- change ups
German firm poised for more growth
Weeke NA rolled the dice during the downturn and is on pace to double in size.
A German manufacturer’s Grand Rapids operation is set to double in size.
Weeke North America would like to see its output of CNC routers increase from approximately 200 machines to 500 in the next five years, a far cry from the 24 it produced at its start in 2009.
The operation began as a partnership with Stiles Machinery Inc., 3965 44th St. SE, Kentwood, an importer and distributor of furniture manufacturing equipment, to help fill a market need, said James Swanson, a product specialist at Stiles.
The vendor relationship, however, dates back as far as the late 1980s. Stiles is now part of the Homag Group, which also owns Weeke Maschinenbau GmbH.
The market the companies needed to hit was a flat table CNC machine, which at the time out-priced itself at nearly $150,000 per machine, Swanson said. The market segment is approximately 1,000 machines, and Stiles and Weeke were selling 15 units — at most — a year. Swanson said most competitors were in the $90,000 to $100,000 range.
“At the time we were a privately held company,” Swanson said. “They built a factory here for one customer in one of the largest economic downturns in history.”
Swanson said if the risk didn’t pay off for Weeke, the operation would quickly have been shut down. The 30,000-square-foot factory near the Gerald R. Ford International Airport came together and the cost of making the CNC machines was reduced by cutting duties, taxes, tariffs, European exchange rates and the high cost of German union labor. As the CNC machines came off the line, Swanson said the costs were reduced by 35 percent, while the product was backed by the Weeke brand name and the service reputation of Stiles.
The success of Weeke North America has led to interest from other German manufacturers in bringing production to America, said Chris Dolbow, Stiles marketing manager.
Another piece of machinery — a bore and dowel inserter — recently began production in the U.S. at Weeke. Dolbow said the price dropped by 40 percent, while orders went from 10 machines to 75 machines in 36 months.
For most of what Stiles imports, the price point is right, but there could still be market opportunities to take advantage of with American manufacturing, he said.
“If there’s a price point to beat, this might be an option,” Dolbow said. “It brings that vision of U.S. manufacturing to all these other German companies who are having trouble. It’s not always the solution, but it could be.”
It has been a solution for Weeke because it’s a natural fit to work with U.S. currency, U.S. suppliers and customers, said Matthäus Schmid, Weeke North America vice president of operations.
Demand for the CNC machines has increased every year, partially because the flat table router was priced where the market comfort level was immediately following the downturn in the economy.
Two years ago, the companies realized they needed to increase the capacity.
“Just the way the square factory was set up and the inefficiencies that were there when you’re trying to build 200 units in a space designed for 100,” Swanson said. “We cost ourselves money in the old space because of inefficiencies in the space.”
Weeke and Stiles worked with Robert Grooters Development to find a new space in the same industrial park. Now leasing the building, Weeke was able to set up a back-to-front production line with a fishbone system — where small parts are put together along the line and sent to the larger machine as it moves toward the departure point. Swanson said there are fewer movements and the built-to-need construction eliminates the constraints of a stock industrial building.
The new space is 75,000 square feet with an option for an additional 25,000 square feet, Schmid said.
With the new layout and office, Schmid said the new building acts as a great sales tool.
“Coming to a ‘Made in the USA’ factory — that resonates with them,” he said. “In the recession, you watched people ship production to India, China, Taiwan, Brazil to find the lower price point. We flipped the market on its ear and came here. Re-shoring hadn’t started to happen yet,” Swanson said.
Swanson said when the North American operation began, there were workers who’d sat on the shelf for 18 months waiting for employment. The operation started with two U.S. workers but has since grown to 27 — a number of company executives hope to double within another five years.
The new office facilities also will allow Weeke to bring a research and development team to the U.S. Swanson said a U.S.-based R&D facility can cut time in getting a product to market by up to 75 percent.
“The way the furniture is built and constructed is different here than the rest of the world,” Schmid said. “We do it very differently. That’s a big component of having this group here is to cater to the configuration of the U.S. It adopts a European concept to the local needs to get costs down.”
In Stiles’ 50th year, the more than $200-million-a-year company is having its best year sales-wise in its history, Dolbow said. He said 15 years ago, the company focused on extending its products to solid wood, architectural millwork, plastics, aerospace and defense manufacturing equipment. Those investments are paying off.
“Our leadership team maintained their commitment toward these investments during the downturn,” Dolbow said. “Which positioned us for a strong and early lead as the market began improving again, where our competitors recovered much slower due to lacking the appropriate capacities because they did not invest.”
Finding the right products to implement will help Weeke continue to grow, Swanson said.
“We have to find the product we can systematically plug in that brings an 80-unit volume,” he said. “That’s exciting for the factory here, and the sales team. If we choose to put it here, it’s because we aren’t performing where we want to be in the market. We address that and they push it.”