Hot Shots: USA


Hot Shots: USA

Speaking Your Language

By Richard Rowe

April 2001

In this issue’s Hot Shots feature, we showcase three geographically and product diverse manufacturers that have contributed greatly to their particular fields of expertise. Richard Rowe begins the series with a profile of Watkins Aircraft Support Products (WASP).

Founded in 1979 by Jim Watkins, chief engineer with a local manufacturing company in Glenwood, Minnesota, Watkins Aircraft Support Products (WASP) set its stall out early. The culture has always been engineering driven with an emphasis on putting well designed products out the door each and every time.

Today’s WASP is 100 percent employee owned following an Employee Stock Ownership Plan (ESOP) purchase from Watkins in December 1997. On retirement, Watkins received plenty of offers from other manufacturers keen to buy into WASP’s success, but he chose the ESOP option as a thank you to his staff. The result is a company whose employees feel a genuine sense of ownership. Perhaps it is no surprise that, at less than five percent, the turnover among the 250 staff is lower than many other companies of comparable size.

Headquartered in Glenwood a little over two hours drive from Minneapolis/St. Paul Airport, WASP has three plant locations in the Glenwood area and a further parts facility that it leases in Sioux Falls, South Dakota. Established as a pure ground support equipment manufacturer, the company diversified in 1985 when it entered the package conveyor market. Today, business is split almost 70/30 in favor of ground support, with some crossover on select products.

The GSE division is headed up by John Silver, a well-known figure in the ground support after 30 years in the business. Together with his colleagues, Silver has overseen the development of a prodigious range of non-powered equipment at WASP. Baggage and freight carts are considered core products and come available in rigid mount and torsion axle styles. Each style is available in the company’s "knock down" bag cart, which ships in half the space of its regular carts, says Silver. WASP also offers open style and flat top baggage carts.

WASP produces some 6,000-8,000 carts a year, and averages about 150-175 items of GSE a week. "Product costs are kept competitive through such large quantity production," says Silver. Other solid business lines for WASP come in the shape of mail carts, pallet and container dollies, aircraft towbars, crew stairs, cargo handling systems, and mobile scissor lifts.

The company saw sales of US$40 million in 2000, and 2001 is looking equally promising, according to Silver.

WASP exports worldwide and lists South and Central America as well as the Middle East as prime markets overseas. In a slow year, exports account for 10 percent of total business and as much as 20 percent in a good year.

The first breakthrough for WASP came in the early 1980s when it secured Northwest as its inaugural major customer, followed shortly by UPS and others. Until 1990, WASP essentially doubled in size every year--"a considerable challenge in terms of maintaining customer service," says Silver. "People knew that we used good design and the major airlines started to come onboard."

WASP proved its opportunism in the late 1980s when FMC discontinued its manufacture of non-powered GSE. WASP made quick work of filling the vacuum and picked up long-time FMC customer, United Airlines.

In the grand scheme of things, WASP’s products are hardly the most technologically advanced. Being non-powered they don’t need to be and Silver admits that, barring a few tweaks and modifications here and there, many of the products have seen little change over the last 20 years.

With no engines to maintain, and backed by sound engineering principles, WASP products have been out in the field for almost as long as the company has been in business. As such, the company’s parts division has become an important part of its business. "Parts and service represent large parts of the company’s business and are both growing fast," comments Silver. Parts represent roughly 12 percent of the business, while employees in the parts department make up almost 10 percent of the total work force.

The GSE parts division at WASP comprises an inventory of nearly 3,000 different parts to support equipment, with a computerized inventory to monitor parts usage and to provide shipping dates and inventories for customers.

"We ship over 90 percent of parts orders within 24 hours of receipt," says Silver, well aware that customers usually need parts yesterday.

Great emphasis is placed on supporting the spare parts business with designated staff taking orders. "Although those folks can help a customer with a technical question, more often the person with the problem would be directed to one of our service technicians who are actually lead persons from the production line," explains Silver.

"These are the people we feel are best suited to remotely ‘trouble-shoot’ a problem. If the tech support person feels that the problem merits an engineer’s efforts he will work with the appropriate engineer to come up with a solution. Our number one task is always to get the customer up and running as soon as possible."

Silver says that it is only after that task is accomplished that attention turns to fault finding. "Fault finding does have a certain negativity associated with it but it is really necessary to prevent the same problem from reoccurring," he adds.
WASP hopes that its quest for improved after sales support and better efficiencies all round will be helped by a major building project that will transform the company’s current disparate facilities. Ground was broken in October 2000 on a new GSE manufacturing facility in Glenwood which will double the size of the existing facility and feature greatly improved material handling equipment such as robotic welding and laser fabricating equipment to reduce cycle times. The new facility should be ready by the summer, says Silver. WASP will then move its parts warehouse into the former GSE division manufacturing building and step out of the lease arrangement in Sioux Falls.

