Northwest Business Magazine

Bergstrom Inc.: An International Competitor with Rockford Roots

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Serving equipment builders like Caterpillar and John Deere requires an international footprint for companies like Bergstrom Inc. in Rockford. Discover why this manufacturer is so committed to its customers, employees and hometown.

Assemblers like Jose Gonzalez use electrical and mechanical prints to assemble some components, such as this control board for a mining-grade climate system. (Chris Linden photo)

Assemblers like Jose Gonzalez use electrical and mechanical prints to assemble some components, such as this control board for a mining-grade climate system. (Chris Linden photo)

It’s hard to believe today, but there was a time when automobiles had no air conditioning and heaters were a luxurious add-on. Auto technologies have come a long way, since the 1940s, and one Rockford company has remained at the forefront of innovation.

For 65 years, Bergstrom Inc. has built climate-control systems for commercial vehicle markets around the world. It maintains plants in eight countries and serves big-name customers like Caterpillar, John Deere and Peterbilt.

Take a drive on any given highway, in any corner of the world, and you’re likely to pass a driver being heated or cooled by a Bergstrom unit: a trucker in a big rig, farmers plowing fields, earthmovers sculpting roads, school bus drivers transporting kids.

Supplying global production is big business in the Rockford area, where nearly one-fifth of all jobs are related to manufacturing, and where local production accounted for nearly $2.5 billion in exports during 2015, according to the federal International Trade Administration. Across Illinois, manufacturers exported some $68 billion in goods during 2014.

Despite its international reach, Bergstrom remains firmly headquartered in the Rockford region. Not only is the company close to major customers and transportation routes, but it’s invested heavily in the success of its employees and hometown.

“My father knew very well that to stay in business, Bergstrom had to supply state-of-the-art, competitively priced, quality products to its customer base, says company chairman David Rydell, whose late father, Elvin Rydell, was an early partner. “He also felt it very important to treat its team members with respect while providing competitive wages and benefits, a pleasant and safe place to work, and adequate training. In addition, he said it was important to treat its supply base fairly, and also to be a good corporate citizen. My father knew very well that this could only happen if the company operated at a decent profit, so that it could share and still have funds to reinvest.”

Inside Bergstrom HQ

From its start in 1949, Bergstrom has specialized in climate control devices, which it primarily sells to original equipment manufacturers (OEM). The company still maintains some of the same accounts landed by its founders, Adolph Bergstrom and Rydell.

“My father and Mr. Bergstrom worked at a company in Rockford called Burd Piston Co., back in the 1920s and ’30s, and became good friends,” says Rydell. “Mr. Bergstrom left in the mid-’40s and started his own company. About a year and a half after he formed it, he asked my dad to join him. Mr. Bergstrom’s love was to be with customers, and he needed someone to run the company.”

The pair started by making heaters for construction machines, trucks and school buses. Over the next several decades, the small company acquired large-scale customers. Rydell joined his father’s business at age 16, doing odd jobs on summer break, and eventually moved into the corner suite. When the company’s customers expanded into international markets, it followed, setting up in the United Kingdom in 1989 and in China in 1998. Today it also has production centers in Brazil, Spain, Turkey, Russia and India.

“They had the vision to be in China before it was even cool,” says Jack Shaffer, president and CEO. “They had a facility there that was already growing and successful when, 10 years ago, everyone was saying, ‘I need to get to China.’ We were already there and well established.”

The company serves many types of industries, including components for military vehicles, mining equipment, the niche automobile market, logging machines, the marine market, and stationary refrigeration, such as water coolers or grocery store units.

Its signature proprietary technology is the NITE: the No-Idle Thermal Environment system. The compact unit allows truckers to sleep comfortably in their cabins without running the truck’s engine, thus reducing fuel use and emissions.

“You’ve seen the trucks at the truck stop idling their engine in order to keep their cabin comfortable all night long,” says Shaffer. “With our product, you don’t have to do that – this unit is battery powered. It’s very green and lean, and we have it on many OEM trucks in the United States.”

Building a Component

Bergstrom employs more than 2,000 people worldwide, with about 500 based in Rockford. Its headquarters on the city’s south side is a hub for company executives, engineers and product assemblers. A separate division, in a separate facility in Rockford, handles aftermarket services of Bergstrom equipment.

Generally, a new product begins when a customer requests bids for a new product, like a Caterpillar machine.

