Northwest Business Magazine

An Era of Expansion: Manufacturing Basks in a Golden Age

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It’s no mirage: In this economic recovery, Rockford’s manufacturers are growing in leaps and bounds, bringing with them renewed prosperity for local workers and numerous opportunities for area suppliers. This is the inside story of how our region is growing, and how area manufacturers are responding to the growing pains that come with a new era of expansion.

Quantum Design has expanded beyond engineered control systems and now serves the steel manufacturing and printing industries, as well.

Quantum Design has expanded beyond engineered control systems and now serves the steel manufacturing and printing industries, as well.

They knew the rush was coming. What the team at Rockford Toolcraft, a metal stamping and tool/die specialist in Rockford, didn’t foresee is how fast it would come.

The customer was a major truck manufacturer who was ramping up a new product. It meant good news for Rockford Toolcraft, which last year enjoyed one of the busiest periods in its 43-year history. Revenue jumped. One hundred people were hired. Suppliers got more orders. Even the vending machine guy got a boost. But getting there – that was an adventure.

“If your boss throws down double the amount of work on your desk and wants it in the same amount of time, it’s like, ‘How do I deal with that?” says Tom Busse, company president. “But it’s that first big wad that hits you that’s difficult to handle. That’s how last year was for us.”

Busse’s experience is something you’ll hear a lot around the Rockford area these days, as manufacturing basks in a new golden era. It’s a season filled with many successes and plenty of growing pains, too.

The numbers alone paint a rosy picture. Since its bottom-out in 2010, local manufacturing employment has jumped 24 percent, according to data from Illinois Department of Employment Security. That’s roughly 6,400 new jobs. In eight years.

Area manufacturers produced more than $45 billion in gross domestic product in 2017, jumping 6.5 percent from four years earlier. Almost 20 percent of the city’s workforce is engaged in manufacturing – half, if you also account for the logistics and utilities jobs that support it, according to the federal Bureau of Labor Statistics.

In just the past few years, Woodward has ramped up toward full employment at its new Rock Cut campus, where members are preparing parts for next-generation aircraft engines. The FCA Chrysler plant, retooled for new vehicle lines, has drawn suppliers who’ve built new facilities. Food producer Berner Foods and retail display producer Siffron are preparing to open massive warehouses. Numerous other firms have launched new products, purchased new machines and hired additional workers.

Manufacturing’s explosive comeback is expanding our region’s economic base in many ways, but this rapid growth is also bringing with it new and unfamiliar challenges. And yet, our region is leagues ahead of its peers. This is the moment we’ve been waiting for.

“It’s a very fundamental component of evolution: The ones that are most nimble, quickest and most adaptable to change are the ones that are going to thrive,” says Nathan Bryant, President/CEO of Rockford Area Economic Development Council. “We have that in our market.”

The Big Picture

There are, essentially, two types of drivers in today’s manufacturing scene: The innovators taking bold risks and the suppliers who are feeding the beast.

On the one side are firms like Collins Aerospace which, in its drive to create a hybrid gas-electric engine for airplanes, has established a skunkworks project in the Rockford area, investing $50 million to develop a special high-voltage lab to test high-power generators for aircraft. Expected to be operational by 2021, it’s part of the company’s $3 billion investment in electric architectures.

“When you want to test your product, no matter what you’re testing, it offers us an opportunity to draw folks into this community and at the same time see the technical innovation that’s taking shape locally,” says Bryant.

While major firms push the envelope of innovation, local suppliers are feeding demand from the likes of the aerospace, agriculture and automotive sectors, producing everything from stamped metal to fasteners – and we’re still a leading global market for fasteners, says Bryant.

“We’re far enough down on the supply chain that having enough vision to understand the shifting economy can be somewhat difficult,” says Bryant. “In my opinion, that’s why, historically when there are big shifts in the economy, we tend to be rolled first and rolled a little bit longer before we come around. One of the opportunities for us, as a region, is to start having greater clarity about the impacts of what’s going on in the overall global economy and getting our companies to think about that, so they can be more adaptable.”

That’s why, as he sells our region to outsiders, he’s quick to talk up our competitive advantages: quality of life, expedited investments, welcoming culture, talent development pipelines and a proven track record.

“What we do have is a pedigree to say, ‘Give us your problem.’ We have a pedigree of solving complex problems, so it stands to reason that we can help you, too,” says Bryant. “When it comes to talent development and competing on economic development, we’re competing with communities that are four and five times our size. We’ve heard over and over again that communities our size are not doing what we’re doing.”

Opportunity Knocks

Growth at Quantum Design, in Machesney Park, Ill., has been a long and steady process, largely through a series of acquisitions. All while orders continue to grow.

