Minnesota Company Has Clients Gaining Interest
Harbinger Industries has found a fixtures niche it can bank on.
By Greg Landgraf
In an era of financial industry mergers and rapid change in the physical form of banks, Minneapolis, MN-based Harbinger Industries Inc. has found profitability in serving clients like Norwest, Chase Manhattan, Eureka Bank and First Chicago.
"The consolidation in the banking industry has been very good for Harbinger, because as banks become larger and larger, they are looking for fixtures to provide a unified impression on people when they first walk in," explains Harbinger president Michael Quirk. He adds that changes in the banking industry make the niche unusual, with banks sprouting up in very small locations, temporary locations or within drugstores or supermarkets. They function differently than the traditional institution, and they require casework that is more like store fixtures than traditional millwork.
"The term today in the fixtures industry is GÃÆÃâ¡ÃÆÃÂ¿clicks and mortar' because of the way in which computers are being integrated," Quirk says. "For financial institutions, we're seeing a combination of computer-driven financial transactions that take place in a small, non-permanent bank."
Like most fixtures, Quirk adds, bank fixtures serve as communication devices. They perform their function in a variety of ways: holding placards or brochures, serving as an interactive computer kiosk or creating a visual impression.
"Clicks and mortar" shows through in work Harbinger did for a Wilmington, DE, bank. The Learning Curve is an "educational bank" that helps students and parents search for colleges on computer touchscreens and extrapolate costs to guide their investment strategy. The fixtures need to work with the electronic equipment. "It's built kind of like a trade show display in that it's all curved and it all bolts together," Quirk says. "They were able to go in and wire and install this project in less than a week."
Store fixtures did not really begin to enter Harbinger's business plan until 1994. Prior to that time, the company had focused on tenant finishing projects, but Quirk felt it needed to expand. "We wanted to have dual markets to limit the risk in case one of them had a downturn in the economy," he says.
Since 1994, fixtures have been the company's primary source of growth, and they now make up about 40 percent of Harbinger's business. Most of its fixture customers are banks, but other clients include national retail chains like Ralph Lauren, Calvin Klein and B. Dalton, as well as local boutiques.
Architectural work still accounts for half of Harbinger's sales, and 10 percent comes from OEM manufacturing. The architectural background is what propelled Harbinger into higher-end fixtures.
"As our company developed, our focus was on quality first, every time," Quirk says. "Because we had the background in the architectural side of it, where high quality is really expected almost all the time, we've been able to culturally shift that emphasis on quality to all the other parts of our business."
Quirk says that includes meeting the client's price point as well as timetables that are frequently under six weeks for even the largest jobs. "Our job is to make sure that we can engineer projects to meet the client's service level," Quirk says.
Much of that responsibility is shouldered by Harbinger's engineering department, whose work typically accounts for a third of the time Harbinger puts into a project. The engineers are responsible for taking a design and determining the materials and processes to use in order to build a functional project cost-effectively and within the customer's time frame.
Six of Harbinger's seven engineers are former shop floor employees. "We've trained them to use the tools that we use -- the computers and software -- but they also have basic woodworking knowledge, they understand how things go together, and that's really the key component to a good engineer," Quirk says. He adds that clients are impressed at the "value engineering" that their designs receive.
Fixtures that Harbinger made for Norwest Banks gave the engineering department a chance to shine, Quirk says. The fixtures are freestanding displays that hold brochures and placards. "When we first took on this project it was taking us about six hours per fixture," Quirk explains. "We reengineered the process using some really unconventional techniques to get it down to about an hour and 45 minutes, which helped us meet the deadlines for the client."
Instead of making a solid particleboard box, laminating it, finishing it and cutting bevels and finishing them, Harbinger miter-folded high-pressure laminate so the displays fold together. Edges are cut through the laminate, but not through packaging tape on the back side, which acts as a hinge and gives the unit a "no black line" appearance.
Harbinger shifted from paper-based to CAD-based engineering in 1991. "We put the drafting board in the lunchroom and put the computer on the desk, and literally overnight flipped the switch," Quirk recalls. He says the total transition period lasted only about four weeks and was made difficult not by employee attitudes to the change, but simply by having to meet tight job time frames.
Absorbing the tight schedule then, however, helped to make it possible to handle even tighter schedules today, says Quirk. "From an evolutionary standpoint, that was a lynch-pin for the way Harbinger changed."
Another important step the company took was investing in CNC machinery. In the late 1980s, Quirk says he heard from other companies that computer-controlled equipment was the wave of the future, creating a mix of very small shops with computerized equipment serving niche markets and large shops able to react quickly enough to take on smaller jobs. "My judgment was that the mid-sized shop was going to go away or at least become radically different," he says. "And we were a mid-sized shop."
