Dearborn Mid-West Conveyor Company

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Dearborn Mid-West Conveyor Company

20334 Superior Road
Taylor, Michigan 48180-6031
U.S.A.
Telephone: (734) 288-4400
Fax: (734) 288-1914
Web site: http://www.dmwcc.com

Wholly Owned Subsidiary of Tomkins Plc
Incorporated: 1995
Employees: 150 (est.)
Sales: $90 million (2003 est.)
NAIC: 333922 Conveyor and Conveying Equipment Manufacturing; 333923 Overhead Traveling Crane, Hoist, and Monorail System Manufacturing

Dearborn Mid-West Conveyor Company is a leading maker of conveyor systems. The company’s products are sold primarily to the auto industry, the U.S. Postal Service, and bulk materials handling firms. Dearborn Mid-West was created in 1995 by the merger of two established conveyor makers, Dearborn Fabricating and Engineering Corp. and Mid-West Conveyor Co., both of which had been acquired by the British conglomerate Tomkins plc. DMW was forced to downsize following the U.S. economic recession that began in late 2000 and in 2002 closed one of its two manufacturing plants.

Origins

The roots of Dearborn Mid-West Conveyor Co. date to 1947, when the Dearborn Fabricating and Engineering Corp. was founded by members of the Dunville and Wells families. The firm’s original location was a 10,000-square-foot site in Dearborn, Michigan, but operations were soon moved to larger quarters in the nearby city of Detroit. The company’s primary work was fabricating parts for conveyors, such as platforms, chutes and housings, as well as supplying and installing crane systems. In 1956, the firm bought the American Cable Company, a conveyor maker.

The 1960s saw the major automakers switch from buying parts to build their own conveyors to purchasing entire conveyor subassemblies, and manufacturing of the latter became the focus of Dearborn Fabricating and Engineering. The company grew into one of the leading conveyor makers in the Detroit area, which was home to a number of such firms. Dearborn Fabricating got much of its work from the Chrysler Corp. and was eventually recognized by Chrysler as its primary conveyor contractor.

In the 1980s, conveyor makers began to add computers to their systems with programmable controls that could monitor fault conditions and downtime. Dearborn Fabricating and Engineering kept pace with the industry and added these features to its products. During the early and mid-1980s, automakers retooled their factories to install the new computerized manufacturing equipment, which brought considerable business to the Dearborn Fabricating. The firm’s conveyors were used for purposes such as transporting parts and subassemblies along the assembly line to be received or modified by workers. They could handle such items as doors, engines, or entire vehicle bodies, running in an endless loop which kept the line going non-stop. Reliability was an important factor, as any downtime would reduce the number of vehicles completed.

In 1983, the owners of Dearborn Fabricating put the company up for sale, and the following year it was purchased by a group consisting of management and a small number of employees. During this period the company was growing, and by 1986 it had a staff of 120 and revenues of $54 million. The firm was run by 37-year-old President and CEO Wes Paisley.

Detroit was a particularly competitive market for conveyor makers, with nearly three dozen such firms located in the area by this time. When orders from automakers dropped off in the latter half of the 1980s, many companies consolidated or sold facilities to cut costs. In October 1987, Dearborn Fabricating was purchased by Philips Industries of Dayton, Ohio, a company that primarily supplied components for building contractors and recreational vehicle makers.

With Philips’ backing, in 1988 Dearborn Fabricating acquired Unified Industries of Howell, Michigan, and the conveyor division of Detroit-area firm Taylor and Gaskin, Inc. The company now had a total of 170 employees, with its work still largely drawn from the auto industry. Annual earnings had declined to approximately $40 million. The firm was building systems for Chrysler Corp.’s St. Louis assembly plant, Ford’s Wixom, Michigan, plant, and General Motors’ Lansing, Michigan, Buick-Oldsmobile-Cadillac plant, at budgets of between $2 million and $5 million per project.

A year after it had acquired Dearborn Fabricating, Philips Industries bought a second large conveyor maker, Mid-West Conveyor Co. of Kansas City, Kansas. Like Dearborn Fabricating, Mid-West had been founded just after World War II, beginning its operations on January 1, 1947. The firm’s founders, Harlan and Omer Potter and Vernon Street, grew Mid-West over the years into a full-system conveyor supplier until the company was purchased by Conergics Co. in 1970. Conergics was acquired by Foster Wheeler Corp. in 1984 before winding up in the portfolio of Philips four years later. At this time, Mid-West had 320 employees at a plant in Kansas City, Kansas, and specialized in making undercarriage conveyors for use by the mining and automotive industries. The firm’s work included such projects as designing and building a $12 million overland conveyor system to transport coal from a mine in Wyoming to a nearby power plant, as well as designing and installing the materials handling systems for the Mack Truck plant at Winnsboro, South Carolina. Philips’ two new conveyor firms accounted for approximately $135 million of its $962 million in revenues for fiscal 1989.

In 1990, Philips’ management decided to spin off its materials handling operations over concerns about their profitability. Observers cited the intensely competitive conveyor marketplace, Philips’ inexperience in bidding on such work, and several money-losing projects that had been underbid by Mid-West as reasons for the move. Another Philips auto industry unit, wheel maker Shelby Advanced Automotive Technology Inc., was also put up for sale at this time.

Sale to Tomkins Plc in 1990

In June 1990, an agreement was reached to sell Philips Industries to Tomkins Plc of London, England, for $550 million. Tomkins was a large manufacturing conglomerate that controlled a number of different businesses, many of which were located in the U.S. Tomkins soon announced that it would continue seeking to sell the conveyor firms, but in the absence of a substantive offer made the decision to keep them.