For almost 20 years, Quantum Design simply engineered and produced machine control systems. In 2007, the firm bought out the retiring owners of Centro-Metal Cut, a specialist in conditioning grinders and abrasive saws for the steel industry. In 2014 the firm branched out and purchased KTI, a South Beloit specialist in splicers and rewinders used in labels and packaging. Two years later it purchased an Indiana firm specializing in roll sheeters for the printing industry, and just last summer it purchased CTC, a competitor of KTI that was going out of business.

“We’ve come across these opportunities through the years, and it’s just made sense to purchase these product lines,” says Angie Ostler, vice president of finance and marketing at Quantum Design. “The thing that ties them all together is our control systems group, because they do the controls for all of the systems we manufacture.”

The rapid series of acquisitions left the team at Quantum Design feeling stretched thin as it traveled between multiple locations. So, last year it began building a brand-new facility right off Interstate 90, where it could combine all five product lines. The new 100,00-square-foot facility, set on 9 acres along the highway, brings all 100-plus employees under one 34-foot high roof.

“We felt like our overall growth was hindered by having separate locations,” Ostler says. “So, we felt like moving into one location, even though it has less square footage than our previous three facilities, it’s set up more efficiently and has a flow for everything in a way that’s beneficial.”

Since moving in this past April, Quantum has added at least six new people – all representing new positions needed to fill growing orders. Plans are underway to add a second shift at the firm’s in-house machine shop, which generates many components assembled on-site. “It seems like we’re always hiring,” says Ostler. “It used to be in spurts.”

Ramping up employment has proven challenging, in part because of the Rockford area’s nearly 5 percent unemployment rate – one of the lowest rates recorded since it peaked close to 20 percent in 2010, according to the federal Bureau of Labor Statistics.

Machine builders and CNC machinists are the most in-demand at Quantum Design, and they’re some of the hardest positions to fill, says Ostler. Machining is a skilled trade that often requires experience and certifications. Machine building, on the other hand, requires experience less than the right combination of aptitudes.

“We’re looking for someone who has building skills, whether they like to tinker in their garage or they’ve worked construction in the past,” she says. “It’s a unique product we’re creating, but it’s a willingness to want to learn and a willingness to grow with the company and work hard.”

In many cases, Ostler says, employees can start in entry-level positions and rise through the ranks. To sweeten the deal, Quantum Design offers a souped-up benefits package and a spacious, sunlight-filled employee lounge meant to create a laid-back atmosphere.

Quantum Design is also setting a groundwork for the future by collaborating with local colleges and high schools, encouraging local youths to consider a manufacturing career.

“We say, ‘Hey, maybe if you’re not thinking you want to go to college, there are skilled trades you can learn and things you can do that you can still be successful at without a college degree,” Ostler says. “We tell them about our panel shop and opportunities here. And, we’re trying to build an internship program for our engineering department.”

Capitalizing on Opportunities

Just off Interstate 90 between Roscoe and South Beloit, PBC Linear is expanding and adding jobs as new orders come in for the company’s linear motion products – tools commonly found on manufacturing lines for packaging and medical devices as well as military equipment, aerospace equipment and 3-D printers.

It doesn’t hurt that changes to the federal tax laws have created a strong incentive for the company’s recent $10 million commitment to expanding and refurbishing its facility.

“With the recent changes made to the capital gains tax laws, it made it advantageous to make the investment,” says Tom Schroeder, vice president and chief operating officer. “So, probably 40 percent of the $10 million we’ve actually spent on new equipment. That’s for new product lines as well as new equipment to update some of our old equipment.”

The company is now moving existing product lines into a brand-new, 65,000-square-foot production center on its South Beloit campus. The move frees up room in the existing facility to revise existing product lines and improve their efficiencies, says Schroeder. At the same time, PBC Linear is also welcoming a subsidiary from North Carolina whose factory was destroyed by Hurricane Florence last year.

In all, the company’s added close to 50 jobs over the past year, says Schroeder. But filling those jobs has been a challenge, especially when so many positions require distinct skill sets such as CNC operation, toolmaking and machine maintenance.

“We have a number of ways we try to recruit and promote ourselves, but what we really try to do is absolutely make sure we’re offering competitive wages for the area, and we’re providing a benefits package that, I would say, is one of the best for our size of business,” says Schroeder. Benefits include a self-insured health insurance program, 401(k) matching, supplemental life insurance, an on-site gym and access to NorthPointe Wellness.

PBC Linear has also begun sponsoring apprentices who take classes at Rock Valley College while learning on the job.
Leaving the Rockford area to grow has never been an option for Schroeder’s family, which owns and operates PBC Linear. “Back in the early ‘80s, my dad really wanted to prove that manufacturing was still viable not only in the U.S. but in the Rockford area,” he says.

