Commercial Forged Products Shows Profit Gains

Strong sales and profit gains in recent years are the result of the management's "passionate" approach to competing against overseas manufacturers.

Wozniak Industries, with forging and other metalworking divisions in suburban Chicago, St. Louis, and Tennessee, may be a textbook study of how to conduct business successfully in today’s market conditions.

Todd Wozniak, president, says the result of consultant studies and many changes made at the beginning of this century now are paying off in building a more profitable business, increasing employment, and even taking business away from countries with low employee salaries.

"We do not intend to have our metalworking business become a service business," Wozniak says, referring to the growth of service businesses as manufacturing moves out of the U.S.

The company operates Commercial Forged Products, Bedford Park, IL, and General Metal Products in St. Louis. Since Wozniak Industries was founded in 1985, the corporate office has been located in Oakbrook Terrace, IL.

Sales last year increased by 15% to $50 million, they will be up about 20% this year, and another large percentage increase is forecast for next year, according to Wozniak. "We mean to make this metalworking firm grow in a way that makes sense for us and helps our customers."

Ed Wozniak, chairman, who founded the company, says the business had about 350 employees several years ago. It operates today with a hundred fewer people, but is making more money and is geared for even higher sales. He adds that he wants to acquire metalworking firms if they can provide value-added services for Wozniak customers or can help his business enter or penetrate niche markets.

Passionate about competing — "We are passionate about what we do," Todd Wozniak emphasizes. "We hear about companies that move manufacturing and services into low-cost or low-wage countries. We strongly object to that and want to manufacture in the United States.

"We need to be smarter, and invest in new equipment, processes, and people. We have added to our engineering staff and will be hiring more technical people.

"A high school education no longer assures a job. Our employment from two years ago is up by 10% and will increase by another 10% in the next two years.

"We also want people to take pride of ownership in our business and to decentralize it with employees making decisions on their own.

"Management wants to add value, to upgrade our end product, and to climb the food chain to assembly and machining. We want to get closer to the end user of the parts or components we make as we become a value-added supplier."

Todd Wozniak became the new president of Wozniak Industries this summer, at age 36. After graduating with a bachelor’s degree in business administration, and a master’s degree, he taught special education, mathematics, and science for seven years at middle schools in Oak Brook and Villa Park, IL. Then, he joined Wozniak Industries and became involved in sales, marketing, and engineering. Upon his new appointment, Wozniak explained that his goals will be to maintain and increase employment — and to keep specialty metalworking manufacturing in the U.S.

Working with customers
One recent example of how the company is competing involves another company that was making the same kind of parts Wozniak Industries can make. "We successfully suggested that it would be more cost-effective for us to do what we do best, and make the parts for them while they do what they do best, which is to assemble their complicated product with its thousands of parts, and sell it."

In another case, a competitor was trying to do large and small jobs, but was not particularly successful with their niche markets. Wozniak explains, "We made a deal with them to acquire their equipment to handle this kind of work and let them successfully earn profit with large broad-market forge work. The parts we now make for this company cost them less than when they made them."

Wozniak Industries evolved into its present profitable position even though it has fewer customers. As Todd Wozniak explains it, instead of trying to be everything to everybody, the company in the past couple of years has focused on potentially higher-profit niche markets, and in increasing its penetration of these niches without depending upon one customer in them.

GMP in St. Louis operates in a 250,000-ft2 stamping plant with 1,500-ton presses, large bed presses, and deep-draw and other stamping and fabrication equipment. A few years ago the division had 180 customers with two of them accounting for 80% of the work. Today there are approximately 50 customers with the two largest now accounting for only 40% of the sales dollars.

Todd Wozniak explains what happened. Most of the customers at GMP had short runs with tight delivery deadlines. This meant that long-run jobs were constantly interrupted so that operators could spend four or more hours setting up the short-run orders. Newer technical concepts have helped CMP to reduce the setup time by 50%.

Customers for GMP are in agricultural products such as farm implements, on and off-the-road large equipment, and defense such as making parts for the Hummer.

