Since 1976, Mega Corp. has continued to add new products and increased its international business sales.

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Jim Kunz knows the power of a good business relationship. As president of Mega Corp. Inc. – the Albuquerque, N.M.-based construction and mining equipment manufacturer – Kunz sees first-hand how maintaining OEM partnerships can be beneficial in uncertain economic times.    

Despite a floundering economy, 2008 was a strong year for Mega Corp. “Our revenues are about five times what they were five years ago,” Kunz maintains. Solid OEM partnerships, increasing international demand for equipment and the ability to create low-volume, highly specialized products has been the saving grace for the company in the past five years.   

Mega Corp. caters to OEM dealers worldwide, including Caterpillar, Komatsu and John Deere. Dealers, in turn, sell product primarily to surface mining and large construction contractors. Larger haulage equipment is typically purchased outright, while smaller haulers are rented.    

“We look for niche products that are in the general category of construction and mining hauling and are something that we would produce less than 50 units per year,” Kunz explains. “We look for lower volume and more customization, where our special features can command the market. These are the things that [OEMs] want to add to their portfolio.”   

Founded as Magnum Industries in 1976 as a manufacturer of construction and mining equipment, the company evolved into an auxiliary equipment manufacturer. In 1983, its name was changed to Mega Corp. to more accurately reflect its business markets.   

Kunz joined the company in 2001 as vice president of operations. With more than 16 years of experience in new product development for Komatsu and also with Caterpillar, the transition to Mega Corp. was smooth, he recalls. Four years later, Kunz became general manager and in 2006 was promoted to president.

Making Transitions
Mega Corp. intends to continue to grow business through the introduction of new products. Working in conjunction with OEMs, Mega Corp. has steadily added to its product line, which now includes coal haulers, equipment trailers, specialty dumper bodies, tailgates, articulated truck conversions, scrapers, and portable tanks and truck chassis.      

“We can sell to construction and mining dealers around the world, yet we are small enough to pay attention to the details,” Kunz notes. “Our people have a lot of experience building this product and that is the most valuable asset that we can have.   

“That is our advantage in the marketplace and it goes hand in hand with our niche business model. There is nobody that is just like us in the world that matches up against our broad product spectrum.”

New Markets
In the last several years, Mega Corp.’s construction equipment sales have been largely dependent on the trends of the residential and commercial construction market. Although domestic sales have leveled off, international business is becoming a significant source of revenue. “Our exports exceeded our domestic business this year, so we responded by finding partners overseas that could increase our capacity,” Kunz says. “Our business has become increasingly global.”   

Because of the robust international construction scene, Mega Corp. has established three licensed contract manufacturers in South Africa and South America – including Columbia and Chile – and will pursue ventures in Europe and Australia in 2009. “These products are very large, and the sea freight costs are based on the size of the product,” Kunz explains.    

“We pay for how many cubic feet we are moving. So, a product that might cost $150,000 might add on $50,000 in shipping alone from say Albuquerque to Chile. That’s a significant portion of the total price in the end. There is a lot of pressure to locate the manufacturing closer to the destinations where they’re going to be used.”   

Mining commodity price increases have meant strong sales for Mega Corp. “2008 was a record year for revenues and was the sixth consecutive year of increasing revenues in a row,” Kunz maintains. “Our business has changed profoundly this year. After watching construction machinery dominate our build schedule for the past several years, we experienced a 180-degree change to virtually all mining equipment.”

Work With the Trends
In addition to the volatility of the markets, Mega Corp. has also adjusted to the needs of its end-users, which are sometimes dictated by environmental regulations and increasingly complex technologies.    

Several years ago, infrastructure contractors found auxiliary equipment such as water haulers was a convenience. Today, using this equipment is almost a requirement, Kunz says. “Environmental laws require dust control on almost every job site, so what used to be something nice to have is now essential. That’s caused a lot of people to pay attention to the availability and productivity of their water-hauling equipment.”   

As machines become more complex, Mega Corp. is required to devise components that align with the more technologically advanced systems, including hydraulic systems or sophisticated electrical controls in the operator cabs. “[Dealers] do not have as many sophisticated technicians as they once did, so the dealers expect more of a plug-and-play product, and they want us to come up with it,” Kunz notes.   

Buyers are also using newer vehicles in their applications. “If you look 15 years ago, the majority of the equipment would have been on a used truck, and now that truck is new,” Kunz says. “90 percent of the machine is being combined with something new, because it’s likely to be more productive and comply with the latest emissions laws and environmental regulations.”

Engineering Expertise
Mega Corp. employs seven engineers on its 150-person staff. Although most direction for new product comes directly from the dealer or OEM, Mega Corp. employs seven engineers devoted to product development, as well as outsources some engineering services. Once enough interest is generated for a new product, Kunz says, it doesn’t require high-volume demand for the company to begin production. “If we feel there is enough of an interest, we’ll go ahead and put it on the list,” he says.   

A typical engineering project lasts between one and three weeks, with larger projects taking between one and three months. Almost every order has some form of engineering associated with it, according to Kunz. “Because our equipment is highly customized and because the pace of change in the mining and construction industry is so great, [OEMs] come out with something new almost every two years,” Kunz says.   

Kunz describes its manufacturing facility as a “very traditional shop,” without a lot of automation, where products are built one or two at a time and the minimum lead time from order entry is 90 days. The 62,000-square-foot shop is outfitted with cutting machines, press brakes, steel rollers and cutting shears and a blast and paint area. Depending on the type of equipment, Mega Corp. will ship out a complete machine or sell it as a kit where it can be installed on a truck once delivered.    

It also manufactures components such as the water spray system, hose assemblies or operator controls. “We have a general philosophy to build as much of that as we possibly can and not outsource if we don’t have to,” Kunz notes.    

Although involved heavily in the manufacturing process, Mega Corp. is primarily a fabricator. Water pumps, steel plates, tube pipe, hardware fittings and electrical components are a few of the items the company purchases from a handful of specialty suppliers.