Lucky, too, for the region. The growth happening at PBC Linear is spreading far beyond its 50-acre campus.

“I remember seeing a study that said for every one manufacturing job there’s somewhere between six and eight supporting jobs created to support that one manufacturing job,” says Schroeder. “So, if you create a job for a machinist, someone has to provide the material they’re using, someone has to provide the tooling they’re using, the coolant they’re using, and all of those come from different companies.”

A Matter of Confidence

Busse notices it, too – an increased sense of confidence all around. He sees it in the new cars sitting in the Rockford Toolcraft parking lot, owned by employees who worked some 20 Sundays and countless overtime hours last year to keep up with customer demands. Busse also hears it from his customers, which include a number of major OEMs.

“The mood of our customer is that they have confidence in the future, and a lot of their new programs started because they had confidence,” he says. “We cannot take any credit for this economy ourselves. We didn’t grow this. We didn’t go out and find a bunch of new customers. We just expanded with our current customers.”

And the effects are trickling down the line. Last year, Rockford Toolcraft spent roughly $72 million on steel alone, with additional services outsourced locally whenever possible.

Like other manufacturers, Busse has had to add extra perks to entice new employees, but nearly 80 percent of his new hires last year were in general labor or entry-level jobs from which someone can work their way up. Surprisingly, even those jobs were hard to fill with qualified candidates, says Busse.

Learning from the experience, Busse and his Human Resources team began a new onboarding process this January, designed to prepare new employees for their first weeks on the job. Their first few days begin in a classroom, and once they make it to the shop floor, they’re assigned employee mentors who can show them the way. Retention numbers are rising, says Busse.

“Before, if we needed help we just called up the temp agency and they’d send five people,” says Busse. “They got here and they would go to work. If they had it in them, they understood it and they were comfortable, but for a lot of them, I think the shock of it freaked them out. Now, we try to temper that a little bit the first couple of days.”

Stretching Out

With nearly 80 percent of its business in the automotive sector, Rockford’s Specialty Screw is bouncing to new highs as auto sales return to their highest levels in 15 years. It’s welcomed news for a company that’s doubled its employment since the darkest days of the recession, when survival and sacrifice were top of mind.

This spring, the Tier 1 supplier, a specialist in highly engineered, customized metal fasteners, completed a 20,000-square foot addition that added nearly 25 percent more floor space.

“We were getting very cramped,” says CEO Russ Johansson. “It was becoming a safety concern, too. Because of a lack of floor space, we staged our work-in-process in any available spots. Forklifts were weaving through stacks of material, and it was getting hard to notice the employee work stations.”

The new space brings with it a number of efficiencies, including a rearranged shipping/receiving area, new equipment and a more spacious production floor. But it also provides what human resource manager Kathy Schier believes will become a competitive advantage in attracting talent: space for dedicated training.

Fasteners at Specialty Screw typically combine a “cold heading” primary process that creates the fastener’s basic shape and secondary work that adds threads, drills holes or does other metal removal functions. It’s work that typically requires a special kind of machining experience that’s rare in today’s workforce.

“On the secondary side, there isn’t a lot of outside training for that, and that’s really where our specialty is,” says Schier. “It’s what makes our parts stand apart from all of the other fasteners out there.”

The company has found success in working with the Rock Valley College/Northern Illinois University partnership for engineering talent, and it’s benefitted from RVC’s cold-heading training center, where workers can learn how to convert wire into components through high-tonnage cold-heading manufacturing.

What’s hardest to find, says Schier, are “soft skills” – mechanical aptitude, punctuality, work ethic and an ability to put your phone away. To hook the best candidates, Specialty Screw offers perks like a strong benefits program, tuition reimbursement and a wellness program. And, the company is taking its message to area high schoolers, connecting with them in the hopes of fostering future employees. Johansson estimates the new addition, when fully ramped up, will add about 10 employees.

“We’ll ask a lot of our long-term employees, ‘How’d you get into manufacturing?’” says Schier, Johansson’s daughter and one of three siblings involved in the business. “A lot of them got into manufacturing right out of high school.”

Committing to a $2.5 million expansion wasn’t easy, says Johansson, especially since the last recession left him feeling “gun shy” about the next economic correction. It was a change in mindset that helped him to seize upon a new economic reality.

“We used to do expansion and purchase of machines based on a ‘build it and they will come’ mindset,” he says. “I said no, I’m not going to build it because then the economy will slow down and then I’ll have this equipment and space without the sales to support it. We kept putting it off until we said we’ve got to do it. We’ve got to have the philosophy that we’re going to continue to grow. So, we went ahead and did it.”

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