Driving Out Costs
Cover Story
By Joanna Miller   
Thursday, 27 December 2007
Remmele Engineering custom automation equipment contract manufacturing New Brighton, Minnesota
When German immigrant Fred L. Remmele founded his tool and die business in 1949, he had two employees. Today, Remmele Engineering employs 525 people and sees annual sales of approximately $110 million. It operates four sites in the Minneapolis/ St. Paul metropolitan area – one in New Brighton, Minn., one in St. Paul and two in Big Lake, Minn.

For 58 years, the company was privately owned and operated by the Remmele family. In March, it was sold to a Minneapolis-based private equity group – Goldner, Hawn, Johnson and Morrison.

According to Remmele President Richard Pogue, a few things have changed since the acquisition.

“First of all, Goldner purchased Remmele as growth platform and they are open to explore opportunities that extend beyond traditional organic expansion,” he notes. “We are actively looking for domestic acquisitions and expanding internationally into the rapidly growing markets in Asia.

“They have brought us capital and acquisition expertise to grow both organically and internationally.”

Remmele competes in several diverse market segments that are counter-cyclical, allowing the company to enjoy continuous growth without too much dependence on one customer group, Pogue says. It concentrates on custom automation and contract manufacturing, specifically for aerospace, medical device and semiconductor customers.

“Last year, we also produced equipment for the oil and gas manufacturing segment and we are exploring opportunities in wind power generation,” Pogue says.

The company’s automation customers are typically product and process innovators, he explains, who need sophisticated equipment custom-built to demanding performance specifications, while the contract manufacturing customers seek partners who provide manufacturing solutions and proprietary technology from micro to macro early in the customer design cycle. “We partner with customers at the entry level of development, particularly in design,” Pogue says. “We offer engineering solutions so that costs are designed out of their product before it’s released. We act as an extension of their company.”
Faster and Better
Overall, customers want suppliers that can offer expanded design and cost-reduction services, Pogue says. To compete with competitors in Asia, Remmele is continuously updating its processes and looking for ways to reduce cost.

“Our customers want their supply base to have capabilities that involve more design and proprietary technology,” he says. “We partner with customers earlier in the design cycle, designing function in and cost out. We are seeing our most successful customer relationships develop with customers that are bringing their supply base in to help design better products.”

In aerospace and other segments, he says, the company is seeing more composite structures and materials displacing metal. And the time-to-market is shortening.

“We’re finding that we need to improve and evolve our systems so that we can become more model-driven,” he says. “We’ve invested a lot of time, effort and money on implementing computer-integrated manufacturing systems.”

The company is integrating CAD and CAM technology with enterprise resource planning (ERP), and shortening the whole cycle. “We’re building expert knowledge into our models, so that we’re enabling our best practices to be spread out across the company faster,” Pogue says.

“All of that makes the time from model release to first part and production much faster. We’ve also improved our ERP systems so we can handle lower-volume products with a higher configuration mix. We are building a supply base that can also respond quicker.”

Focus on R&D
As the company looks toward the future, it plans to spend more on internal R&D efforts to reduce weight, remove heat and reduce customer assembly and machining costs. Its Connexsys patented technology helps to reduce weight and it is deployed in aircraft structures, defense equipment, shipboard radar structures and tooling for composite structures.

Its CoolStream patent-pending technology uses Connexsys and friction stir welding for thermal cooling. “Moore’s Law says that as computers get faster and smaller, there is more heat generated that needs to be dissipated,” Pogue says.

“We’re taking this technology, integrating thermal cooling with structural components, and doing the design for customers. For our medical devices customers we are deploying cellular manufacturing technology, incorporating robotics and vision systems to effectively compete with the Asian supplier base.”
 
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