Remmele Engineering: Engineering an Evolution

Manufacturing

Written by Amanda Gaines

Tuesday, 01 April 2008

Remmele Engineering: Engineering an Evolution - American Executive - RedCoat Publishing

A focus on a healthy culture and niche target markets has enabled this manufacturer to evolve.

Premier Business Partners:

Dorsey & Whitney, LLP

When Remmele Engineering was founded in 1949 by Fred Remmele, the company had two employees and was a tool and die manufacturer. Today, the company’s employee base has grown to 630, and its core focuses have evolved to include precision manufacturing, fabrication, and assembly of components for aerospace, defense, and medical devices.

Richard Pogue, President and CEO

On March 29, 2007, St. Paul, Minn.-based Remmele Engineering took another evolutionary step after being acquired by Minnesota-based Goldner Hawn. The acquisition transformed the company from a family-owned business to a privately owned corporation. But although the ownership structure has changed, Fred Remmele’s vision to provide employees and customers with a sense of security and satisfaction remains as vital to the company’s culture as it was years ago.

“Over the years, Remmele has provided a challenging yet stable work environment for its employees,” said Richard Pogue, president and CEO. “The single most challenging aspect of the acquisition was making the management transition as seamless as possible for the employees. The attractions of working at Remmele are the quality of life and the job security, and those continue to be the guiding principles by which we operate.”

Opening the door
The acquisition by Goldner Hawn did more for Remmele than change its business structure, however. It also opened the door for what Pogue calls “an ambitious growth cycle.” Management looked at the company, which, at the time, had three business units: aerospace and defense, which are separated into two plants; medical devices; and custom automation. Within the first six months of the acquisition, the team saw the growth potential in aerospace, defense, and medical devices but not in custom automation.

“Automation is a capital-intensive business, and the market is more cyclical,” said Pogue. “We decided to divest the custom automation and grow the other business units both organically and through acquisitions.”

The plan worked, and in January 2008, Remmele completed its first acquisition with Minnesota-based El-Tronic Precision, Inc., a medical device engineering and contract manufacturing company with product lines similar to Remmele. The first bonus to the acquisition: the two companies had no overlapping customers. The second: the culture of El-Tronic matched that of Remmele.

“The company was non-union, very well-run, and was consistent in areas we wanted to grow,” said Pogue. “One of the reasons the children of El-Tronic’s founder, Dick Lynch, wanted to join a larger company was that they’d taken it to the limits of its expertise without investing in advanced project management and enhancing their sales and marketing.”

Niche expertise
El-Tronic’s attraction to Remmele lies in the company’s concentration on niche markets in which it can partner with customers and provide critical manufacturing processes that enable customers to concentrate on their core competencies. Remmele differentiates itself by focusing on project management and innovation, helping customers design the costs out of their processes.

On the aerospace and defense side, for example, the company’s product lines are large radar structures for ships and ground-based systems. Much of the radar systems’ capabilities lie in the accuracy of the structure housing the electrical elements. As the electrical components become more powerful, they generate more heat. Remmele helps its customers design structures that are both accurate and serve as thermal managers.

“We have proprietary technologies, such as CoolStream, a thermal management product, and ConnexSys, a metal joining system, that are embedded in the design process,” said Pogue. “We hold very large structures to very close tolerances and integrate the thermal management into the structure, thereby reducing costs and increasing accuracy of our customers’ end items.”

On the medical devices side, rather than approaching the market with low-volume, high-mix products similar to aerospace and defense, the company looks for high-volume products. Remmele specializes in metallics (either titanium or stainless steel), which typically cover high-value portions of the industry, as well as spinal implants, vascular implants, and surgical devices.

“We’ve taken a cellular manufacturing approach where we integrate machine cutting, vision inspection, heat treatment, and wash stations that are highly automated. It takes a lot of the labor out of the process,” said Pogue. “Our expertise resides in process technologies that produce high-quality, high-volume products.”

Evolutionary growth
As the company evolved, Remmele’s end products grew in size and complexity. For example, one of the company’s end items includes roughly 40,000 parts. As Remmele’s material needs grow, the company risks losing manufacturing efficiency. As a result, Pogue said outsourcing will begin to play a larger role.

“Every business needs to decide which processes it wants to be world class at performing and then focus its time, effort, people, and capital on becoming proficient,” said Pogue. “For outside services that aren’t part of your manufacturing strategy, you need to find the best suppliers to support you. You will become more competitive, and your business will grow.”

Remmele is also looking to expand its business organically by adding products to its medical devices unit, such as precision tubing and stamping, and by looking for composite part manufacturing opportunities for its aerospace and defense unit. Pogue would also like to see Remmele grow through acquisition by following the same steps it took when acquiring El-Tronic.

“We’re not looking for turnaround situations,” said Pogue. “The reason most acquisitions fail is because of a cultural clash. We’re only interested in bringing in companies with solid management structures and an ability to fit into our model and culture.”

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