“Caterpillar would say, ‘We have a new product that needs a heating and air conditioning unit, and it’s got to fit into this space and meet this performance criteria,’” explains Shaffer. “We spend weeks putting together the proposal, and assuming we win the bid, we begin an eight-phase process.”

The first several steps focus on product design. By phase three, manufacturing engineers begin planning and testing production; by phase eight, the unit is in full production. From start to finish, the process can take one to three years.

“We started working on the No-Idle in 1995,” says Rydell, “and we didn’t start selling product until about 2005.”

Rockford’s Plant 1 is where the “runners” – the high-volume units – are assembled in stations, organized by customer. At each workbench, assembly teams follow a computerized system of instructions, some of which coordinate with Bluetooth-enabled tools.

“The computer might say, ‘This piece needs to be torqued at 40 inch-pounds,’” explains Paul Wixom, operations manager. “This tool will torque it to 40 inch-pounds and tell the computer it’s torqued. If you’ve got to do eight torques, it’ll count for you.”

In the adjacent Plant 2, workers are assembling bus and off-highway products. Slower-moving units are assembled further back. Wixom points out one unit that’s used in underground mining and takes about a week to assemble. It’s roughly the same size as a rooftop commercial-grade air conditioner.

“We do all the schematics and wiring by hand, from a print,” says Wixom. “It takes skill to be able to build these units.”

Downstairs, a semi truck cabin, with wires protruding from every angle, is sitting in what looks like a giant freezer. But inside this environmental chamber, the truck’s climate system is being put to the test.

“It’s like when you’re in the hospital and you have an EKG so the doctors can get signals from your body,” says Wixom. “Here, it’s all about how warm, how fast, how cool, how fast. This chamber gets up to about 125 degrees and down to 20 below zero. We’re testing how fast the system cools the cab, how fast it’s defrosting and how fast it’s heating.”

Corporate Culture and Local Investment

Many components that circulate through the Rockford plant come from American manufacturers, but many also come from Bergstrom’s facility in China. The parts produced there supply Chinese manufacturers as well as Bergstrom’s domestic customers.

“We supply ourselves, and guess what – that plant is one of our best, most reliable and highest-quality suppliers,” says Shaffer. “Sending that work to China actually allowed more high-quality jobs to be created here in Rockford, because we’re more competitive to our customers and so we win more programs.”

Many of Bergstrom’s customers do their manufacturing in other countries, in the same places where those units are sold. Shaffer and Rydell find that it’s been a competitive advantage, in many ways, to manufacture close to the source. The cost of shipping parts overseas can be so large that some equipment manufacturers will only award bids to companies near a particular plant.

“If you don’t have plans to be in Brazil, and you don’t have a partner in Turkey, and you don’t have an operation in, say, Mexico, you can be disqualified,” says Shaffer. “You may be a good company, but in the manufacturer’s eyes, you’re not big enough and don’t have enough global reach. Because we do have that global reach, we’ve won a lot of business.”

Across its many locations, Bergstrom maintains a consistent company culture, one that’s focused on safety, quality and self-improvement. From day one, employees are trained in the company’s culture and values, and provided with performance incentives. Bergstrom employees live by the standards of lean manufacturing and a combination of internal values, inspired by Caterpillar’s supplier code of conduct.

“I had an idea that Bergstrom should have its own code of conduct, but that it should be on one page and it should be in every office and division of the company,” says Rydell. “One of the biggest problems we’ve had with the code of conduct, at least from what I’ve been told, is that some employees lost their jobs because they couldn’t clean up their language – and it’s in the code of conduct that we don’t use profanity.”

Shaffer regularly tracks company executives and their ability to achieve objectives. Inside the Rockford assembly plant, colleagues hold each other accountable daily. The plant’s Communication Control Center is filled with marker boards that track things like work orders, processes, production goals and quotas, and safety issues.

“Every day at 8 a.m. there’s a meeting here,” explains Wixom. “We talk about the most important thing: safety. And then, we talk about quality and delivery. We’re very passionate about safety first, quality second, delivery third.”

Wixom and his teammates lead some 30 to 35 audits every year, to ensure that the company and its employees live up to these high standards.

Personal and professional development is actively encouraged on the assembly floor. Through the company’s “Mastery” program, employees learn more about company history and become experts in their departments. Those who earn their first master get a pay increase, and those who earn a second Mastery, in another discipline earn additional pay increases.

