The employee stock ownership plan at Lou-Rich has enhanced the success of this contract manufacturer. David Gill describes how quality and customer service are part of the stake each employee has in this company.
Lou-Rich, Inc., the contract manufacturer of mechanical and electromechanical assemblies, has 253 owners. Being an employee stock ownership plan (ESOP) company, this is not unusual; there are ESOP firms with many more owners, of course. What is distinctive about this company, however, is how ingrained the ESOP is into the company culture. Because of their stake in how the business performs, all 253 owners of the company go beyond the extra mile to meet and then exceed the highest expectations of its customers.
“We became employee-owned in January 1992,” says Mike Larson, president and chief executive officer, “and from that time, the ESOP has made a significant impact on our operating philosophy. It has driven our growth and determined every aspect of our day-to-day operations. All of our employee-owners are empowered to make decisions, every day, that affect the course of the company.”
In such an environment, individual and company growth have gone together. Founded in 1972 and based in Albert Lea, Minn., Lou-Rich has emerged as a supplier of solutions in the contract manufacturing of its products.
Improvement as a Given
Employee ownership is one of many elements that are critical to Lou-Rich’s operations. The company focuses its manufacturing around a total quality philosophy, which it calls Managing Total Quality (MTQ). This initiative provides the means for Lou-Rich to maintain and extend its total quality system, and keeps all of the employee-owners on the march toward continuous quality improvement.
MTQ at Lou-Rich is based on the company’s ISO 9001 certification, which covers its facilities in Albert Lea, Hayward, Minn., and Brandon, S.D. Taken together, the manufacturing space at these locations totals about 310,000 square feet. ISO 9001 provides the basis for the company’s quality management, and MTQ ensures that the employee-owners further develop the quality system. The end result is continuous improvement. Combined with Lou-Rich’s penchant for innovation and its ample capacity, this gives the company the necessary flexibility in meeting its customers’ changing requirements.
But Lou-Rich doesn’t stop there. The company is committed to what it terms “total production,” meaning that its engineers support every aspect of the design process by using CADKEY and Pro-E CAD systems, plus project management functions. The company also conducts time-phased material requirements planning (MRP), driven by the customer’s demands and the Lou-Rich computer system for greater efficiency. The plants also employ statistical process control, which provides the manufacturing staff with precise information on how the production process is going at any given moment. In addition, the facilities inspect products using coordinate measuring machine verification and other electronic inspection equipment.
The Complete Package
This infrastructure of quality processes provides the focal point for Lou-Rich’s vast menu of capabilities. The company also offers its customers a huge breadth of experience in designing and producing its own dies and fixtures. Its production equipment includes significant CNC machining and turning centers; CNC punching, hydraulic and mechanical presses; CNC forming centers; and laser centers. With this broad array of state-of-the-art equipment, Lou-Rich possesses a broad range of fabrication capabilities; the company processes materials such as aluminum, bronze, copper, mild steel and stainless steel. It performs brazing, soldering, mig and tig welding, spot welding and seam-resistance welding.
Lou-Rich’s experience and capabilities in assembly and finishing round out the company’s positioning as “a complete product manufacturer,” according to Ken Schuler, director of sales. The plants’ focused cells produce electromechanical subassemblies and complete products. The finishing areas include electrostatic and powder-coat painting, which is conducted in the company’s five-stage-preparation, conveyored system. The combination of total quality processes and the most up-to-date equipment available enhances the commitment by Lou-Rich’s employee-owners to exceeding its customers’ specifications and to enhancing its customers’ own success in the marketplace.
Lou-Rich’s customers appreciate what the employee-owners give them. One example is The Koskovich Company, which came to Lou-Rich for help in 1992. Jerry Koskovich, president of the Rochester, Minn.-based firm, says, “Lou-Rich, Inc., began manufacturing the Auto-Omni Robotic Component Saw for The Koskovich Company in 1992 when the production rate was six units a year.” Over the next seven years, Koskovich adds, “the annual production rate…increased approximately sevenfold, to in excess of 40 units in 1999.”
Lou-Rich is currently on course to make itself an even more complete manufacturer, if such a thing is possible for a company that already does so much for its customers. The company is moving to start its newest venture — original-equipment manufacturing. “Our intent,” says Schuler, “is to develop new products that we own and produce. It will provide a lot of growth for us down the road.”
The company took its first step in this direction in January 1998, when it acquired Exact Manufacturing, a maker of aluminum extrusions using its proprietary Ultra Precision Extrusions® process. This process produces features, tolerances and surface finishes previously thought to be impossible to achieve. It also works to resolve complex design problems by offering an alternative that provides extreme freedom of design and the ability to produce tolerances of plus or minus 0.001 inch on a consistent basis. In addition, Ultra Precision Extrusions® permits the manufacture of wall thicknesses as thin as 0.008 inch with surface finishes as fine as 10 micro-inches, superior concentricity and reduced machining requirements.
A year later, Lou-Rich furthered its OEM venture with its purchase of 63 percent of Kleen-Tec. This company markets a line of automobile and industrial parts washers and automobile servicing equipment. “Auto servicing equipment and medical equipment are two other significant growth areas for us as we look ahead into the next few years,” Schuler says. For these and other market opportunities, the multitude of Lou-Rich employee-owners stand ready to maintain and exceed the company’s already-established standards in quality and customer responsiveness.