- January 01, 2000, Claudia Hine, Senior Editor
With a combined 50 years of experience in the converting industry, William R. Arndt and Michael R. Nowak decided to start their own coating business, incorporating in November 1996 as Coating Excellence International (CEI), Wrightstown, WI.
The partners envisioned a small, innovative company that would be responsive to customers, quick to market, and good to employees. It would be another eight months before their Davis-Standard Egan extrusion coating line was delivered, a time the two principals spent on the facility, staffing requirements, and community relations.
Wrightstown Welcomes Good Neighbor
When you're starting from scratch, the decision on where to build becomes critical. Wrightstown was chosen carefully. Because it is centrally located between Green Bay and Appleton, CEI can draw personnel from both cities, and employees have relatively short (20-mile at most) commutes. One-third of the company's staff, however, lives even closer, within five or ten minutes of the plant.
"The other issue is rail," says Nowak, president of the firm. "There are not a lot of places around here with rail. Wrightstown was starting this new industrial park. It was very advantageous from a cost standpoint to be out here. They were willing to work with us, and the results have been great. We think this is going to be a growing area, so it's a great place to be."
When it came to the facility, executive VP Arndt says they wanted a new building. "We looked around at used buildings," he says, "but we felt that any place we went, we really compromised on cost because you went in with a lot of material handling inefficiencies and waste. We felt that completely new was the way to go to make sure we were set for the long run. I think that's helped us a lot from a credibility standpoint. We're not a 'here today, gone tomorrow' kind of place."
Arndt recalls, "We could not have gone into business and hired somebody to do all the engineering and everything else, so Mike and I basically wore many hats. We really relied on our direct suppliers -- HVAC system, piping, concrete work, equipment installation -- all those different vendors worked with us and helped us become successful."
He adds, "We made a conscious effort to be as environmentally friendly as we could be. When we went to apply for permits from the Department of Natural Resources, we didn't have to get an operator permit or a construction permit because our emissions and noise levels were so low."
Nevertheless, because Coating Excellence was the first business moving into the industrial park, local residents were concerned about the environmental impact on their community. A meeting was held at the local VFW. "People wanted to come and ask questions," says Arndt. "When we were able to tell them about not needing the permits, they couldn't believe it."
Noise levels on the plant floor are kept below the OSHA limit, Arndt says, because the refrigeration units and poly pumps are enclosed in a separate room, a benefit to employees because hearing protection is unnecessary.
He adds, "We also got a grant from Wisconsin public service because we came up with the idea of cooling our office with chill water running through our system rather than having separate air conditioners."
Today the 50,000-sq-ft facility, which sits on nearly 81/2 acres, boasts two silos alongside the railroad track, a pond, and a landscape of prairie wildflowers that machine tender Greg Welhouse planted and tends on his own.
Equipping for Long-Term Service
Arndt and Nowak also made the decision to go "brand new" with their equipment.
According to Nowak, "We decided if we were going to do it, we wanted to do it right." Arndt adds, "Our philosophy going into it was that we wanted to watch our overhead as much as possible. We didn't want to have older equipment, because there's a tendency to have this ongoing repair program. So we decided to get new equipment, really good equipment, and that way we'd only need two maintenance people for our whole facility. We have 95 percent uptime on our equipment."
Coating Excellence serves the food and industrial packaging markets with poly-coated products and laminated products, such as sugar pouches, gum and ice cream bar wraps, paper ream wraps, and labels. Nowak explains, "A lot of the things we're producing aren't the highest margin products out there. They're things our competitors might want to produce in bad times but lose interest in when times are good. We decided we wanted a machine that was very efficient and wide and fast so we could go to our customers who might have supply disruptions from time to time because their suppliers would say, 'The market's good out there right now; we really don't want to make your product, because we don't make enough money on it.'"
Nowak continues, "We felt there was room to have a good, high-speed, efficient machine and a low-overhead operation where you could be in those products day in and day out and be happy with them. We could go to those customers and say, 'We're here, these are the products we want to make, and it's not going to be just for today-we're here forever to make these products.'"
That philosophy led them to Davis-Standard Egan's 100-in. high-speed extrusion coating line, automatic die system, and CMR 2000 control system.
