Diversification : A Successful Strategy

Today NMC-Wollard is a successful, diversified manufacturer of everything from bee-keeping equipment to GSE. While it is currently adding new products and improving its manufacturing capabilities through implementing “lean” concepts, it took more than 75 years and several mergers for the company seen today to take shape.

Northwestern Motor Company, Inc. (“NMC”) is an amalgamation of several different companies and product lines which originally began with railroad maintenance equipment. In 1939, the company designed and introduced what was widely accepted as a rugged and dependable tow tractor.

“Our first tow tractor line launched with the models 60, 100 and 140,” explains current NMC-Wollard Vice President Bruce Steingart, whose father was a founding partner in the company. “Those tractors have evolved over the years and we eventually built the model 200 with a military version called the MB4.”

Tow tractors remain one of the company’s core products. In 1986, NMC merged with Mobility Inc., a manufacturer of fertilizer distributing equipment and Sludge Systems International (S.S.I.), a manufacturer of municipal and industrial mixers for composting sewage sludge. NMC was the surviving company in this business combination with the ownership split between Robert P. White and John Steingart (Bruce’s father), who were the owner and president of Mobility and S.S.I. respectively.

“Mobility bought NMC to diversify from the agricultural market it was in,” explains Steingart. “I think the price was right and diversification of the business was their strategy. They did not want to have all their eggs in one basket. I think they saw the potential with the aviation industry, saw this ground support company and thought they’d give it a go.”

In 1991, NMC purchased the service parts business of Lannex, a supplier of tow tractors and parts to the military and in 1992, NMC acquired Swinger, a line of small front-end articulated wheel loaders. Then in 1993, John Steingart and his three sons purchased White’s equity interest in NMC. In 1994, Wollard airport equipment, a manufacturer of baggage belt loaders, airplane stairs, water and lavatory service bodies, was acquired from the Hobart Corporation. In January 2000, NMC and Wollard were combined to form what is now known as NMC-Wollard.

After merging the two companies and bringing President Tim Keyes on board a few years later, the company implemented a new manufacturing method in various aspects of its facility in Eau Claire, Wisconsin.

“Tim has brought a different level of manufacturing to the company with the introduction of the lean process,” says Steingart. “Currently that is trickling down through the rank and file. It’s an ongoing process; you don’t just wake up one day and say ‘we’re going lean today’ and then you’re done. We are implementing the process as we see fit when we have time, but sometimes you have to stop what you’re doing because we’re just so busy — especially this time of the year. The airlines fiscal year is running out so they’re releasing their orders and spending some of their budgets. But we do have more opportunities to implement this lean process.”

Historically, the company has marketed tow tractors to the industrial, foreign export and government markets. In the last several years however, the company has successfully expanded its marketing effort to the airline market — particularly air cargo. According to Steingart, rather than pursue the highly competitive small baggage tractor segment, the company initially pursued the more profitable air cargo market.

“Because there are many competitors in bag tractors with the smaller 3,000-5,000 draw-bar pull market we saw an opportunity,” Steingart says. “Our model 100 is a larger tractor and at the time there were no real competitors with that size unit. That tractor could go faster and pull larger loads; therefore there was more productivity with that tractor … mostly with cargo and mail at that time.”

Steingart says the company still targets the cargo market but lately there have not been many sectors of the aviation market that are particularly lucrative, although he remains optimistic about the future.

“They seem to be getting better,” he says of the airlines’ financial status. “I think oil is still a big piece of their expense side with it pricing around $82 per barrel.”

With the airlines’ fuel worries Steingart believes the push to go green will become stronger than ever in the near future. “That’s what I’m hearing for ‘08,” he says. “There are some airlines out there that are planning to make a stronger push to bring their GSE inventories into a green state.”

The renewed interest in all things green doesn’t worry NMC-Wollard. The company has already created environmentally friendly product lines. “We have a belt loader that’s electric, our passenger stairs for narrow and wide body are electric and our maintenance lift is electric. We are working on a high value bag tractor which will have an electric option and the Mongoose belt loader is also available in an electric version.”

The Mongoose, a belt loader currently in the testing period at NMC-Wollard, is an exciting new product for the company — one that Steingart hopes will help them enter the exclusive belt loader market.

“We are still testing it with two launch customers, but that period is winding down and we are talking to them about their 2008 fiscal budgets and capitol expenditures,” he says of launch customers United Airlines and WestJet. In the next 12 months it’s our goal to get the Mongoose off the ground, start securing business and begin to command a market share. There are only a couple companies that have tried to capture that market place and the idea behind the Mongoose is to allow the airlines to reduce their fuel costs, since they can take out the ‘magic carpet’ in the container portion of the aircraft and become more efficient with loading and unloading baggage and cargo.”

While the company is experiencing success with several of its product lines, Steingart sees a few challenges ahead, not just for his company but for all manufacturers in the industry.

“Power trains in general are a concern,” he says. “How is the industry going to react to Tier 3 engines and which ones are they going to incorporate into their fleets? What type of transmission they are going to want? So there are just a lot of balls up in the air right now when it comes to the standardization of power trains in the industry.”

As NMC-Wollard continues to grow and add to its product lines, Steingart see no limit to the expansion of the company his father helped form. “We are still in an active mode to acquire other companies as we see fit for our business model and our synergies here,” he says. “We are looking for other manufacturing companies and they don’t necessarily have to be tied to the airline business. We are still in a growth mode and trying to diversify the company to provide us with continued staying power.”

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