Johnstown Wire Technologies manufactures wire products in four primary wire categories: cold-heading quality, aluminized, electro-galvanized and wool wire. Cold-heading quality wire, JWT’s largest product segment representing 65 percent of sales, is used for difficult-heading applications in the metal-fastener industry, with diverse end markets including automotive, small motor, home appliance and construction. The company’s wire is used in complex and demanding applications, such as engineered fasteners that hold seat belts to the car chassis, and self-tapping screws.
Electro-galvanized and hot-dipped aluminized wire is used for outdoor, often high-strength, corrosion-resistant applications, including utility guy wires, grips, strand and construction staples. The construction sector uses JWT wire as the raw material for the industrial staples that go into manufactured houses. Highly uniform metallurgical structure is required to manufacture steel wool, which is used in automotive brake pads, furniture refinishing and soap pads.
JWT Quality & Metallurgical Expertise
The quality instilled in JWT’s products as well as its metallurgical expertise sets the company apart from the competition, says Walt Robertson, president of JWT. “We are the product quality leaders in the North American market,” he maintains. The quality of JWT’s cold-heading products is superior to that of any manufactured in North America and comparable in quality to the best Japanese products, which have historically been the leading cold-heading products available in the world. Johnstown Wire uses CCA annealing, a significantly better process than the batch annealing process used by most competitors, to produce the desired microstructure and consistency in the finished product. The company also uses hydrochloric acid cleaning, a powerful cleaning process that is superior to the sulfuric acid cleaning process used by many competitors. It’s also generally acknowledged that JWT’s electro-galvanized, aluminized, and wool products are the highest quality products in their categories available in the market.
In addition, JWT “offers strong metallurgical technical support to our customers resulting in exceptional product design,” notes Robertson. Johnstown Wire’s industry-leading metallurgical knowledge allows management to work closely with customers to develop new, complex wire applications and with vendors to develop and produce suitable rod properties for more demanding wire applications. Management believes that this high level of knowledge and experience is unmatched in the steel wire industry and provides JWT with a substantial competitive advantage in meeting customer needs and generating new demand for the company’s products. Robertson adds, “We pride ourselves in engineering products characterized by their ‘Fitness for Use’ in technically demanding applications.
Johnstown Wire has focused on highly demanding product segments where few competitors can produce to the exacting metallurgical specifications and consistency levels required. As a result, the company enjoys higher margins and significantly less pricing volatility than found in other segments of the wire industry.
Johnstown Wire has developed a stable industrial customer base, with companies such as Textron, Illinois Tool Works, Alcoa and Black & Decker. The company’s customers are consolidating their supply bases to a few strong companies such as JWT that possess broad product range, high product quality and consistency, and technical engineering capabilities. Moreover, two of JWT’s major competitors have gone out of business recently, namely MGF-Rockford and American Steel & Wire. As a result, market share is migrating to JWT from other wire producers, and the company projects that its share of the cold-heading wire market will grow from 14 percent to 17 percent by 2004.
Approximately 70 percent of JWT’s customer base are primarily manufacturers of high-end fasteners. Between 2001 and 2009, demand for fasteners is expected to increase by $6 billion or 77 percent. The favorable outlook for fastener demand presents an attractive opportunity for JWT.
Growth expectations for the steel fasteners in the automotive, construction and appliance industries depend on are so positive that between 2000 and 2001 alone, JWT invested $7 million on increased capacity and infrastructure improvements with a direct impact on its steel fastener customers. For example, JWT installed in 2000 its fourth CCA furnace that expanded its annealing capacity by 44 percent.
JWT and Bethlehem
Johnstown Wire was founded in 1911 in Johnstown, Pa., as part of Bethlehem Steel Corporation’s integrated Johnstown steel mill. From 1911 to 1992, the Johnstown wire mill was in continuous operation and grew its capacity to become one of the largest wire producers in the United States. In 1993, JWT became a privately held company when Bethlehem sold its wire mill assets to a group of investors.
The company’s 700,000-square-foot operation in Johnstown features one of the largest wire facilities of its kind in the world and is equipped to produce the widest variety of wire products of any wire mill in the United States. Equipment isn’t everything because as Robertson points out, “JWT has a very skilled work force that we rely on day in and day out.”
While JWT faces strong competition from imports, the company’s management believes the company offers customers certain advantages not found with foreign wire producers. “Because of the lead times we’re given and the complexity of the products we make, it’s not that easy for our customers to switch to imports,” explains Robertson. “Our customers in cold-heading wire in particular want very complex products and they give us short lead times to get these products delivered to them. Lead times in the area of 48 to 72 hours are generally the norm. Based on these constraints, it would be very difficult for them to get these products from an overseas supplier. Additionally, switching to imports would force customers to build up on inventory to meet lead times, but that’s not really a solution because the wire products we’re talking about have a limited shelf life.”
The limitations customers face with imports is not the only reason JWT maintains a loyal customer base. Johnstown Wire’s technical superiority is manifested through a range of process advantages that includes continuous-coil annealing, hydrochloric acid cleaning, raw material sourcing and the metallurgical expertise mentioned earlier. The company uses this expertise to supply highly customized and technically sophisticated wire solutions to its customers, most of whom have complex end-use applications and require exacting specifications.
“For each of our customers we have developed supply programs tailor-made to their needs,” notes Robertson. This customized approach allows JWT to differentiate itself from its competition and enjoy consistently higher pricing. This strategy also reinforces the need for long-term relationships, for it would be difficult and costly for a customer to attempt to recreate an equivalent technical process with a JWT competitor.
Johnstown Wire helps maintain its just-in-time and product quality advantages through the innovative business system it runs. Johnstown Wire’s business system is the Axiom software package by AXIS, which was installed at JWT in 1995. “Because JWT was chosen by AXIS as a beta site, we were one of the first companies to make use of its advanced software,” says Robertson. Axiom works on a client/server basis, linked by an Ethernet backbone throughout the company. The system extends to the shop floor where all production data is entered and updated in real time. The software is designed for metals producers and is written in Progress, a fourth-generation language. Virtually all of JWT’s business functions are integrated into the system, including sales-order management, shop-floor control, accounting, and quality control.
“The AXIS software has been a huge help for us because it helps us manage the complexities of our business,” says Robertson. “Tracking ability is crucial when you have more than 200 customers and each of these customers can choose from a variety of products and wire properties. The software has been so successful at the company that other metal companies are now using it.”
A full 45 percent of JWT’s customer base is in the automotive industry, making the company very automotive-driven. Business with this particular industry has been solid over the last couple of years and prospects for future growth look quite good. As Robertson points out: “New data indicates that the average age of cars on the road in 2002 is eight, the same average age as in 1992. That’s a remarkable statistic given all of the cars that have been sold in the last few years. This information leads me to believe that the car industry is poised for growth and by extension we’re poised for growth in the industry.”
Sales to non-automotive industries have been mediocre in the last two years as result of the general slowdown in the economy. That being said, Robertson is optimistic: “In 2001, industry went through a major inventory adjustment that drove the manufacturing sector into a recession. Today, the new figures we’re seeing indicate that that the inventory-to-sales ratio is at the lowest point it has been in years. This is a positive development because this means industry will be demanding more of our products in the future as a result of restocking.”