In 1991, the company bought a Heian CNC router from Stiles Machinery that cost $300,000, a third of its revenue that year. Two years later it added a $130,000 Holzma CNC beam saw, and more recently, it bought a Weeke Optimat point-to-point drilling and routing machine and a Costa NC veneer sander.
The CNC machinery and CAD engineering had a marked effect on Harbinger's business. "The following year (after purchasing the equipment) we slightly more than doubled sales, and we did that by increasing our labor force by 15 percent," Quirk says. He adds that productivity increases were not limited to machining; assembly times, for example, were reduced because the parts were more uniform. Also, Quirk says customers knew Harbinger was shifting to computer-based equipment and gave the company larger jobs.
Other equipment Harbinger uses includes two air-assisted airless finishing booths. The company lays up its own laminates and some veneers, and does a portion of its own metalworking, primarily on metal tubes and small quantities that metal shops often do not want to take on. Quirk says Harbinger coordinates materials, wiring, building and shipping for the parts of a project it doesn't directly manufacture.
The company uses the AutoCAD drafting package, as well as Holzma Cut Rite optimizing software, WoodWOP to write code for the point-to-point machine, and MasterCAM and RouterCIM to program the Heian machine.
To manage its schedule, the company uses Job Ops software, which includes real-time tracking and scheduling of all jobs and runs inside the company's accounting software, MAS 90. This system enhances Harbinger's ability to tell a client up front what its capabilities are. "We enter the estimated hours for a job into the computer, the computer automatically schedules it based on those estimated hours and the delivery dates that we put in, then we track against that," Quirk explains. "It's a dynamic, living schedule that changes every day.
"That's how we determine whether we can take on a project or not," he adds. "We don't tell one of our good clients, GÃÆÃâ¡ÃÆÃÂ¿No, we won't do it.' But the information we get from our scheduling package allows us to predict in advance that we're going to have to do something different."
In that situation, the company has several options: hiring subcontractors or temporary workers, outsourcing parts, giving the design to the engineers to find a faster way, or working with the client on the phasing of the job. "It is a can-do, never-say-die attitude towards getting a job out when clients need it," Quirk says.
As a result, Harbinger can meet its tight production schedules. "What we're trying to do is set up a win-win situation between our clients and Harbinger. We view ourselves as an extension of our clients' businesses. If we can help them succeed, that's better for us," Quirk adds.
Jobs typically run from $25,000 to $1.5 million, and annual sales are $6.5 million. The company does not seek out smaller jobs, but will do them as a service for its top customers. "We're part of their business," Quirk says, "and if they need small jobs done, then we'll continue to help them."
The 65,000-square-foot shop has 33 full-time shop employees and 22 office employees, including the seven engineers. The company has grown consistently since its 1982 founding, appearing on Wood & Wood Products' Wood 100 report of the fastest-growing wood products companies for six of the last seven years. As business has expanded, Harbinger has faced the challenge of adding employees to keep up with the work. "The first thing you need to do is retain the good employees you already have," Quirk says. "You need to treat them with respect."
Continuous job training and a chance to move up are one benefit that Harbinger offers. Many shop floor employees have moved into engineering, and a former plant manager has made two jumps, first into engineering and then into purchasing, Quirk says. Other benefits include medical and dental insurance, vacation, merit bonuses, 401(k) matching, educational assistance, and company social functions. Harbinger also supports employees who move on to start their own woodworking companies by referring most residential jobs to them.
Finding new employees is more difficult because of low unemployment, Quirk adds. He sits on the advisory boards of all three post-secondary cabinet programs in the Twin Cities area, which allows him to meet students as well as "to support and repay the industry," he says. He also works on the Partners in Progress high school outreach program through the Architectural Woodwork Institute. "The local Minnesota AWI chapter is participating in the national effort to become more involved at the high school level in attracting students into the secondary wood products manufacturing field," Quirk says. In Minnesota, efforts include offering teachers help getting students in the woodworking classroom.
AWI contacts have also helped Harbinger's marketing efforts. Quirk estimates a quarter of its sales can be traced through AWI in some way. Other marketing has been through primarily local contacts with architects and store designers. "We've been in business long enough that some of those local contacts have moved to different companies in different parts of the country, and that's part of how our work spread," Quirk explains. "The banking projects are designed in Minneapolis but shipped throughout the world. We've done work in South America, Europe and Canada."
Quirk also attributes part of Harbinger's success to the service the banking industry provides to him as a customer. "A great relationship with your bank is critical to the success of a small manufacturing firm," Quirk says. "It can help you grow or it can stop you from growing. If there's bad news, your banker wants to hear it from you and he wants to hear it from you first. Maintaining the trust of the bank is something that has to be done -- they're as important as any vendor or any client."
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