Century of Growth, A

Michael Fickes

When people talk about growing technology companies, few mention Heil Environmental Industries Ltd.

Perhaps more should.

Unlike most technology companies, Heil roared into 2001, the company's 100th year in business.

Throughout the 20th century, Heil has compiled a steady, occasionally spectacular, record of growth in the business of manufacturing ever more technologically advanced truck bodies for solid waste collection trucks.

Heil's second century has quickly begun to build on the successes of the first.

Consider the first two months of 2001.

In January, Heil bought Bayne Machine Works Inc. Located in Greenville, S.C., Bayne manufactures hydraulic lift systems used in the waste industry in a 70,000-square-foot production facility. Bayne's patented rack and pinion rotary actuator is unique in the industry.

“Bayne's growth record has been the result of new product development, quick delivery, outstanding customer service, after-market support and high-quality products — all key ingredients that make Bayne a perfect fit for Heil,” says Glenn Chambers, president of the Chattanooga, Tenn.-based Heil.

By February, Heil had advanced its technological capabilities once again with the opening of an e-commerce site for distributors to order parts, check the status of orders, track packages, retrieve pricing and inventory information, and view parts books.

This year, Heil customers will see at least two major new product introductions. A split body rear loader will join the product mix, and New York City has already placed an order for 300 of them. Then comes the Python, according to Heil, a dramatic improvement of automatic side loader technology.

All of these developments reflect Heil's characteristic broad-based approach to growth: solid, reliable, relentless steps forward through acquisitions, research and development, manufacturing, customer service, and eventually, the bottom line.

Considered one of the nation's premier manufacturers of waste industry truck bodies, Heil has taken a number of steps that have doubled its revenues over the past five years. Combining internal growth with growth through acquisitions, Heil reached approximately $250 million in sales during 2000.

One of the factors contributing to Heil's sales record is a large and diverse product line. “I would estimate that we sell approximately 17,000 pieces of equipment, including dump bodies, every year,” says Senior Vice President John Craig.

According to Heil officials, the company holds more than one-third market share in the waste-truck industry. For instance, in the category of automated truck bodies, the Heil name appears on approximately 60 percent of the products purchased by waste collection companies and municipalities across the country, Heil says.

Chambers credits the nuts and bolts of the company's growth over the past several years to the efforts of Wayne Smith, who manages the company's manufacturing plants. “Wayne had robotic assembly systems installed in all our plants,” Chambers says. “And a continuous robotics investment program is in place.”

In this recent modernization effort, Heil spent $1 million on a new painting facility, $2 million on new fabricating equipment and $2.5 million on five state-of-the-art robotic welding stations.

The result? Growth. The Fort Payne, Ala., manufacturing plant alone has boosted its sales by more than 200 percent over the past three years.

“Where we really make our living, though, is through the teamwork that exists among our manufacturing, sales and customer support organizations,” Chambers says. “The key to Heil is people and their ability to react in a coordinated manner.”

The company's organization focuses on eliciting contributions from individuals, something that large corporate structures often find difficult to do. Heil has labored to prevent corporate paralysis throughout its history.

In the early 1970s, for example, Joseph Heil Jr., the company's president at that time and a third-generation Heil family member to run the company, decided that a centralized business structure made it impossible for management to develop and maintain relationships with employees.

Then, Milwaukee, housed the lion's share of company operations; the company employed 1,500 people overall.

To remedy matters, Heil decentralized the company, spreading out across the country with new manufacturing plants, each employing 300 to 400 people.

The first of the new plants appeared in Fort Payne, Ala., and Dunfermline, Scotland, in 1973.

In 1977, Heil continued the decentralization process by moving the solid waste division from Milwaukee to Chattanooga, Tenn. A manufacturing facility remained in Milwaukee. That same year, the company's senior executive lineup changed.

Joseph F. Heil retired as chairman of the board after 54 years with the company. Joseph F. Heil Jr., moved into the posts of chairman and CEO. And John E. Arpe was named president and COO.

Together, Heil and Arpe continued the company's geographical expansion.

The next year, in 1978, Heil acquired a manufacturing facility in Tishomingo, Miss. A year later, the company opened a dedicated parts facility in Tiftonia, Tenn., near Chattanooga.

