Two strong Wisconsin companies recently joined to form a hybrid manufacturing firm through a seamless transition. TJ Hale Co., a retail interior environments manufacturer, joined forces with another Milwaukee area company, A.J. Pietsch Co, to form an alliance of two companies with more than 150 years experience in the secondary wood processing industry.
When Hale purchased Pietsch in September 2011, it created a company with 130 employees, upwards of 300,000 sq. ft. of manufacturing, office, and warehouse space, as well as a national presence in retail interiors (Hale) and specialty architectural millwork (Pietsch).
So what were the major challenges re combining the two companies? Was there a “culture” difference between the two companies? “The cultures were rather similar,” says Hale CEO Robert Rosean. “Differences existed due to size and markets served, but were also seen as complementary and perhaps synergistic in terms of serving existing customers of both organizations.”
Still, there were some adjustments, particularly on the production side. “The processes at TJ Hale are more developed, and the scope of the organization allows for more specialization in roles,” Rosean says. “The ERP system in place at Hale formalizes and documents many of the functions done ad hoc in a smaller organization. There is obviously a learning curve for the veterans of the smaller shop (Pietsch), but also more resources and depth of experience are available to serve our clients here.”
The combined organizations have grown payrolls over 35 percent and revenues over 50 percent in the last 12 months, according to Rosean. The combined company is located in Hale’s facility in Menomonee Falls, north of Milwaukee. “Future growth for the combined company is the key goal,” says Rosean.
“We’re very excited to see this combination to its full potential over the next three to five years” Rosean adds. “We have great confidence in the Wisconsin talent brought to bear and in the potential of increased manufacturing expertise this brings to our clients. An essential key to our past success and that of our future is the skill of our companies – as we bring new generations into our business, we are excited to see the experience of all these years bestowed unto these next generations.”
The combined organization continues to serve local architectural millwork needs as well, and site-specific perimeter retail opportunities that were not a major focus of either organization before the combination.
“In addition to the addition of skilled employees, it was a purchase of selected assets of A.J. Pietsch by TJ Hale,” says Rosean. “The prior location of Pietsch, which was an older building with a less efficient layout, was not included in the deal. Much of the existing machinery at Hale was larger and newer than what Pietsch used, and likewise was not included.”
Personnel roles examined
Materials manager Dave Nadolski explained how the merge of employees was accomplished, relative to job description, duties, and other factors.
“Each Pietsch employee went through the screening and interview process of TJ Hale,” says Nadolski. “Skill levels and interests were determined, and ultimately every former employee of A. J. Pietsch was offered a job with TJ Hale.”
He says most job descriptions and roles translated directly from one organization to the other, such as cabinetmakers, finisher, estimator, etc. “In the several instances where there was not a direct fit, there were needs for roles that matched the skill sets of the Pietsch folks,” Nodolski says.
Rosean says the transition day was well-planned in advance, and new employees already had the benefit elections, physical exams, and related issues completed. Then on Sept. 29, 2011, employees reported to the Hale facility for their first day of work for the combined organization.
The manufacturing sequence from order taking, order entry, manufacturing transfer, production, software integration, assembly, and shipping was altered slightly to accommodate the merger.
“Clients will often begin to relate their needs in terms of how many stores and when during the year they will outfit them,” Nadolski says. “Client management teams stay engaged to fill in the details and refine the order as it draws closer. Much of the information is captured in our ERP system, and it forms the basis of most downstream activities. Sales orders are entered, and the needs generated in the system for outfitting stores are broken down into items, and further into component manufactured and purchased items.”
The company reverse calculates all production and delivery dates from the ship date, backing into order and production dates, Nadolski says. That challenges engineering with new requirements to fit the 3D modeling and detailing/production sequencing tasks into the tight windows required to meet customer needs.
Modified production scheme
Under the modified production scheme, scheduling juggles the dates and generates the production orders to feed the shop work in the right order to meet the demands. Much of the production is shipped to Hale’s second facility where it is staged and combined with other production orders to ship as full-store orders.
Often the fixtures and millwork items are loaded on the trailer in the reverse order the installer will need them, to make sure that the next items needed at the store is next off the truck. Some installations are handled by Hale, and some by the client’s installer of choice.
Recession and beyond
So, how has Hale dealt with the recession? “The economic slowdown affected Hale just as it affected all businesses -- sales slowed down. Belts were tightened and nobody benefited during the slump,” Rosean says. The difference was that Hale’s customers, taken as a group, used the opportunity in 2011 to continue building their presence in their target geographical markets. The rebound was dramatic and robust, Rosean says.
Looking ahead, Rosean is optimistic about the outlook for 2012 for Hale/Pietsch. “Continued growth in sales to existing customers is forecast for 2012,” he says. “Margins are under some pressure due to pent up raw material and wage inflation, as they are throughout the marketplace. The challenge is to respond with continued productivity gains. More productive machinery and continued ingenuity from engaged employees are the tools of choice.”
Rosean sees continuing economic recovery, and the resulting growth rate of retail as the recovery takes hold, will continue to boost sales in the industry. “Growth in metals capacity and other non-wood materials are being fostered to continue to serve customer needs along with our current competencies,” he says. “All lean organizations that have survived the downturn are challenged to increase capacity and grow while remaining lean, plus delivering the best value to the customer.”
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