While working with consultants, the managers realized GMP could make far more money with a lot fewer customers. Then began the job of pruning the number of customers by looking at the volume of sales and the growth potential for each account, and considering what added-value GMP could produce and what other jobs might exist with the customer.

In one case, this led to transforming a $50,000-a-year account into a nearly $5-million-a-year customer. "We met with them and told them what we could offer and they liked it," Todd Wozniak says. He admits now that until that time none of his sales reps had visited that company to seek new business.

Upset forging — Commercial Forged Products is the largest independent upset forger in North America, and Ed Wozniak believes there is considerable room for expansion at the 10-acre plant.

When Wozniak acquired CFP in 1986, its sales amounted to $9 million. Sales projected for the next year amount to $30 million, with nearly all of the gain coming in the recent past. Products include tubing products for the oil industry, and axles and parts for off-road vehicles.

Its upsetters range in size from 3-in. (840 tons) to 8-in. (2,520 tons).

Todd Wozniak says the company "pre sells" forged parts. With this approach, Commercial is investing in a $4.5-million forging machine that will operate automatically. The Wozniaks’ plan is to relocate the parts’ manufacturing back to the U.S.

CFP also has three machining centers, and will be installing more, to provide added-value for customers as its engineers work more closely with customer engineers and designers.

Markets and products — Commercial Forged Products serves a variety of markets: farm and agricultural equipment; truck, bus, and trailer; off-highway equipment; material handling; energy; and mining equipment.

In serving these markets, CFP produces semi-pierced upsets, hollow (fully pierced) upsets, and solid forgings. From a shape standpoint, the products are as varied as the markets that use them. What they have in common are the advantages of upset forgings: grain structures of the metal reoriented by hot-working to provide superior strength where needed. The process offers many design and manufacturing advantages, plus lighter weight, fewer rejects, and structural integrity.

The shapes include spindles, some with flanges up to 16 in. in diameter; pinions in a variety of configurations and weighing from 5 to 300 lb; yokes up to 43 in. long and 9 in. in diameter; axles up to 16 in. in diameter, some completely finished with machining, splining, and induction hardening; shafts up to 16 in. in diameter; percussion bits; tubing in special configurations; and specialty bolts from 2 in. in diameter.

History of CFP
1874 — Arthur J. O’Leary and Charles Smith start a small forge shop on Chicago’s North Side called Smith & O’Leary.
1903 — Arthur’s son (also Arthur) joins the business. Arthur J. O’Leary & Son opens a new shop on Chicago’s Lake Street, adding punch presses and small hammers to meet higher volume demand.
1906 — Business expands and the O’Learys move to the Clearing Industrial District (now Bedford Park) on Chicago’s far southwest side.
1919-1942 — Between the wars, O’Leary continues to add hammer capacity to meet the demands of the railroad and farm industries. A popular product of the day was the 70-pound blacksmith vise sold to Montgomery Ward and used by America’s farmers.
1943 — O’Leary becomes Kelly O’Leary Steel Works, and to meet wartime demand new capabilities include gravity and steam hammers, upsetters, bulldozer presses, and fabricating work. Products include artillery shells; mortar housings, casings, and "Bailey Bridges" used by the Allies in their dash across Europe.
1944 — Now Kelly Steel Works, expansion of the upset forging capability continues. Kelly has 1.5- to 6-inch upset forging machines for ordnance work, preforms for the hammers, fasteners, and sheet piling anchor rods.
1946-1986 — Kelly is sold to Commercial Shearing renamed Commercial Stamping and Forging to reflect various manufacturing processes now taking place in Bedford Park — stamping, fabrication, and forging. Expansion of forging capacity continues with addition of three 8-in. upsetters and the elimination of the hammers.
1986 — Commercial Shearing sells the operation to Wozniak Industries Inc. of Oakbrook Terrace, IL, and the name is changed to Commercial Forged Products.
1990 — Commercial adds a fourth 8-in. upsetter.
1996 — Commercial achieves ISO 9002 certification.
1999 — Commercial updates its quality systems to QS 9000.

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