Throughout this period, Heil and Arpe broadened the company's product line and fostered the development of a number of now classic Heil's.

In 1979, the company signed a licensing agreement with Sargent Industries and Gar Wood to bring a high-compaction rear loader into the product line, leading to the introduction of the “Formula” series of refuse bodies.

Heil then, in 1980, acquired Litter-Lift Systems, which produced a forerunner of the Formula 7000 automated collection unit, and Fiberglass Specialists Inc., which was renamed Heil Rotomold Inc., a producer of plastic refuse containers.

During this period of acquisition, decentralization continued as well. In 1984, Heil restructured into two companies: the Heil Refuse and Dump Body Company and the Heil Bulk Trailer Company.

By 1985, the slow and steady, 10-year decentralization strategy bore fruit, and the company began to grow more rapidly.

“Prior to 1985, we had not been able to provide the product, technology, service and support, or delivery times that national accounts expected,” Chambers says. “As a result, we were dealing mostly with small municipalities.

“At that time, it took 120 days to deliver a truck to a customer, from the day the chassis arrived in the plant. In 1985, we took that time down to 30 days, which, today, remains the industry standard, on average. We can do it more quickly if necessary.”

The decentralization process made it possible to streamline the company's approach to manufacturing, a process that entailed training and certifying welders and assemblers, retooling and re-fixturing the plants, and reorganizing the workflow.

A Browning-Ferris Industries (BFI) order placed in the early 1990s demonstrated the results of this reorganization. “BFI asked for 10 automated trucks to be delivered in a month,” recalls Jim McKee, vice president of sales. “That's an unusual order, and it was tough, but we managed it.”

More recently, Heil delivered 25 automated trucks for a Republic Services startup in Houston. The schedule called for delivery in 45 days. When the trucks arrived, so did a virtual army of Heil support and training squads to introduce the new equipment. “Our job involves more than delivering iron,” McKee says.

Decentralization also has powered up the company's research and development.

Prior to 1985, for example, front loaders used telescopic cylinders to push compaction panels all the way to the rear of the truck-bed. The procedure took as much as a minute.

When a customer approached Heil in the early 1980s about a new front loader compaction technology being experimented with on the West Coast, Heil jumped at the chance to study the machines.

“In California, there was a demand for lighter duty front loaders,” recalls Houston Ratledge, a Heil product manager. “Some small companies and independent hydraulic and mechanical engineers had put together a new kind of front loader to meet this demand. Their machines used compaction panels that moved only half-way back, but still allowed compaction levels of five or six to one. The big advantage to these ‘half-packs’ was that the process only took 26 seconds. This saved an enormous amount of time.

“Our engineering staff went west to study this technology,” Ratledge comments. “They came back with sketches of how the concept might be improved and adapted to our production process. As a result, we developed an East Coast version of the West Coast front loader.”

The customer who had suggested the idea to Heil took 10 units and evaluated the new technology, as well as the productivity increases it afforded. The evaluation eventually produced an order for 50 units. Heil dubbed the product the Half/Pack and introduced it to the national market.

“The idea revolutionized the industry,” Ratledge says. “We were the first to bring it to a national market.”

According to Heil, the Half/Pack leads in the front loader market, with more than 7,000 units on the road.

Throughout the mid 1990s, the Half/Pack evolved further, incorporating a curved body shell and spawning the first generation of the DuraPack bodies. The newest model comes with computerized controls in the form of a programmable logic controller (PLC). Heil introduced clamp-on arms to the industry in 1999, and John Deere cylinders now are used on all Half/Pack applications with the exception of ejector cylinders.

According to the company, many collection companies prefer basic hydraulic and pneumatic controls without the PLC, and Heil continues to market that model under the name DuraPack Half/Pack Classic. Both come in standard and extra duty versions, with body capacities ranging from 35 to 40 cubic yards.

DuraPack Half/Packs also come in lighter-weight versions designed for the West Coast and Southern California markets.

Overall, research and development remains a centerpiece of Heil's approach to the industry. For example, following two years of development, the Python automated lift is slated for introduction this year.

While the function is similar to the Rapid Rail product, Heil says this system for reaching, lifting, dumping and replacing residential rolling carts is easier to maintain, and quicker and smoother.

