July 23, 2014 at 2:10 p.m.
Forge charts a course into 21st century (11/22/06)
By By JACK RONALD-
The parking lot's not as full as it was when Pat Bennett reported to work at Portland Forge in 1979 as an overgrown kid.
In those days, about 600 people worked at the steel forging manufacturer on the north side of town.
Today, Bennett says, the number is 264.
He should know.
Today, he's president of Portland Forge, a division of Allegheny Technologies.
And though the manufacturing climate is different and the challenges are different, Bennett believes that - at its core - Portland Forge is what it always has been.
"In a lot of respects, it's the same as when Lee (Hall) was here," Bennett said in a recent interview.
Hall, son of the Forge's founder Donald Hall, represented the long tradition of local ownership and local management of what once was Portland's largest employer.
And yet, while Bennett believes the central mission of the Forge hasn't changed, the environment in which it operates today is dramatically different.
"Business is more difficult. Markets are more difficult," said Bennett.
Nothing spells that out better than the past eight years, when Portland Forge made the difficult transition from 20th century manufacturing to 21st century realities.
"1998 was our best year of the '90s," said Bennett. "It was one of the best ever. The late '70s were our boom times."
He added, "By '98 we were really pretty strong, but four years later we had our worst year ever."
A look at three years can demonstrate the roller-coaster ride that Forge management and production employees have struggled with.
In 1998, things were great. In 2002, things were rotten. In 2006, business has rebounded but the company has undergone some fundamental changes.
"We're back at the profit levels we were at in the late '90s," said Bennett.
But the company's not back at the same employment levels. And the jobs involved have changed as well.
In 1998, Portland Forge employed 337 people. That was down sharply from the hey-day of the 1970s. But a disproportionate number of those jobs - 84 - were in management.
By 2002, the Forge employed 217.
Today, it's back up to 264. But the number of management positions has dropped from 84 to 59.
The jobs that were added were on the plant floor. "The bulk of the additions have been in the factory," said Bennett.
"The interesting thing of that is 102 of the 264 have been hired since the beginning of 2004," he said.
Known as a place of lifelong employment, the Forge has seen a good chunk of a generation retire. Another 21 will be eligible for retirement next year, with their departure creating new jobs.
"It's a training issue," said Bennett. "For years we had guys who had been here forever and knew exactly what they had to do."
A number of factors contributed to the Forge's roller-coaster ride.
Some had to do with the usual cycles in the economy. Others had to do with events beyond anyone's control.
"I think things will always cycle," said Bennett. "The other thing that had a screwy impact on everything was 9/11. After 9/11 capital goods spending just went in the tank."
But through the ride, the Forge has persevered.
In many ways, it helps that the local plant has never been a producer of huge volumes of a single product. It hasn't been an operation that churned out 500,000 of a single component.
Instead, the Forge - with roughly 300 customers - has an average production lot of 350 pieces.
Those pieces don't go to mass production companies like the automobile industry but are instead headed for heavy equipment manufacturers, oil field developers, and makers of heavy trucks.
The emphasis is on quality, on strength through forged steel, and on durability.
In many ways, that small focus - "We're a job shop," said Bennett - has been essential to the company's survival and its ongoing success.
Still, the challenges can be enormous.
In 1998, steel cost the company $619 a ton. Today, it's $878 a ton.
In 1998, the energy cost for every ton of forgings was $31. Today, it's $113.
In 1998, the company paid 43 cents for health care cost for every dollar it paid in payroll. By 2002, that had hit 62 cents for every dollar of payroll. Today, it's 49 cents.
And while customers will accept - to a limited degree - the passing along of steel and fuel costs, there are very real limits.
"Our customers," said Bennett, "are not going to give me a price increase so I can pay the guys in the factory more."
In 2002, when things were at their worst, the Forge couldn't even begin to consider passing along higher costs. The competition wouldn't allow it.
"When nobody's got any work (as in 2002), people are cutting prices," he said.
Having weathered that storm, Bennett is optimistic about the future and comfortable with the way that future fits with the company's past.
"We sell forgings to probably 300 customers," he said. The top ten customers account for about 50 percent of the business. "Today, only five of the top ten were in the top ten in 1998." But of those, four were also in the top ten list of customers for the Forge 30 years ago.
In other words, there is dramatic change at the very same time there is consistency.
"The objective is to fill in the troughs," said Bennett, referring to the 1998-2006 wild ride.
To do that, the company is moving in some new directions.
This year, about 10 percent of the forgings sold will be "value-added," meaning that they have undergone at least rough machining. That's what the customer base is demanding, and that's what the Forge is delivering.
"We're doing machining or having machining done. We're coordinating the machining," said Bennett.
Caterpillar, long a Forge customer, now wants its forgings "rough-turned." Portland Forge was ready to comply.
"There were some forgers who didn't want to participate," said Bennett. "We were able to pick up business because we were willing to offer that. ... I think that's going to grow."
The Forge uses Performance Tool Inc. in Portland, a Decatur area firm, and another company for its Kentucky plant to handle the machining.
"It's nice to know we're a significant part of the local economy," said Bennett. "I think we have the best group of folks in leadership in all three unions we've ever had."
Bill Coleman is president of Local 1620 of the Blacksmiths Union. Norm Overton, Guy Pensinger, and Steve French lead the local Teamsters unit. And Tom Harmon is president of the Machinists local.
"I don't make anything," said Bennett. "The guys in the shop are the ones that make us money."
