Shepherd Caster growing, adding jobs

By Nathan Peck | MiBiz
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ST. JOSEPH — Why is Dennis Jones smiling?

In an office furniture industry working to recover from a 30-percent decline in 2009, the president of Shepherd Caster Corp. saw the company’s sales grow 5 percent over the last year. Those numbers are more impressive when one considers that the company added 10 jobs, increased its sales force by 50 percent and invested in machinery.

That investment has also helped Shepherd gain market share — it is now the fifth largest caster company in the U.S., up from seventh two years ago — and in a somewhat anomalous move compared to the rest of the industry, the company is moving the production of castors onshore from locations around the globe.

“We really have been employing the same strategy all along. It is not great growth, but we were growing when a lot of the industry was shrinking,” Jones said in an interview with MiBiz. “We invested a lot in a down economy in automation and our sales force.”

That investment is paying off in 2010 as Shepherd Caster’s year-to-date sales are up 26 percent over a year ago. Shepherd has achieved that growth in large part to a diversification strategy that began a decade ago when 90 percent of the company’s sales were tied to the office furniture industry. Office furniture now accounts for approximately 15 percent of the company’s sales, and Shepherd still supplies the office furniture giants such as Steelcase and Haworth, but no one industry surpasses that 15-percent benchmark. The customer base is extremely diverse as well, with no one customer accounting for more than a few percent of sales.

“We didn’t give up on any of our markets. We strategically decided what industries we wanted to supply to,” Jones said. “We were able to diversify … into more stable markets as well.”

The diversification strategy dovetails with Shepherd’s push for lean manufacturing. Today, the company’s manufacturing area with its die presses and automated assembly machines is bright and clean, indicative of a company that has taken 5-S and lean practices to heart. That wasn’t always the case — the plant was once dimly lit and its presses painted green to hide grime from lubricants and stampings. The presses are being painted a light grey because it can show stresses and deposits can indicate that a mechanical failure is imminent. The company converted a boardroom into a classroom and Shepherd employees conduct 5-S audits on two departments a week, said operations manager Ron Greulich.

“Lean manufacturing works because you are empowering employees to find efficiencies. We were unsure if we would get buy-in from the long-term employees, but they bought in — they felt for the first time someone was listening,” Greulich said.

The move to lean manufacturing has increased efficiency in the plant and is becoming a competitive advantage for Shepherd as OEMs in office furniture and retail fixture industry have logistical problems in procuring parts from far-flung distributors. Shepherd manufactures about 50 percent of its products, providing value-added service to another 30 percent using some imported content, and distributes another 20 percent of goods manufactured elsewhere.

The cost of maintaining an inventory of parts or lost time as shipping containers of finished goods are slow in reaching the U.S. have made Shepherd an increasingly attractive choice for OEMs, said Jones.

“Our advantage is that we can turn around our inventory quickly. In the current economy, we are seeing more U.S. manufacturers rethinking their importation strategy where container backups are increasingly a problem and they are realizing their supply chain was not as strong as they thought,” Jones said. “We are gaining an entrée into markets due to our low tooling costs. Now we can increase the volume of our sales. We are finding there is an advantage to quick delivery, we don’t have to be the lowest, just competitive.”