HOLLAND — A West Michigan equipment manufacturer wants to leverage its engineering pedigree to navigate a consolidating industry.
Ben Fogg, president of Fogg Filler Co., said he’s learned from watching the mistakes of his larger competitors, many of whom have broadened their product portfolios to the point where they’ve gotten away from their core competencies in liquids packaging and filling.
Instead, the Holland-based maker of fillers, sterilization and capping equipment, and other products focuses on a strategy of continuous improvement.
“Our corporate culture drives continuous improvement to make each machine significantly better,” Fogg said. “That philosophy flows through our culture for internal processes and because of that willingness to change, we’re growing.”
Fogg Filler generated approximately $30 million in annual sales last year and expects to grow annually at a manageable 10 percent — a rate the company has maintained for several years, Fogg said. The company serves customers ranging from food and beverage producers to the makers of pharmaceuticals, as well as the manufacturers of industrial liquids including fuel injector cleaner, embalming fluid and lantern fuel.
The process of continuous improvement has led Fogg Filler to look for ways to broaden the capabilities of its existing equipment rather than focus on vertical integration. For example, the company repeatedly has updated its ultraviolet (UV) sterilization equipment, technology Fogg Filler first developed in 2003. The company has positioned the technology for environmentally conscious customers seeking an alternative to using harsh chemicals in the sterilization process, Fogg said.
In other cases, Fogg Filler has looked to scale its equipment to meet the needs of industry. That includes launching a smaller and more affordable filling machine for the small, but growing craft distilling industry in Michigan and nationwide. Similarly, the company is developing a filler to work with carbonated products to serve the craft beer industry.
Fogg Filler also plans to continue to develop new equipment that can fill thicker liquids such as shampoos and cosmetics, he said. Currently, the thickest substance the company’s equipment can fill is drinkable yogurt.
The Holland manufacturer’s nimble growth strategy comes during a strong period for the industry as a whole. The global packaging machinery industry, which includes the beverage, pharmaceutical and personal care products sectors, is expected to grow to $52.5 billion in 2019, a 37-percent increase from $38.2 billion in 2015, according to a report from Freedonia Group, an Ohio-based research firm.
Fogg Filler employs approximately 150 workers and wants to hire an additional 18 people this year to support its business. This fall, the company plans to complete an 18,000-square-foot expansion and the renovation of its offices, which includes creating a two-story, 15,000-square-foot space for its expanded engineering and research and design departments.
Holton-based Patron Construction Inc. is serving as the general contractor on the project.
The latest project comes just three years after a previous expansion, Fogg said.
“We could grow faster if we wanted, but we’re holding back because of the technical repercussions of growing too fast in the complicated business we’re in,” Fogg said. “Getting ahead of yourself can be worse than getting behind.”
That’s a lesson he’s learned from watching competitors who’ve diversified to the point where they’ve gotten “over their heads” in making too many product lines and trying to control the entire supply chain.
“They’re very good at one thing and out of arrogance, they say they’re also going to be good at making labelers, and therefore very good at making a blow molder and conveyors and automation — that’s just not true,” Fogg said. “They’re all a lifetime’s worth of knowledge and experiences.”
Fogg said he’s seen the trend intensify in recent years as private equity firms have bought into the industry and pursued a roll-up strategy.
“Private equity in our industry is buying up suppliers like us at a frantic pace, and they have the ability to offer the whole line under one corporate umbrella,” he said. “It doesn’t mean they’re good at it, it just means they bought all the companies that theoretically have all the pieces plugged in. In the short term, that’s a pretty big challenge.”
Fogg Filler, which receives an offer from a would-be buyer about once a week, can react more nimbly and serve its customers on a more personal basis than those larger corporations, Fogg said.
“A lot of our success is that we’re big enough in size to be able to handle a Fortune 500 company, but we’re small enough in size to remain agile,” he said. “We’re not a corporate monster.”
Still, the larger conglomerates have started to squeeze the company out of trade shows, Fogg said, noting the well-capitalized competitors also have larger marketing budgets, which makes the industry as a whole more competitive.
While Fogg Filler seeks to avoid overextending itself in its core business, the company has invested approximately $10 million into Smooth Logics, an affiliated enterprise resource planning (ERP) and manufacturing resource planning (MRP) software development company in Holland.
After seven years in development, Smooth Logics plans a summer 2016 launch for its Counterpart software, which streamlines data integration for custom engineering firms using Solidworks.
“Instead of diversifying within our industry, I chose to diversify in a radically different space,” Fogg said. “We’re rounding the horn and getting close (on the software launch). It’s a really good space for us to be in.”
MADE IN MICHIGAN: With sales of about $30 million last year, Holland-based Fogg Filler Co. plans to grow its business at a rate of 10 percent in 2016, despite opportunities to expand faster. Executives at the manufacturer of equipment for the liquid packaging industry said Fogg Filler will continue to widen the capabilities of its existing product portfolio, while resisting offers to sell in an increasingly consolidating industry.