Under Tompkins, Dearborn Fabricating and Mid-West Conveyor’s operations were gradually combined, and in the fall of 1995 the merged companies took the new name of Dearborn Mid-West Conveyor Co., or DMW. Dearborn Fabricating head Wes Paisley was named president. Initially the firm was head quartered in Detroit, but several years later ground was broken in nearby Taylor, Michigan, for construction of new administrative offices. The 23,000-square-foot, $2.9 million headquarters was opened in 1998, replacing offices that had been occupied since shortly after the company’s founding in 1947. A new $8 million, 105,000-square-foot plant next door was completed two years later. A second factory and several other operations remained in Kansas City. At this time, the firm’s assignments were largely drawn from the automotive, postal, and bulk materials handling industries.

In March 2000, DMW announced it would begin manufacturing and selling an automated electrified monorail system (AEM) licensed from Fredenhagen GmbH of Germany. The AEM fixed-path system was designed with speed, ergonomics, and noise reduction in mind, and could be used in place of conventional overhead conveyor systems.

The U.S. economy was now booming, and DMW was enjoying a period of growth. Revenues for 2000 topped out at approximately $250 million, and the firm had a backlog of work during most of the year. The company was now ranked 16th on Modern Materials Handling magazine’s list of the top 20 materials handling systems suppliers in the world. The year also saw DMW win DaimlerChrysler’s Gold Award for quality, one of many such honors it had received from the auto industry. The firm had recently supplied the first automotive production “skillet system” to DaimlerChrysler’s Sterling Heights, Michigan, Trim Shop. The skillet design used scissors lifts to raise an item being assembled to a comfortable height for workers, yielding greater operator flexibility and improved ergonomics.

Materials handling equipment was becoming increasingly sophisticated, and the offerings of DMW were no exception. Electric systems were now replacing pneumatic and hydraulic ones, resulting in lower costs and reduced maintenance requirements, as well as better compatibility with the software-based control equipment that was now in vogue. The new systems were also quieter and more easily adaptable to the individual needs of employees, which improved worker comfort and sped up production. In addition to these benefits, the more flexible systems allowed manufacturers to respond more quickly to changing market conditions, which was a necessity in the era of “Just-In-Time” ordering and shipping practices, which had become a standard way of doing business.

A plant where much of the new equipment had been installed was DaimlerChrysler’s Toledo North Assembly Plant in Toledo, Ohio, where the Jeep Liberty sport-utility-vehicle was built. Among the devices installed there by DMW were skillet, power and free, and belt conveyor systems, as well as Just-In-Time slug delivery systems for seats and instrument panels. A total of 3.75 miles of conveyor systems were situated within the 2.1 million-square-foot plant.

Company Perspectives:

The DMW mission is to provide our customers with people, business practices, and conveyor systems of the highest integrity.

Orders Drop Following Cutbacks at DaimlerChrysler in 2000

When the U.S. economy began to slip at the end of 2000, DMW was hit hard. Leading customer DaimlerChrysler reported a disastrous fourth quarter and cancelled conveyor orders and factory improvements almost immediately, with the other automakers soon following suit. DMW’s workload was cut in half, and revenues dropped to just $120 million during fiscal 2001. In September 2002, president Wes Paisley told Crain’s Detroit Business that the company would be happy to realize even $90 million in sales for that year. To reduce operating costs, DMW began making layoffs in early 2001, and in July 2002 closed its Kansas City plant, which employed 160. The firm’s Kansas City-based project management and engineering division was not affected. During this period several of the company’s Detroit-area competitors closed major facilities or went out of business entirely.

As DMW’s contracts with the auto industry dropped off, it continued to build conveyor systems for other customers. These included the U.S. Postal Service, for which the company had been working since the mid-1970s. Products in this area included bulk mail, tray mail, and loose mail sorting systems. Among the projects the firm had completed for the postal service was a $61 million installation of sorting and conveyor systems at all 21 bulk mail centers around the United States, as well as at many of the agency’s parcel and distribution centers.

Despite its ongoing financial woes, the firm was showing a strong commitment to the environment and its workers, and DMW was named a Clean Corporate Citizen by Michigan Governor John Engler in 2002. The company had already met the ISO 140001 environmental standard, and its new plant incorporated such features as welding and paint fume extractors and ergonomically-designed work stations.

Though it was struggling with a downturn in business, Dearborn Mid-West Conveyor Co. was a survivor in a field in which several of its competitors had recently gone under. The company’s dependence on the auto industry placed its fate, to a certain extent, in the hands of the big three carmakers, but it was also seeking work in other areas, and its experienced management had successfully guided the firm back to health during other lean periods.

Principal Competitors

Jervis B. Webb Co.; Peak Industries, Inc.

Key Dates:

1947:: Dearborn Fabricating and Engineering Corporation is founded near Detroit.
1947:: Mid-West Conveyor Company is founded in Kansas City, Kansas.
1956:: Dearborn Fabricating acquires American Cable Company.
1960s:: Dearborn Fabricating focuses on building conveyor systems for the auto industry.
1970:: Conergics Co. buys Mid-West Conveyor.
1984:: Management-led group buys Dearborn; Conergics is sold to Foster Wheeler.
1987:: Philips Industries purchases Dearborn Fabricating.
1988:: Philips buys Mid-West; Dearborn Fabricating acquires two other conveyor businesses.
1990:: Philips is sold to Tomkins plc of England.
1995:: Dearborn Fabricating and Mid-West Conveyor merge to form Dearborn Mid-West Conveyor Co.
1998:: Dearborn Mid-West moves to new headquarters in Taylor, Michigan.
2002:: Auto firms make cutbacks; Dearborn Mid-West closes its Kansas plant and lays off 160 employees.