Volume 9 | Issue 1 | Year 2006

What’s in a name? Today, many a company is known by a name that was more in tune with what it once was than the business it currently conducts, with reference to a founding ownership that has long since ceased to actively participate. According to the Institute for Family-Owned Businesses, the average life cycle of a family business is 27 years; only 30 percent of family businesses are ever run by the children of company founders, only 13 percent by the grandchildren, and less than 3 percent by grandchildren.

George Koch Sons, however, lives up to its name the way few others do. While its business is focused on finishing, it is continuing a long family tradition. One of seven diversified companies within Koch Enterprises, which has been operating from the American heartland of Evansville, Ind., for over 125 years, George Koch Sons designs, manufactures and installs industrial finishing systems, washers, ovens, related controls and acoustical enclosures and panels. A relative upstart in the family business, George Koch Sons has provided over 1,200 complete finishing systems to improve customer product appearance, functionality and cost for over the past 65 years. “Our CEO and ownership represents fourth generation of the Koch family; just as you would expect from the company name a fifth generation is currently active in management and preparing to lead the business in the future. I think that bucks the general trend of most companies today,” comments Sam Woehler, director of sales.

This is not to say, of course, that as a family-owned business George Koch Sons tends to stay in its own familiar backyard. While most of its sales are concentrated in North America, the company also has an office in Lichfield, U.K., and has installed its systems not only in Europe, but throughout the world. “We provide a complete turnkey system to finish parts of all shapes and sizes with e-coat (electrocoating), powder, liquid and wood,” Woehler explains. “The only thing we don’t provide is the consumables.”

He notes in particular that, “George Koch Sons has invested more than 40 years in the development of e-coat systems that combine the best science and engineering with hands-on field and technical support that is widely acknowledged as the finest in the industry. We are founding members of The Electrocoat Association and proud to have employed three recipients of the prestigious Brewer Award for excellence and innovation in electrocoating technology.” A particular advantage of e-coating is that in addition to providing outstanding appearance and excellent corrosion resistance, it offers high utilization of paint with little waste with a consistent control of film thickness. However, Woehler emphasizes, “We also recommend what’s best suited to the customer needs. We’re not pushing e-coat over powder or liquid, we’re matching the best type of coating system to what the customer needs.”

Energy Efficient
While the technology of the systems – whether e-coat, powder, liquid or wood, doesn’t change that much over time, Woehler notes that as customers evolve new product lines there is a corresponding demand for new finishing systems. George Koch Sons has customers in a number of diverse industries, including automotive, construction, farm machinery, heating and air conditioning, office equipment, lawn and garden, metal stampings, motorcycles and sporting goods. In addition, the company has spun off components of its complete finishing systems as separate product lines, all emphasizing energy efficiency. “That’s one of our major competitive differentiators,” Woehler points out. “We’ve got a lot of competitors, but we stand out because our systems deliver higher operational value at a lower operational cost. These days, in particular, everyone has got to be more energy conscious. And our systems are the obvious conscious choice.”

He adds that, like every manufacturer, George Koch Sons is faced with rising material costs that just can’t simply be passed along to its customers. “You’ve got to squeeze cost-inefficiencies out of your own operations to compensate,” Woehler says. “We’ve been implementing lean principles for a number of years, and recently are focusing on improving the order taking process through to inventory and job closeout.”

Manufacturing is performed at a 130,000-square-foot facility in Evansville, employing both manual labor and automated processes. “We’ve got an excellent manufacturing group,” Woehler says. “One thing we’re doing in particular right now to maximize ROI is to minimize floor space but still achieve higher productivity and efficiency.” Because these are primarily custom systems, lead time can run up to nine months, including up front design time before the customer even cuts a purchase order. “We fully understand that the success of any project depends on competent project management,” Woehler points out. “A core strength of George Koch Sons is our highly qualified and experienced project managers to ensure all aspects of the proposed project are successfully anticipated and fulfilled within budget and on-time.”

To some extent, the business health of George Koch Sons is tied to that of the industries it serves. Woehler is cautiously optimistic that capital equipment spending will continue on a healthy level for the foreseeable future. However, he adds that this optimism is not cause for irrational exuberance. “The nature of capital-intensive businesses is that they are volatile; they can be up for extended periods, but just as easily down for extended periods. So we want to be conservative and not over expand to the point where we might suffer from underused capacity. As the business grows, we have a number of local subcontractors we rely on to make sure we remain customer-responsive without over committing ourselves.” Unlike many manufacturers, George Koch Sons doesn’t feel threatened by offshore manufacturers. However, as its customers move to Asia, the company will follow. “It just makes sense to fabricate our systems close to customer locations,” Woehler points out, “and as our customers do more manufacturing overseas, we may need to do so as well.”

New Opportunities
Woehler notes that a growing part of business involves insulating acoustical panels. These all-steel panels self-interlock without connectors or joiners and can easily accommodate any configuration required, horizontal or vertical. Another growth area is applying finishing technology to wood products, particularly oriented strand board (OSB). “There’s a large and growing market to ship OSB overseas,” Woehler points out. The George Koch Sons Flatline Strand Dryer is a low temperature, high production dryer that offers superior performance over conventional rotary dryers while substantially reducing government regulated emissions standards.

George Koch Sons is also introducing a new product in conjunction with PPG Industries, a first of its kind hand-held paint finisher with a continuous conveyer belt to coat small parts. “We’re pretty excited about this and have a number of pending patents related to the different formulations and processes we use in this product.”

This means this family business with its growing family of products is far from finished, and will apply its formulae for success for many more generations to come.

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