Like others, WASP has benefited in recent years from the airline community’s relatively new-found appreciation of all things GSE. "We have seen a huge replacement in GSE, and much of our growth in the last four to five years has come from that replacement," says Silver.

Today, WASP lists most U.S. major carriers as key customers, many of which are now settling into multi-year agreements on equipment purchase. "The larger customers are certainly looking at multi-year terms," says Silver. "While there is no definite agreement on how much they will buy, we agree to deal on the basis that they will buy some [equipment] and we agree to hold the price in exchange for their loyalty." United, Continental, Northwest, American and, to a lesser extent, UPS, have all signed up for such deals.

In a market that continues to evolve through mergers, acquisitions, and the kind of consolidation that is already apparent in the airline and ground handling arenas, WASP is looking carefully at its own position in the market. It is by no means a truly global player, but is no small fry either. Having been in business for more than 20 years, WASP has clearly made good on its early commitment to be there for customers in the long term and wants to continue serving its loyal customer base for many more years to come.

After so long in the business, John Silver has noticed many changes in the GSE industry, but one or two stand out in recent years. One is the rise to prominence of the service companies. The fact that such organizations bid on specific projects--perhaps looking to open up a new station in one to two months--means that they need equipment quickly, something that can test the production capacity of even the most nimble of GSE suppliers.

"They are mostly buying equipment that has been bought before, so there is no huge problem engineering wise, but we do need to respond in terms of the manufacturing process," says Silver. This is where the new facility complete with laser welding and robotic procedures is likely to pay dividends.

"Service companies are a little less particular and tend to go for the standard design," adds Silver. "Because of our size, we can manufacture the basic parts of items like baggage carts ahead of time in batches of 300 rather than waiting to get an order and then running off 20 units and building each from square one."

Another change that Silver has noticed is the relatively high turnover of staff in airline purchasing departments, which creates both challenges and opportunities. While it results in less continuity and accumulated knowledge, the new person in charge could herald a fresh start for companies that had not made any impact with previous purchasing managers. "A lot of the newer people rely on the manufacturers which is a good thing for us," adds Silver.

WASP staff do their fair share of visits to GSE shops, and meetings are also held with client GSE maintenance personnel once or twice a year where mechanics offer feedback on how a product can be improved.

"One particular customer in the past has assembled a group of maintenance people from different stations--not necessarily managers--to meet once a year and review any problems that they may be having," explains Silver. "Another customer gathers concerns from the field by means of a ‘product concern report’ that must be filled out. We are then asked to respond to the concern and eventually we review these with the customer and try to agree on solutions.

"The third scenario involves informal visits to customers' maintenance shops to get direct input from the line mechanics. Although you can get ‘blind-sided’ sometimes in this situation, we don't feel that a manufacturer should ever be afraid to hear what the customer has to say."

Efforts have also been made to standardize equipment and parts where possible, but like other manufacturers WASP is caught between the need for specific products by particular customers, and the equal demand for more responsive after sales support.

"We have made a concerted effort over the years to standardize certain components in a given product line," explains Silver. " A good example is our line of LD-3 dollies. We had developed several good reliable versions over the years in response to various customers' individual needs and they all looked like they shared a lot of common parts. Trouble was, those parts were just different enough to make them unique for each type of unit. By ‘tweaking’ the individual designs we were able to come up with a half dozen models that share around 75 percent common parts. This allows us to stock these common parts and when we receive an order for a specific model we only need to fabricate the 25 percent that's unique to that design."

Silver is comfortable with WASP’s image in the market place--"a company of high value products rather than cheap to initially buy"--but is aware of the need to remain competitive in a highly volatile market. "I am convinced that the future will see fewer [GSE] players out there, so we had better be ready to respond to the customer. The GSE market does not have thousands of customers, and we cannot create an artificial demand by convincing airlines to buy more baggage carts. We need to provide the best quality and engineering possible."

Market sophistication is the name of the game, even when it involves small steps rather than giant leaps. Technical manuals are now available in electronic format, and will eventually be posted on the company’s website. "Customers at different locations are trying to come up with something that everyone can access," says Silver. "This is another way for us to keep customers if the next person can’t offer it."

Clearly, customer feedback is crucial, and WASP has used it to good effect. It is, however, a two-way street with communication the key, says Silver. "If our customers can effectively communicate their real needs, we can develop a plan to meet those needs. Maybe they ordered 100 units but they really only need 10 of them to be delivered in 30 days with the rest to follow. If that is communicated to us from the get-go that will help us plan our strategy for success."

It’s an old adage, but the more a manufacturer knows about a customer’s situation, the chances are it will be better able to serve them.