“The Python's arm is very fast, but also very soft,” Ratledge says. “The Python operates in 8 seconds, and accelerates slowly and softly. By mid-stroke, it is traveling very fast. When it reaches a container, it decelerates softly for retrieval.

“This offers two benefits,” Ratledge explains. “It reduces the rocking that a driver feels in the truck, and it lengthens the useful life of the arm as well as the containers.”

Heil approaches research and development like it approaches all of its business tasks: from the perspective of customer service and support.

“When you buy a Heil, we're never going to let you down,” Chambers says. “It should not break. But if it does, we'll fix it. We practice this philosophy day in and day out.”

George Paturalski, director of marketing for the refuse group, calls customer service the backbone of the company. “Over the past few years, we've invested more than $1 million in customer training facilities,” he says. “We have a state-of-the-art training facility at the Fort Payne, Ala., plant, and we have two large mobile training trailers that take training to customers at their locations. We've also built an automated warehousing system. We've documented that this sophisticated system allows our people to ship parts on the same day they are ordered 97 percent of the time.”

The company's parts facilities in Fort Payne and Phoenix employ distribution techniques to support this delivery record. Incoming orders are keyed into the system, causing parts trays in 40-foot-tall towers to begin to cycle. The tray holding the requested part shows up at the bottom of the stack and slides out. The part is ready for picking and packing, and inventory is automatically adjusted and re-ordered, if necessary.

Heil also works closely with its 47 distributors, some of whom have sold Heil products for 60 years or longer.

Recently, the company introduced a distributor scoring system to help ensure consistent quality. “With this system, we grade distributors in four areas,” Paturalski says. “We look at total sales performance, parts inventory, financial stability and service capability.

“In terms of service, we want to make sure that each distributor maintains adequate staff, can trouble shoot for customers, checks new trucks in and out properly, has all of the latest service bulletins, and fills out the warranty registrations.”

Heil uses this criteria to review the performance of each company distributor twice a year.

From research and development to advanced manufacturing techniques through the backbone of customer service, Heil hopes to continue building its record of growth for the next 100 years.

One thing, however, differs from the last century. Julius P. Heil founded a startup welding company in 1901 and operated for many years on shoestring budgets. Heil begins this century with the substantial financial support of a new owner: Dover Industries, one of five divisions of Dover Corp., New York.

Dover purchased Heil in 1993 just prior to the retirement of Joseph F. Heil Jr. The transaction represented a marriage of two companies with aligned interests. Heil wanted to find a buyer that understood its business, provided strong financial support, but allowed existing management to operate the company.

“As it turned out, that was Dover's criteria for acquisitions,” Chambers says. “Dover looks for market leaders in niche manufacturing sectors with solid management capable of continuing to run the company.”

Dover views its role in Heil's future as one of providing the capital necessary to build the business.

Over the next five years, the Dover-Heil relationship will focus on an ambitious business plan with internal and external goals for growth.

“Our plan for internal growth is to concentrate on the markets we're weaker in,” Chambers says. “Generally, these markets are on the West Coast. We also will continue to focus on improving the work we do for our East Coast customers.

“In terms of external growth, we will look for good niche players in our market,” Chambers adds. “We think there is going to be some consolidation in the domestic industry. And we know there is going to be consolidation in the international markets of Europe, South America and Asia. So we're looking for strong companies that we can acquire throughout the world that are good fits. These might include competitors, as well as companies that produce equipment related to our business area.

According to Chambers, Heil will look for companies that fit its manufacturing and/or marketing approach. For example, street cleaners and sewer cleaning equipment, he says. “When we call on a municipality, the person we deal with often buys a whole range of equipment: garbage trucks, dump bodies, roll-offs, compactors, street sweepers, sewer cleaning equipment and so on.”

But after a century of growth driven by innovation, Heil has a message for today's technology companies: Technology alone does not drive growth and profits. Growth comes from an organizational flexibility that promotes steady forward movements through research and development; an ever expanding, ever more refined product line; teamwork and customer service; and financial strength, Chambers says.

With this bit of wisdom, Heil has grown steadily for 100 years and has positioned itself for a second century of growth.

Michael Fickes is Waste Age's business editor.