HUSCO International is a leading global manufacturer of hydraulic and electro-hydraulic controls for off-highway equipment and automotive applications. Its strategy to grow during the economic downturn: Increased engineering, R&D and facility investments to meet current and future customer needs at the right price. David Soyka learns how these values drive HUSCO’s hydraulic controls business.
HUSCO International is a major supplier of hydraulic and electro-hydraulic controls for customers such as John Deere, Caterpillar, DaimlerChrysler, CNH, Daewoo, JCB, INA, NACCO, Ford, and Volvo, among others. Half of its worldwide sales are derived from outside North America. During the recent economic downturn, the Waukesha, Wis.-headquartered company has retooled to serve new market and product segments. The company’s long-term success can be attributed to a combination of new technology, major new business commitments, and implementation of effective cost reduction strategies.
Manufacturing Improvements for New Markets
There have been several major chapters in the HUSCO story. Founder-owner Dana Schneider sold his business to the Koehring Company in 1968, which in turn was bought by Canada-based AMCA International in 1980. A management buyout led by Chairman and CEO Gus Ramirez returned HUSCO to private ownership in 1985. Since returning to private ownership, the company has grown over 800 percent by providing hydraulic and electro-hydraulic controls for “off-highway” vehicles such as tractors, backhoe/loaders, cranes and forklifts used in the agricultural, construction, utility and mining businesses. These high performance hydraulic and electro-hydraulic valves are integral components in steering control, work function control, and vehicle suspension systems. Additionally, in 1999 HUSCO diversified into the highly competitive automotive market by providing proprietary products for very challenging electro-hydraulic applications. The high volume and high quality requirements for automotive applications were met in a new, highly automated 100,000-square-foot manufacturing facility in Whitewater, Wis. “Instead of producing batch type quantities, we had to gear up to make several million units per year,” explains HUSCO Director of Marketing Chris Kolbe.
HUSCO believes its highly automated Whitewater facility to be by far the fluid power industry’s most productive and highest quality manufacturing facility. “Although we cannot use the same processes for our traditional off-highway products, we have been able to take what we have learned about lean manufacturing in Whitewater and apply it to our other operations,” Kolbe explained.
Global Business Approach
HUSCO has implemented a global manufacturing strategy to ensure it maintains its cost effectiveness regardless of exchange rates. Its new factory in China, a wholly-owned foreign enterprise between HUSCO (85 percent) and Kayaba (15 percent), will serve HUSCO’s customers in Asia and serve as a supplier of low and medium technology products for export to markets worldwide. Even though China labor costs are extremely low, HUSCO uses high technology manufacturing processes and equipment to ensure the highest quality standards are maintained.
A Reputation for Innovation and Low Cost
HUSCO is dedicated to being both the low-cost producer and high technology provider. Kolbe cites new innovations including electronic joystick controllers and an electro-hydraulic force feedback control that allows a valve to be controlled more precisely and cost-effectively with electronics. “HUSCO continues to innovate itself into new businesses by using cutting edge technology; however, we always develop technology with the end customer in mind. We are not creating technology for technology’s sake; rather, we develop technology to improve and differentiate our OEMs’ machines.”
Indeed, HUSCO employs over 150 engineers in contrast to 15 people in sales. “That tells you where our priorities are,” Kolbe says. HUSCO also spends more than four times the industry average on product development. “Because we are a privately owned company, we are able to increase R&D investments during economic downturns.” Consequently, when the economy turns positive, HUSCO’s sales rise far faster than industry averages. Never being content to rest on its laurels underpins HUSCO strategic planning. “We see promising prospects in all served markets; growth that will be driven by broader market penetration and increased sales per machine through increasing HUSCO’s total value proposition for its customers. We look to supply customers with complete control solutions, not just valves. By providing highly innovative, electronically controlled components and systems, HUSCO plans to provide differentiated technology to our customer base.”
A company video summarizes the HUSCO approach: “There’s something timeless about how fine machines work. By providing the right technology and economics, HUSCO has established leadership in virtually every market we choose to serve.”