David Soyka reports on how this Oregon-based company changed with the times to keep pace with evolving industry needs and emerging technologies.
Times change, as has become all too evident in the current economy. Companies that fail to change to meet the needs of their customers face the fate of the dinosaurs.
Based in Portland, Ore. (with distribution centers in Edmonton, Alberta, Canada and Baton Rouge, La.), Pierce Pacific Manufacturing, Inc., has been in the heavy equipment business since 1931. One of the company’s biggest growth spurts was in the 1960s through the 1990s, building rubber-tired undercarriages for crane, scrap and forestry applications. “Forestry is a major industry here in the Northwest,” Greg Hildebrandt, product manager, explains. “Then, excavation equipment undercarriages weren’t as reliable as they are today and track machines weren’t very effective in a lot of forestry applications. The machines could move much better on rubber, cover more ground and, hence, be more productive. It was a similar situation with cranes: At that time, the OEMs didn’t have good ‘roadable’ solutions. So, that was our primary product line.”
Today, however, Pierce Pacific still makes rubber-tired undercarriages, but it is no longer a core product. “The dynamic changed when excavation equipment track undercarriages improved and the crane manufacturers began to offer a factory option on rubber,” Hildebrandt explains. “Since we’re making significantly fewer carriers these days, we don’t have the purchasing power we once had because we’re not buying the axles, transmissions and engines in the same volumes, so it’s difficult to compete with the OEMs. While we still manufacture carrier applications, we’ve shifted our core competencies to other areas. Today, primarily we’re an attachment manufacturer for excavator equipment.”
Pierce Pacific builds its complete line of attachments directly for the OEM and their dealers that carry the equipment, primarily for sale in North America. Products are also sold to South and Central America, Russia and Australia. Markets served include forestry, demolition, scrap and material-handling as well as special excavation applications. “We have very strong relationships with our local end-user customers, particularly in the forestry industry,” Hildebrandt notes. “The timber and forestry business is big here in the Pacific Northwest region and it involves a close-knit group of folks. We wouldn’t be as successful as we are if we were not based here in Oregon in the heart of the industry.”
He adds, however, that outside of the region, and outside of the forestry industry, Pierce Pacific does face some marketing challenges. For example, “The folks in Louisiana have a different perception of us than those here in Oregon,” Hildebrandt says. “One customer may view us as a long-reach excavator boon manufacturer, while another might view us as a forestry attachment supplier. Ultimately we need all of our value customers to know all of our capabilities.”
Hildebrandt says that Pierce Pacific looks to fill market segments for product offerings that the OEMs don’t offer, or that may sometimes be specially requested by dealers and their customers. He emphasizes that its products are not OEM-specific. “We might build attachments for John Deere machines that a competitive excavator manufacturer, say, Komatsu, offers as a factory-built option. At the same time, we might be building other attachments for Komatsu machines because the Komatsu factory doesn’t offer. In one sense we’re competing against that very company that we supply to. At the same time we’re helping round out their product line. In all cases, our goal is to add value to the OEMs and their dealer network, to help sell their equipment. We could never survive as a business if we only supplied one brand exclusively.”
One growth area in particular is in mid/large-sized excavator booms. “That’s become a sweet spot, for us. Most excavator manufacturers offer long-reach excavator booms as a factory option on smaller machine sizes, but not in the mid/large machine segments,” Hildebrandt says. “That’s where we fit in.” That said, Pierce Pacific does offer a full range of long-reach excavator booms in both the long reach and super-long reach categories.
While Hildebrandt says that Pierce Pacific, like most every manufacturer, is feeling effects of a slow economy, the upside is that it has created new opportunities. “The dynamic right now for OEMs is new engine development. In the current economy, that means OEMs have limited resources to devote to other new product development, and perhaps are even cutting back on what they once allocated. That’s where we can step in to help OEMs and their dealers provide new features, functionalities and product solutions without any significant investment on their part.”
Even in a better economy, Pierce Pacific provides OEMs several advantages. “For large companies like Caterpillar or John Deere, it may not pay to have a five-year development plan for an attachment that might sell only 50 units a year. But it’s different for a company like us that specializes in this kind of scale and product. The ability to offer a specialized machine makes the excavation equipment that much more marketable, again without any significant investment on the part of the OEM, and likely resulting in rapid incremental sales.”
He adds, “Whether the economy is good or bad, we’re always looking for different ways to gain market share. The way we do that in any economy is to look for new opportunities in niches that add value to excavator-based equipment that increases sales for OEMs and their dealers.”
One example is the recently introduced universal Pierce power clamp bucket for excavating, demolition and road building. “It’s a single bucket attachment that allows you to attach various bucket/grapple halves, instead of having multiple dedicated attachments,” Hildebrandt says.
Another exciting new product is an all-in-one computer-controlled tree harvester/processing head for the timber industry. “It attaches to an excavator and has two chain saws on each end, and driven by feed wheels,” Hildebrandt explains. “The head grabs a tree that is standing or felled, delimbs it, and saws it into the length and diameter preferred by the mill for final merchandising. The head can process the tree at rate of 16 feet a second.”
Such innovation is what Hildebrandt cites as a core competency that reflects the company’s reputation for innovation in the forestry industry. “There are other timber processing products available in North America, but we have a significant portion of that market. That’s a reflection of a move we made in the 1990s to emphasize forestry products that improve safety and efficiency.”
One key move in that effort was the acquisition in 2006 of the assets of Denharco Inc., a company formerly based in Saint-Hyacinthe, Quebec, Canada. “Denharco was a widely recognized product and brand for stroke delimbers and other forestry processing heads,” Hildebrandt says. “We continue to manufacture and sell those products under the Denharco name.
According to a company press release, “Since the acquisition…we have translated thousands of engineering designs, aggressively replenished a depleted inventory, integrated Denharco business/infrastructure, hired appropriate sales and product support representatives, manufactured structures, and now, building finished products. All Pierce Denharco products are being manufactured in our Portland, Ore. facility. And of course, our extensive inventory will support parts sales as well as production units. In other words, we’ve got to have the parts you need!
In fact, all Pierce Pacific manufacturing is performed at a 75,000-square-foot facility in Portland. “Since we’re dealing with the needs of specialty markets, we typically build-to-order, though, of course, we do keep an extensive inventory of service parts to support our customers,” Hildebrandt says. “However, utilizing sales forecasts and, where it makes sense, we do build some product in anticipation of demand.”
The company employs about 140, and Hildebrandt emphasizes that “we have a great group of people who work for us, many of whom have worked here for 20-plus years. Obviously, the quality of your product depends on the quality of your people, and we have a demonstrated record of quality in both.”
Indeed, current ownership of the company reflects just how deep employee involvement extends. In the 1960s, Mike Hildebrandt was a 17-year-old who swept the floors at Pierce Pacific, and by the mid-1980s became a salesperson and wound up buying the company.
It’s that kind of attachment to the business that has made Pierce Pacific a leader in attachments.