Gears? Ho-hum…some might think it’s not exactly an exciting industry. But were it not for Gleason Corporation, no one would be equipped to do all of the things that make life exciting and pleasurable. Like pleasure-drive our recreational vehicles. Like fly in our snazzy cars. Like scream-ride the world’s largest roller coaster. Like use our prized power tools to build that classic dollhouse for our daughters, or that hidden tree house for our sons. None of these joys would be possible were it not for the humble yet mighty gear. Gleason knows how to make gears click for manufacturers around the globe in the automotive, aerospace, truck, recreational vehicle and power equipment industries. The company designs and manufactures about 60 percent of its products for automotive OEMs, which use them primarily for manufacturing transmissions and axles.
The Rochester, N.Y.-headquartered company is a global leader in the theory of gear design and in the application, testing and analysis of prototype and production gears for these industries. “We more than likely have a presence anywhere in the world where companies are making gears,” says David Burns, president and chief operating officer. Gleason has seven manufacturing facilities in Asia, Europe and the United States, and operates sales and service offices in 30 countries.
Tools for Success
Gleason’s products include machinery for the production, finishing and testing of gears. Its services include a worldwide support system that provides tooling, replacement parts, field service, application development services, gear design and inspection software, training programs, engineering support and machine rebuild and upgrade services.
“We are a high-technology producer, which you can understand when you see the spectrum of products and services we can supply,” says Burns. “Since we provide a full range of products to support gear production, we often provide technologies that any single one of our competitors cannot.”
As a full-service supplier of machines for gear manufacturing, Gleason can supply anything that’s needed to make a gear. The company initiates a project by providing gear-design services for a particular application. “We can take the project from preprototype production to applications testing right through to producing the gear-making machine tools, as well as the perishable cutting tools used in the machine tools,” says Burns. Gleason also provides software programs and support, and on-site service.
“Our machines are highly engineered with tremendous levels of customer specifications built in,” says Burns. “They need to comply with very rigorous engineering, production and maintenance specifications.”
Gleason attributes its success in the industry to its acute sense of the global marketplace, which in turn resulted from its early entry into the worldwide market. “We were one of the first companies in the U.S. to export a machine to Europe in the late 1890s,” says Burns. Gleason was the second U.S. company invited into the Chinese market once President Nixon lowered the trade boundaries with China in the mid-1970s. Gleason also has a prominent presence in the Indian market, with its wholly owned subsidiary operating in Bangalore. The company established this unit in the early 1990s, after India eased restrictions to allow selected companies to establish wholly owned subsidiaries; it was the second foreign company to be approved.
But getting in the door is only half the story; cultural familiarity is the other half. “We diligently attempt to honor the cultures and environment in which we operate, and we work very hard to ensure that our employees and executives act in a culturally appropriate manner,” explains Burns.
Gleason measures its success based on return on capital. “We are an EVA-driven company, and all of our bonus plans are dependent on the economic value we are adding to the company,” explains Burns. “So if we don’t earn a premium return on our capital, no one in the company receives a bonus — from the CEO on down.”
Like most other industries, the supply of products in this industry has begun to be homogenized due to advancing technologies. Consequently, there is less differentiation among the products that the companies are producing, explains Burns. “Therefore, strategies of regionalization and customer service are becoming more and more important in the industry we are serving,” he says.
Over the last two decades, the gear-machinery manufacturing industry has been following a consolidation trend that is apparent throughout the machine tool world. As the customer base consolidates and globalizes, global consortiums are forming in the United States, Europe and Japan, says Burns. “Smaller niche suppliers, which serve a particular regional market with a few products, are finding it harder to sell to a globalized customer base,” he says.
The changing dynamics of business relationships is, in large part, causing the evolution of these consortiums. “A decade ago, the customer-supplier relationship was more intimate and depended more on personal relationships, so smaller companies with regional niches could survive because they could carve out enough business in one locale with people they knew,” notes Burns. “The essence of transactions today is becoming more impersonal, and it often comes down to who can give the best price and support in the short term to satisfy the customer’s short-term objectives.”
The Promise of Performance
“We have always viewed ourselves as more of a solutions provider than a product provider,” says Burns. “We focus on guaranteeing that the output of a system we provide will yield a certain result, and that the parts coming off our machine will function in the way our customers want for their particular applications.”
Because of Gleason’s century-plus experience in the industry, its engineers can suggest a design to meet a customer’s specifications. “We can then take that design and make prototype gears, and put them into application testing to see if the transmission or axle does what it should long before a customer commits to it in production,” Burns says. “We can then provide a full line of equipment, including all of the cutting tools, once we’ve proven that the gears work in the way the customer wanted them to work.”
“We are a steak-and-eggs kind of company in that we focus on the basics and we do them well,” says Burns. “We believe we are here to serve our customers for a long time to come, and that shows in the Gleason machines still running in the field that were built back in the 1920s. We understand that we have a long-term obligation to our customers, and our performance depends on the quality and dependability of the 2,600 people we have working for us worldwide. We have many dedicated and long-service people which lead to Gleason being the stable company it is.”
Even with its broad global reach, Gleason has a strong local presence in its technical centers throughout the world. This is an advantage the company plans to use to leverage its future growth, which it sees in developing more opportunities to do outsourced work for automotive OEMs. “So when companies are interested in outsourcing some of their manufacturing processes, we are right there and close by with our technical centers right up the road from them,” says Burns.
In spite of the continued consolidation of the industry, as well as the globalization of its customer base, Gleason is confident of its future role as a continued worldwide leader. “We hope that we have evolved to the point where companies recognize us as a global, world-class solutions provider,” concludes Burns. “Some companies will survive and some won’t. We intend not only to survive, but also to continue to expand the breadth of our product offerings and the markets we serve. After all, that’s in keeping with the legacy of our company.”