them, and weÔÇÖre paralleling our effort with theirs.ÔÇØConveyor technology may look straightforward, but innovation is alive and well both in bulk handling and in the industrial sphere. ÔÇ£In bulk materials handling, we try to form alliances with companies that have unique technology,ÔÇØ Warmoth says. ÔÇ£For example, three years ago we formed a relationship with FLSmidth KOCH of Germany to develop pipe conveyor systems in which the belt wraps around the material and contains it until it discharges.ÔÇØ These have come into their own in the American market because of their environmental capability. ÔÇ£They can do three things,ÔÇØ he says. ÔÇ£First, because the material is enclosed, thereÔÇÖs no dust. Second, they can go up steeper inclines than a conventional conveyor. Third, they can traverse horizontally in a curve.ÔÇØ The ability to curve cuts out transfer points, where most of the dust is generated. ÔÇ£WeÔÇÖve had tremendous acceptance of this technology, and there are really big cost benefits as well as the environmental payback to the customer.ÔÇØOn the industrial side, Dearborn Mid-West has been busy designing and building prototypes of new type conveyor systems aimed at a wide variety of industries. The standard automotive product is heavier and costlier than some of these new customers really need, explains Warmoth. ÔÇ£WeÔÇÖve exchanged some of our IP with a technology partner in France. This is lighter-duty equipment that can be used in the appliance industry, or even in some automotive or aerospace applications. It does the same job in the same way as our standard product but costs less and is more flexible.ÔÇØ The company has done projects in India in the past and is now keen to move back into the Indian market. With over a billion people and annual growth around 9 percent, the Indian economy, for all its vast resources, is overstretched in some of Dearborn Mid-WestÔÇÖs core markets. The automobile industry is growing massively, but even more interesting is the power-generation sector. ÔÇ£India is committed to electrify its rural areas by 2012, which means huge growth in coal-fired power generation. Even after 2012 it continues on a similar scale. We did that in the US in the 1940s, so the project management skills that we have will be in demand, as well as the conveyor technology.ÔÇØWhether itÔÇÖs done through alliances, acquisition or by opening a company in India has yet to be decided. In one form or another, though, Dearborn Mid-West will definitely be entering the Indian market, Frank Warmoth promises. ┬á