Columbia Machine defies prophets of doom through its creativity, flexibility
Sunday, November 25, 2012
Ostensibly, Vancouver-based Columbia Machine Inc. shouldn't be here.
After all, American manufacturing, though it still flexes plenty of highly productive muscle, is no longer a job-producing giant. Clark County is no exception: Manufacturing made up 20 percent of county jobs in 1990; it pitched in only 9 percent in 2009.
Automation is part of the reason. But in the past decade or so corporations, seeking fatter profits and lower labor costs, rushed to off-shore production and jobs.
Columbia Machine Inc.
• Location: 107 Grand Blvd., Vancouver.
• Employees: 500 worldwide.
• What it does: The 75-year-old company builds concrete products-making equipment and package-moving palletizers.
But Columbia Machine — which builds concrete products-making equipment and package-moving palletizers — is emphatically still here, proudly defying the prophets of American industrial decline. "It's pretty unique," said Rick Goode, the company's president and CEO, "to do all of these things under one roof."
Indeed, Columbia Machine controls everything, from the raw materials that go in to the finished machinery that goes out. It hasn't been swept up in the off-shoring frenzy. It's an international player — a king-size exporter — that holds on tight to its local roots.
In its uniqueness, the family-owned company also provides a model for both would-be and veteran industrial shops on how to succeed in a rapidly changing global economy that favors the nimble over the lumbering.
The company is a "prime example of a world-class manufacturer" that has positive ripple effects in the local and regional economy, said Bonnie Moore, a locally based economic and workforce development expert. She points to Goode's leadership, saying he's diversified the company's lines of business, found niche markets and built a business model that "reflects commitment to its employees, financial sustainability and manufacturing best practices."
'Everything is fully automated'
Columbia Machine, which celebrated its 75th year in business this summer, was founded in 1937 by Fred Neth Sr., who opened Columbia Forge and Machine Works when he was 23 years old. In 1945, the company pioneered a hydraulically operated concrete block-making machine. Until then, you could find similar, semi-manual machines. But a hydraulically operated system — with its versatility and flexibility — was an industry first.
Many years later, the company modified that technology, creating a "palletizer" that could stack consumer products. "We made our first palletizer for Lucky brewery in Vancouver," Goode said.
Nowadays, thousands of the company's palletizers move and stack everything from beer and paper towels to fruit juice and bottled water or, as Goode put it, "pretty much any consumer product on a pallet in Costco."
The machines are super-fast, assembling countless packages in a matter of minutes and meeting the demands of a global supply chain that wants what it wants — now.
"Everything is fully automated," Goode said.
The company's customers, which include Fortune 500 companies, have taken note. During an awards ceremony in 2010, for example, Proctor & Gamble, the global consumer brand goliath, recognized Columbia Machine as one of its best business partners and suppliers.
Goode views Columbia Machine as an enterprise of "engineered solutions," with the ability to take, say, a standard model of one of its palletizers and add features to it to serve the evolving needs of its customers.
And while it brackets the consumer products industry, the company also supplies concrete-products equipment to customers looking to build everything from pavers and curbstones to blocks for retaining walls.
In that line of business, Goode said, "we supply the entire factory," selling machines to companies that do everything from storing, handling and mixing the raw material to molding and cutting concrete into finished products.
The company also is in the business of staying privately held and family-owned by the Neth family.
The decision to stick with that structure isn't tied to some fanciful notion of the past. On the contrary, it's a key business strategy. Goode said having "second- and third-generation owners" has resulted in the company's maintaining a strong balance sheet, robust cash flow and no debt.
"It's a huge advantage to not have to answer to outside shareholders or to banks," Goode said.
That advantage enabled the company to continue to invest in its growth, despite the economic crash. By contrast, Goode said, "a lot of competitors had banks saying 'You can't do this or you can't do that because of the covenants of your loans.'"
It's not that Columbia Machine hasn't had suitors. Private equity firms, for example, have expressed interest in prying open the company and investing in it. And, yes, the company could take the cash, but it would lose something of its soul.
"If you have high bank debt or … private equity, the pressure is on you to drive as much to the bottom line, sometimes at the cost of taking care of employees and taking care of customers," Goode said.
A focus on exporting
Columbia Machine is profitable, raking in $75 million to $100 million in annual revenues. And its high-skill jobs — including everything from electrical and mechanical engineers to field and assembly technicians — come with excellent pay and benefits.