"Everything depended upon us getting off to a running start," explains Arndt. "Mike and I both said, 'Let's not get into something that we're not familiar with.' I was familiar with [Davis-Standard Egan] equipment. They stand behind their equipment, and their service is as good as anybody's."
Nowak adds, "We originally ordered the machine to run down to three to five pounds of poly, and we have been able to run below three. As we pushed the machine, there were some changes we needed to make."
Arndt credits John Baldino, extrusion coating machinery business engineering manager for Davis-Standard Egan, with doing a super job helping them work through modifications they wanted to make. "We just changed a few minor things," Arndt says. "Not a major redesign, but small modifications. [John and I] both learned from it because there are not a lot of machines out there that run quite as wide (up to 102 in.) and as fast as we do. Because of that, there are a few things that were a little unknown to them as well, and we worked through them with minimal aggravation. They were very responsive."
The line arrived at the end of July 1997, and six weeks later the line was running and the company sold its first roll.
More Top-Notch Suppliers
Nowak credits the CMR die bolt control system with giving CEI the ability to go to very low poly weights, as low as 2 lb/ream. The CMR offers real-time reporting on die control and layer ratio, temperature, gravimetric feeding, and winding.
Also critical to the company's success are Corona Design treaters. "I think the corona treaters have worked very well," he says, "and have allowed us to get faster speeds, especially on those lightweight polys." A proprietary moisture control system has allowed the company to achieve very flat, curl free sheets that are free of static.
Arndt also is happy with the Eurotherm Link fiber optic drive control system on the line. "I'd buy another one of those tomorrow," he says. "It's virtually maintenance-free. In fact, when we were tuning the drive, we never broke the initial web. The whole drive tuning took only three days."
Slitting is done in-line on the Egan, but the company recently invested in a used rewinder from A&F Equipment when it found that half its business was large rolls and half needed to be slit down to other sizes. Auxiliary equipment includes a Printco one-color flexo press that can print and/or coat either side of the substrate in-line. Davis-Standard Egan supplied the unwind.
CEI inputs orders on the Concord Business Systems order entry production system, which Nowak describes as excellent. "We were their beta test market for bar code tracking," he says. The system tracks bar-coded rolls and order production costs. If it's a job that's run before, the operators go to the CMR-2000 and pull up the recipe.
Major resin suppliers include Eastman, Equistar, and Huntsman. Specialty additives, slips, and concentrates come from Ampacet, Techmer, and Spartech Polycom. The company uses mixing/blending equipment from AEC. Honeywell-Measurex supplied the web monitoring equipment. The laboratory features new testing equipment manufactured by Testing Machines Inc.
The company works with more than 20 paper suppliers; film suppliers include AET, QPF, and Toray, which also provides metallized films.
CEI is adding a Graceland Engineering hole detector to the line. "We've had some issues with holes in the paper," says Nowak. "Our thinking has always been if a hole went through our extruder, it would break the web at the speeds we're running, but we found that's not necessarily true. We're in the process right now of putting a hole detector on our line, which I think probably will be one of the first on a piece of converting equipment in the industry."
Has the Davis-Standard Egan equipment met expectations? Arndt's answer: "We start up the line, six weeks later the first roll comes off, and we sell it. Your expectations can't be met much better than that."
New Products Add Strength to Line
CEI recently launched a paper/poly/film-constructed product, tradenamed Sharkskin, for use in the ream wrap market. This product has a CEI patent pending. Traditionally, Nowak says, that market has been served by a paper/paper lamination and low-end graphics. As the reams of paper sat on store shelves, they were subject to rips and tears in the wrap, and the end flaps didn't always stay sealed. The Sharkskin product is stronger, according to Nowak, and because it supports higher quality graphics, it has a nicer shelf appeal. "You have the film on the outside, poly in between, and then paper on the inside," Nowak explains, so the product runs like paper on the wrapping lines at the paper mills. "They can pretty much just substitute it right in without costly adaptations to their lines," he says.