At the same time, every employee’s input is valued. Everyone is expected to contribute at least six proposals per year that will lead to company improvement. Walking through the plant, Wixom can point out the results of several money-saving ideas.

“We used to have an issue with scratched sheet metal,” he says, walking past the powder coat painting station. “Someone proposed a better way to handle the parts in our powder coat line. Now, we save probably $50,000 a year because we don’t have those quality issues anymore.”

Inside the parts department, Wixom points out a solution he helped to implement with a cross-functional team. In the past, team members would note parts shortages on a form and copy the information onto a marker board. Planners would later copy those shortages on their own form.

“We did a process map to see how things were working, and we said, ‘That piece of paper you write on – just give it to the planner,’” says Wixom. “Now, the system is computerized, so it appears on this big screen and the planners can pull it up at their desks. I think we calculated this at about a $45,000 cost savings every year.”

The attention to detail is paying off, and Shaffer sees it every time he brings a customer through the plant.

“I am told this by nearly every customer we have: They have never seen a more organized, more error-proofed process for someone our size, running our volumes. In the automotive industry, you might expect production errors at 10 parts per million, but our company might run from 500 to 5,000 parts a year. If you have one reject, your error rates go nuts.”

Wixom sees self-improvement as a means to greater competition. “The only way we can succeed is if we’re all moving in the same direction,” he says. “We’re only as strong as our weakest link. My goal is to have the weakest link come up to a higher level. Then that’s our weakest link, and they improve to the next level. Maybe some day, a lower-producing assembler becomes our best – that would mean they made a huge improvement.”

Reshaping the Region

Bergstrom’s investment in its employees may provide goodwill, but it’s also an important tool in employee retention. Many have worked here for decades, but finding new employees to replace them – on the floor and in the engineering office – is no easy task. It’s not just because of the company’s high standards.

“When we try to recruit, we might find someone from Cincinnati, and they get on Google and discover that Rockford is called the 10th worst in this, and Illinois is 48th worst in that – and that’s all people see of us,” says Shaffer. “So, that’s why we’re involved in Transform Rockford. We understand the facts, and we want to be a company and live in a community where people really want to come.”

Bergstrom leaders are doing their part to actively improve the region’s fortunes. Rydell is on the steering committee of Transform Rockford, a nonprofit organization whose mission is to generate a strategic plan for the region’s improvement. Its committees are addressing several social and economic subjects, including family, infrastructure, recreation, education and jobs.

About 15 to 20 other Bergstrom employees also are engaged in Transform Rockford, and Shaffer co-leads a team on renewal.

“Renewal is safety, education, youth and leadership, and healthy lifestyles,” he says. “You fix all of those, and this will be a place where you’ll have no trouble bringing people in. What do we need right now? We need lower taxes, and we need everything that Transform Rockford is working to accomplish.”

Rydell recognizes that, with meaningful change and a positive external image of the Rockford area, companies like his can successfully recruit skilled talent.

“If the community is successful, that’s certainly a plus,” says Rydell. We want prospective employees from around the country to Google us and say, ‘I’m at least interested in going to the community,’ rather than saying ‘no’ before they’ve had a chance to meet our company.”

Meanwhile, the company is redoubling its efforts to grow local talent. Earlier this year, it became the title sponsor of WTVO/WQRF’s Stateline Quiz Bowl, a televised competition among local high school students.

“We did it for two reasons,” says Shaffer. “One of those was to help the community, but the other was selfish. We wanted bright students to know who Bergstrom is. We hired two of the winners from [Rockford’s] Auburn High School for an internship. It’s our intent that this television show becomes a long-term relationship.”

Rydell and his colleagues have found other ways to give back to the region, too. His father, who died in 2001, served on several area nonprofit boards, including that of SwedishAmerican Health System. The younger Rydell serves on the same hospital’s board, as well as on the boards of the Rockford Rescue Mission, Rockford University and others. He’s steered a certain portion of operating profits into local charities and encourages employees to give back.

Rydell remains committed to his hometown, the same place where his father’s company was established. Bergstrom may be international in scope, but its roots are firmly planted in Rockford’s manufacturing scene.

“What truly separates Bergstrom from any other company I’ve worked with is this atmosphere of high ethics, supporting the community and supporting each other,” says Shaffer.

“It’s a culture that I consider unique, because I’ve worked in five or six places, and there’s nothing like it.”

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