For over 35 years, Aluminum Line Products Company has supplied the commercial transportation industry with a wide range of aluminum and other metal products used in the construction of trailers, containers, truck bodies, refrigerated bodies, and other specialty vehicles. David Soyka hooks up to see how this niche manufacturer contains success.
It’s not typically the case where your employer not only allows you to set up your own business, but agrees to become your supplier. But back in 1960, Ken Wessel saw an opportunity that resulted in just such a classic win/win. As a manager for Alcoa Aluminum, Wessel saw the need to provide parts and fabricated materials to truck trailer OEMs. Wessel asked Alcoa if the company would support him as a distributor to this market. Alcoa thought it was a good idea, Wessel started a company called Aluminum Line Products Company (ALPCO) based in Westlake, Ohio, a suburb of Cleveland, and the rest, as they say, is history.
Today, according to Jim Guerin, vice president of sales and marketing, “It would be very difficult for anyone to try to get into this business. We have longstanding relationships dating back 40 years with all the major suppliers and OEMs that would be impossible for any start-up to replicate.”
Equally important to the company’s success over the years is its unique business plan. “Most metal manufacturers distribute to multiple market segments. In contrast, ALPCO concentrates on a specific niche of a specific market, namely commercial transportation. That customer-focus is a key competitive differentiator that’s enabled us to put deep roots into the transportation industry that no one else can match.”
The privately owned ALPCO supplies the commercial truck and transportation industries with roof and side panels and their associated parts for trailer containers. Aluminum’s light weight makes it ideal for these applications, particularly in these days of rising fuel costs, although ALPCO also makes them in galvanized and stainless steel, as well as supplying some plastic parts. While ALPCO started out supplying trailer materials to truck OEMs, it has diversified to provide similar materials for use with horse trailers, recreation vehicles, cargo trailers, and emergency vehicles. It also supplies a wide range of mill products and processing services in aluminum, steel, plastics, extrusions and other industrial materials to aftermarket providers.
“Transportation is a cyclical business, so to counterbalance that, we’ve branched into other segments, both within transportation and outside to other manufacturers,” Guerin says. “From 1995 to 2001, the transportation industry was doing quite well, but then shortly thereafter hit an historical low. However, it’s rebounded to the point where it is once again doing quite well – we’ve been growing about 15 percent annually for the past four years or so.”
Guerin notes that new emission standards that will take effect in 2007 are spurring new truck orders. “The regulations are going to result in higher prices, so a lot of fleet owners are pre-buying now before the new standards kick in. Along with the new truck, they’ll need a new trailer. This has accounted for a particularly robust market beginning last year. Adding to that is there has been very large growth on the replacement side of the business. You’ve got a perfectly good working truck and chassis but the trailer walls have seen better days. It’s obviously less expensive to replace the roof and walls than buy a whole new trailer.”
ALPCO manufactures at a 120,000-square-foot plant in Westlake, while also maintaining 19 regional centers throughout North America. “Most OEMs operate with just-in-time inventories, so it’s important for us to have the distribution facilities that can get product to customers quickly when they need it,” Guerin says. “Inventory, speed and service are further qualities that set us apart from our competitors.”
Towards that end, ALPCO maintains two flow paths to provide multiple back-ups for its products. “If you are a customer’s sole supplier your production lines goes down, that’s a problem,” Guerin notes. “Consequently, we maintain redundancies to cover just such contingencies. Customers don’t want to hear about our problems, they want their problems solved. So, we try not to have any problems.”
The company employs 80 people full time and engages its own direct sales force. About 20 percent of business is international, primarily Canada, Latin America, Great Britain and Australia.
While aluminum remains the product of choice, Guerin concedes the company is feeling some competition from composites. The price of aluminum, as with other metals, has reached all-time highs, though Guerin believes the issue isn’t one of supply and demand. “It’s true that China’s rapid industrialization has a huge appetite for materials that in some cases is sucking resources away from other parts of the world. But we haven’t experienced a shortfall in aluminum. What’s driving prices up has more to do with economics. Billions of dollars are flowing into funding 401k plans, and copper, gold, nickel and aluminum during the last 12 months are attractive investments. That’s what I think is ultimately behind the rising prices.”
Still, even as the price of aluminum has escalated, the metal still offers the advantages of light weight coupled with the flexibility to easily conform to OEM specifications. “In the current environment, OEMs are relying more and more on assembling parts, while outsourcing the manufacture of the parts themselves. We see ourselves not just simply as a metal parts supplier, but as a fabricator that can add value to finished sub-components.
One example is ALPCO’s capability to provide pre-punched sidewalls. “It saves the OEM time and expense to have the sheets ready to bolt to the trailer, as opposed to doing the drilling themselves. That’s just the type of value-add that makes us a preferred supplier.”
There is a trend towards the use of liquid adhesives, which would at first seem to render moot the advantage of pre-punching. However, Guerin argues that traditional mechanical fastening is the better method. “It’s better for graphics, because the walls are smoother with mechanical fastening. Also, it’s a tighter fit, which means a stronger body that’s less prone to leaks.”
Another way to provide customers with greater efficiency is to improve your own operating efficiency. “We recently implemented a new enterprise resource planning (ERP) system that should allow us to attain ISO certification in the next six to eight months. This system will help improve our quality program with things like better shop floor reports and higher efficiencies in our manufacturing processes. It’s another example of our customer-focused approach: it provides us with greater flexibility to identify and respond to customer needs and get parts to them quickly.”
While other companies look to grow through acquisition and/or product diversification, ALPCO sees no reason to change a formula that has been successful for nearly half a century. “We’ve grown organically by serving a niche market better than anyone else. There’s still a lot of business in that niche and we are uniquely positioned to provide not only the products and services, but the innovations and value-adds that help our customers build better, and more efficiently, to serve their own customers.”