With an ever-increasing population and advancing technology, the demand for energy is growing at an astounding rate. World energy consumption is projected to increase 57 percent between 2004 and 2030, according to the U.S. Department of Energy’s Energy Information Administration. In order to support the increased demand, companies like Valmont-PennSummit must respond.
PennSummit a member of the Valmont-Newmark Utility Division of Valmont Industries Inc., (NYSE:VMI), designs and manufactures a broad-range of custom tubular steel poles for the utilities, wireless, distribution, and transportation industries throughout North America, the Caribbean, and Mexico. It is capable of making tubular sections ranging from six to 122 inches in diameter with steel thickness up to 1.25 inches, and its state-of-the art hydraulic press allows it to bend form lengths up to 60 feet. “With the range of capacity we have, we can provide tapered tubular structures for supporting high-voltage transmission up to 765,000 volts. We also build some of the largest utility structures, some weighing over 150,000 pounds,” says Lew Grant, Director of Sales & Marketing. “The Edison Electric Institute has projected that the annual demand for structures to support electric transmission lines will double in 2010 over 2005, and we have postured ourselves in capacity and production capability to meet these demands.”
The future looks bright for Valmont-PennSummit. It projects steady growth resulting from market demand, greater penetration into the market, and expansion of the scope of its products. As a result of forming strong alliances with some of the major wireless carriers and electrical utilities, it has established a strong business base and successfully bid on major projects, including the New Brunswick Power intertie between Canada and the United States. Specialized projects such as building 150-foot-tall telecommunication poles disguised as pine trees, manufacturing substation structures, and replacing light duty wooden transmission poles with 100 percent recycled or scrap constructed steel poles are some of the additional ways Valmont-PennSummit continues to forge ahead and establish itself in the ever-changing market.
What began in 1988 with 10 people in a 20,000-squarefoot-facility as a traffic and lighting pole business quickly expanded into a company that acquired a significant share of the East Coast market by 1995, providing not only traffic and lighting poles but also manufacturing structures for high voltage transmission lines and the wireless industry. “In 1998, PennSummit was a significant player in the wireless and utility market,” says President Raj Pawar. At the height of the wireless demand, Raj sold controlling interest in the company to a large investment group. The company suffered in the wireless downturn and filed bankruptcy in 2002.
“I bought the company back out of bankruptcy and together with approximately 30 employees began operating as PennSummit Tubular, LLC.” By 2006, the demand for PennSummit Tubular’s products caused it to build an $8 million extension onto its 136,000-square-foot manufacturing facility, which it designed to increase material flow and to improve productivity and material handling. In 2007 a second 200,000-square-foot plant, was purchased to add to the continuous growth for the company.
January 2008 brought new changes to PennSummit Tubular when it merged with Valmont Industries. “From September 2002 to the present, we have grown to employ over 200 people in both technology and manufacturing, and the company has grown to a little over $50 million in sales prior to the acquisition,” Grant says. “This has allowed us to expand into the second facility that was purchased, and we look forward to a healthy future. Our merger with Valmont Industries offers us tremendous support for our future growth, and we have a solid backing and additional facilities that can be used to support projects that go beyond our capacity.” The merger allows Valmont-PennSummit to tackle any project that comes its way.
Through the purchase of state-of-the-art equipment and software, Valmont-PennSummit positioned itself to be at the forefront of providing faster turnaround in delivery of its products, which minimizes both the lead time for its customers and the amount of inventory its customers must carry for their projects. Its proprietary design programs allow it to custom design each project based on customer specifications rather than using standard products that could be inefficient for the particular applications. Ultimately, the creation of custom products results in cost savings for the customer.
The addition of a 60-foot CNC (computer numerical control) press, an automated material handling system, and a machine that marks, cuts and drills all in one location – resulted in enormous productivity gains. “We’re doing things four times faster than before,” Pawar says. “We are also in the process of installing a cut-to-length decoiling machine which uncoils material, cuts it to length, and converts it to plate. This should ultimately reduce material cost.”
Sophisticated software is utilized to program Valmont-PennSummit’s manufacturing machines, and it results in more efficient material utilization. It also allows the company to extract information directly from its engineering drawings into its CNC programmed machines. This interface results in the elimination of multiple manual steps and permits greater efficiency in the manufacturing of products.
Valmont-PennSummit also introduced an AC/DC Sub Arc Welder to streamline its production process. This machine, used in submerged arc welding, provides better penetration and quality longitudinal seam welding than did its predecessor.
The expansion of space and the addition of state-of-the-art machinery and software enable Valmont-PennSummit not only to reduce costs and increase productivity but to bring some of the work it had previously outsourced back in-house, such as polyurethane coating.
PARTNERSHIP PAYS OFF
The weakness of the dollar has restricted material coming into the United States from suppliers in Europe. The limited number of steel suppliers and reduction in competition caused significant inflationary pricing. In addition, the increased cost of fuel escalated transportation costs in both bringing raw material to Valmont-PennSummit and in shipping its products to its customers. “We try to respond to this inflationary pricing by offering risk-benefit pricing to our customers. If in fact there is some decrease in fuel or steel costs in the future, they could share in the benefit in the reduction of those. We try to partner with the utilities and not just unilaterally pass those costs along to them.”
Valmont-PennSummit controls costs by partnering with some of the logistic companies. These trucking companies put trailers on site so Valmont-PennSummit can load them ahead of time and optimize the loads and the best nesting-to-fill capacity so it does not send out partially empty trucks.
Delivering product on time is a major initiative for the company, and fast turnaround on delivery of product enables Valmont-PennSummit to increase turnover of its inventory while allowing its customers to reduce their inventory.
FORMULA FOR SUCCESS
So what does all this change, growth, and response to market demands mean for Valmont-PennSummit? It’s simple. Customer satisfaction. “In spite of all the changes and growth, we are still very much responding to our customers’ needs, and those needs come first,” Grant says. “We have done what is necessary to respond to the changing demands in the markets that we have been supplying since we started the company. As those needs have expanded and changed, we have responded and extended our capabilities.”
As a testament to Valmont-PennSummit’s commitment to excellence, the company was recently awarded the Innovation Award for “Manufacturing Achievement” at the Ben Franklin Technology Partners Innovation Exchange Program and was also selected by the Northeast Manufacturers and Employers Association as the company that best demonstrates “Manufacturing Excellence”. Valmont-PennSummit stands behind the philosophy that if its employees are happy, its customers are too. “Raj Pawar’s main thrust has always been to do the right thing by the people who work for PennSummit and by the customers,” says Grant. “And it has paid off. It’s a success story. A good formula. And when people tried to apply other formulas, it didn’t work.”
Today, Valmont-PennSummit is a leading supplier of custom tubular steel poles and accessories. And its tremendous success would not have been possible without the dedication and persistence of Raj Pawar and his employees.