CEI also is having some initial success with a paper/poly/heat-sealable metallized film pouch as a substitute for the traditional paper/poly/foil construction. "Food packaging tends to be something where people beat you up all the time to get the price lower. This one [paper/ poly/foil/poly] basically has been beaten to death. The initial feedback that we've gotten is that our pricing on the new pouch is 10 percent less, because metallized film is cheaper than foil, and they're filling these pouches 10 percent faster than they're filling the traditional package." While foil may be considered a better barrier than metallized film, once foil is folded, it tends to get little flex cracks in it, Nowak explains, which may make the metallized film a better barrier from a performance standpoint.
Employee Input Is Key
When Nowak and Arndt decided to combine their expertise to start the business (Nowak on the sales and marketing side and Arndt on the manufacturing side), they were committed to providing a good working environment and compensating their employees for doing a good job.
"When we first started," explains Nowak, "we went with two shifts right away, even though we had virtually no business. We'd come up on Monday and go down on Thursday. The guys would all get their 40 hours in, and sometimes they would paint, and sometimes they would do other things, but as we grew and went to different shifts, the guys always had some input. Right now they pick the kind of schedule we run, so we constantly try to keep them involved in how we're going to do it."
With a total of 30 employees, the company currently runs four shifts, 24 hours a day, seven days a week, closing only two times a year. Which days? That decision also was left to the employees, who chose Christmas Day and opening day of deer-hunting season.
"Priorities are priorities," says Arndt. "When we make decisions for the company, we try to think about the employees and what they really want. I think that's one of the things that separates us from many other companies. One thing we're aware of is that we don't want to have a lot of layers of management. People are going to be able to come right to us. We have no supervision out on the floor. We don't believe in any supervision. These are adults, and they can run their own machines."
In fact, the employees determine how much money they will earn by progressing through the company's booklet of skill blocks. Arndt explains, "They can check off that they've learned a skill, but they also have to demonstrate it by results off the machine. Then they have to be able to teach other people below them."
"As their skills go up, they get higher pay," adds Nowak. "So it's kind of work at your own pace to make your pay go up." Arndt continues, "The one thing that's restrictive in that whole system is they have to wait at least 30 days between increases. You have to put that restriction on it, otherwise it doesn't give you time to get the paperwork done!"
CEI employs just three sales people-located in Wrightstown -- and a few distributors to handle its customer base in North and South America. In its first year of business, the company had sales of about $10 million. This year, sales will be more than $20 million. "We'd like to keep that going," says Nowak. "We're hopeful that within five years from today we'll be over $50 million, and that's going to take some growth." The current facility stands ready for growth, says Nowak, who reports, "We've got room for three more extruders here."
Both Arndt and Nowak know it will be a challenge to grow the business while maintaining a "small company" environment. But these two entrepreneurs seem to thrive on challenge, so the odds are with them.
Davis-Standard Egan, Somerville, NJ; 908/722-6000; davis-standard.com
Corona Designs Inc, Garland, TX; 972/272-0471; coronadesigns.com
Eurotherm Drives Inc., Charlotte, NC; 704/588-3246; eurothermgauging.com
A&F Equipment, Philadelphia, PA; 215/289-8300; fax: 215/289-9093.
Printco Industries, Pulaski, WI; 920/865-7775; printco-industries.com
Concord Business Systems Inc., Kennesaw, GA; 770/429-0268; concord-solutions.com
Eastman Chemical Co., Kingsport, TN; 423/229-2215; eastman.com
Equistar Chemicals, Houston, TX; 713/652-7300.
Huntsman Co., South Deerfield, MA; 413/665-2145; fax: 413/665-8917; pliantcorp.com
Ampacet Corp., Tarrytown, NY; 914/631-6600; fax: 914/631-7278.
Techmer PM, Clinton, TN; 865/457-6700.
Spartech Corp., Clayton, MO; 314/721-4242; fax: 314/721-1447.
AEC, Wood Dale, IL; 630/595-1060; aecinternet.com
Honeywell-Measurex, Cupertino, CA; 408/255-1500; fax: 408/864-7538.
Testing Machines Inc., Islandia, NY; 516/842-5400; fax: 516/842-5220.
AET Packaging Films, New Castle, DE; 302/326-5500; aetfilms.com
QPF Inc., Streamwood, IL; 630/830-6900; qpf.com
Toray Plastics America, North Kingstown, RI; 401/294-4511; fax: 401/294-2154.
Graceland Engineering, Des Plaines, IL; 847/699-7424; fax: 847/699-7545.