It employs 500 people worldwide, with about 400 of them based at its sprawling, 320,000-square-foot facility off Grand Boulevard, across from the Fred Meyer-anchored shopping complex.
To maintain its growth and competitiveness, the company has secured lines of commerce in more than 100 countries, exporting its equipment to emerging economies, including India, Brazil, Panama and Mexico.
Columbia Machine has plenty of domestic customers, too, but it's constantly looking for more export opportunities. "We're very focused on exporting," Goode said, noting the company's been shipping its hardware overseas for more than 50 years.
It's a move other companies would do well to adopt, according to Moore, director of business services for both the Columbia River Economic Development Council and the Southwest Washington Workforce Development Council. "It's the way of the world," she said. "It's too limiting to say you're just going to sell to the U.S. market."
That's especially true when you consider that more than 70 percent of the world's purchasing power is located outside the U.S., according to the U.S. Commercial Service, the trade-promotion arm of the U.S. Department of Commerce.
And as Columbia Machine plans for growth over the next five years, Goode said, it will need to hire "in all of the technical fields." To ensure it has a good supply of talent, the company has built partnerships with Washington State University Vancouver and Clark College, supporting scholarships at those institutions and hiring graduates.
Talk to Goode and you get the feeling the company is constantly on the march toward perfection. The 40-year-old is tall and projects a no-nonsense manner. He knows the company's machines inside and out, and his experience and education are deep.
He worked his way up at Columbia Machine. And he possesses two business degrees — a bachelor's from the University of Washington with an emphasis in finance — and an MBA from the University of Portland with a concentration in management and marketing.
But perfection is elusive.
In 2010, the Washington State Department of Labor & Industries penalized the company for $3,500 for two serious workplace safety violations. The violations involved a lack of guards on two machines. The company promptly fixed the problems and paid the fines. It did not appeal the citations.
At the time of the inspection, Columbia Machine had "a good history" and "was making a good-faith effort to comply with safety regulations," according to Elaine Fischer, a spokeswoman for L&I.
Goode said safety remains a top priority for the company and, when benchmarked against other manufacturers, Columbia Machine is "top tier" when it comes to its focus on health and safety issues. "We take safety very seriously," Goode said.
That was evident during a tour the company granted a Columbian reporter. The company's Vancouver factory is spotless, and employees were clad in safety equipment. The company runs a comprehensive safety program that includes a designated safety manager.
During the tour, Goode strode toward a large board attached to a wall, pointing to it and explaining that it's the "Columbia Idea System." It neatly displayed paperwork showing workers' suggestions for improvements and updating the company's progress in achieving them.
At one point during the tour, a group of employees formed a huddle. They were engaged in what the company calls "continuous improvement," a full-time process by which workers and managers are checking in to see how things are going and what can be modified to make things better.
And Columbia Machine wants to continue to improve and grow in Vancouver, where Goode sees several advantages, including its proximity to Portland International Airport. His employees, he said, like living here, too.
It's also where the company has built up its capabilities and successes, all the while eschewing the off-shoring and out-sourcing that so many other companies embraced.
"We want to control everything, from the industrial controls to the frames to the automation," Goode said. "Being able to do that in-house, we're able to control quality and lead time."
Not only is it staying here, but Columbia Machine has solidified its role in the larger economic development of Clark County.
A couple of years ago, Goode agreed to join the board of the county's largest nonprofit jobs promoter and business recruiter — the Columbia River Economic Development Council. Goode said his only concern before joining the agency was that it maintain a focus on helping existing businesses — including manufacturers — grow.
The CREDC — which counts a wide range of Clark County businesses and governments among its 135 members — is doing that now, Goode said, by helping homegrown companies network with each other and by guiding them to the tools they need to remain competitive.
Meanwhile, Columbia Machine's focus on keeping and growing jobs and industrial processes here while exporting abroad may be catching on for others.
Scott Bailey, regional labor economist for the Washington State Employment Security Department, said the off-shoring of jobs was "overhyped and oversold," taking on a life of its own outside rational justification.
"It's not like big corporations are immune to fads," Bailey added. And now, labor costs in China are rising, so the assumed competitive edge in making things there to be exported back to the U.S. "has worn away," Bailey said.
For a manufacturer to stay and grow in the U.S., Bailey said, it has to possess "the will to do it," a focus on keeping its costs down and the drive to invest in "the skills of your workforce."
They are ingredients Columbia Machine understands well. And while it celebrates 75 years in business in 2012, Goode said, the company has every intention of sticking around for at least 75 more.