Still, having gone through a period of uncertainty when it wasn't clear whether Allegheny Technologies would spin off Portland Forge by putting it up for sale, Bennett is well aware of his obligations to stockholders in the publicly-traded company.
"We need to provide a return (on investment) that's as good or better than they can get on their money elsewhere," he said. "It's all a result of being able to provide a return to the folks that own us."[[In-content Ad]]
In those days, about 600 people worked at the steel forging manufacturer on the north side of town.
Today, Bennett says, the number is 264.
He should know.
Today, he's president of Portland Forge, a division of Allegheny Technologies.
And though the manufacturing climate is different and the challenges are different, Bennett believes that - at its core - Portland Forge is what it always has been.
"In a lot of respects, it's the same as when Lee (Hall) was here," Bennett said in a recent interview.
Hall, son of the Forge's founder Donald Hall, represented the long tradition of local ownership and local management of what once was Portland's largest employer.
And yet, while Bennett believes the central mission of the Forge hasn't changed, the environment in which it operates today is dramatically different.
"Business is more difficult. Markets are more difficult," said Bennett.
Nothing spells that out better than the past eight years, when Portland Forge made the difficult transition from 20th century manufacturing to 21st century realities.
"1998 was our best year of the '90s," said Bennett. "It was one of the best ever. The late '70s were our boom times."
He added, "By '98 we were really pretty strong, but four years later we had our worst year ever."
A look at three years can demonstrate the roller-coaster ride that Forge management and production employees have struggled with.
In 1998, things were great. In 2002, things were rotten. In 2006, business has rebounded but the company has undergone some fundamental changes.
"We're back at the profit levels we were at in the late '90s," said Bennett.
But the company's not back at the same employment levels. And the jobs involved have changed as well.
In 1998, Portland Forge employed 337 people. That was down sharply from the hey-day of the 1970s. But a disproportionate number of those jobs - 84 - were in management.
By 2002, the Forge employed 217.
Today, it's back up to 264. But the number of management positions has dropped from 84 to 59.
The jobs that were added were on the plant floor. "The bulk of the additions have been in the factory," said Bennett.
"The interesting thing of that is 102 of the 264 have been hired since the beginning of 2004," he said.
Known as a place of lifelong employment, the Forge has seen a good chunk of a generation retire. Another 21 will be eligible for retirement next year, with their departure creating new jobs.
"It's a training issue," said Bennett. "For years we had guys who had been here forever and knew exactly what they had to do."
A number of factors contributed to the Forge's roller-coaster ride.
Some had to do with the usual cycles in the economy. Others had to do with events beyond anyone's control.
"I think things will always cycle," said Bennett. "The other thing that had a screwy impact on everything was 9/11. After 9/11 capital goods spending just went in the tank."
But through the ride, the Forge has persevered.
In many ways, it helps that the local plant has never been a producer of huge volumes of a single product. It hasn't been an operation that churned out 500,000 of a single component.
Instead, the Forge - with roughly 300 customers - has an average production lot of 350 pieces.
Those pieces don't go to mass production companies like the automobile industry but are instead headed for heavy equipment manufacturers, oil field developers, and makers of heavy trucks.
The emphasis is on quality, on strength through forged steel, and on durability.
In many ways, that small focus - "We're a job shop," said Bennett - has been essential to the company's survival and its ongoing success.
Still, the challenges can be enormous.
In 1998, steel cost the company $619 a ton. Today, it's $878 a ton.
In 1998, the energy cost for every ton of forgings was $31. Today, it's $113.
In 1998, the company paid 43 cents for health care cost for every dollar it paid in payroll. By 2002, that had hit 62 cents for every dollar of payroll. Today, it's 49 cents.
And while customers will accept - to a limited degree - the passing along of steel and fuel costs, there are very real limits.
"Our customers," said Bennett, "are not going to give me a price increase so I can pay the guys in the factory more."
In 2002, when things were at their worst, the Forge couldn't even begin to consider passing along higher costs. The competition wouldn't allow it.
"When nobody's got any work (as in 2002), people are cutting prices," he said.
Having weathered that storm, Bennett is optimistic about the future and comfortable with the way that future fits with the company's past.
"We sell forgings to probably 300 customers," he said. The top ten customers account for about 50 percent of the business. "Today, only five of the top ten were in the top ten in 1998." But of those, four were also in the top ten list of customers for the Forge 30 years ago.
In other words, there is dramatic change at the very same time there is consistency.
"The objective is to fill in the troughs," said Bennett, referring to the 1998-2006 wild ride.
To do that, the company is moving in some new directions.
This year, about 10 percent of the forgings sold will be "value-added," meaning that they have undergone at least rough machining. That's what the customer base is demanding, and that's what the Forge is delivering.
"We're doing machining or having machining done. We're coordinating the machining," said Bennett.
Caterpillar, long a Forge customer, now wants its forgings "rough-turned." Portland Forge was ready to comply.
"There were some forgers who didn't want to participate," said Bennett. "We were able to pick up business because we were willing to offer that. ... I think that's going to grow."
The Forge uses Performance Tool Inc. in Portland, a Decatur area firm, and another company for its Kentucky plant to handle the machining.
"It's nice to know we're a significant part of the local economy," said Bennett. "I think we have the best group of folks in leadership in all three unions we've ever had."
Bill Coleman is president of Local 1620 of the Blacksmiths Union. Norm Overton, Guy Pensinger, and Steve French lead the local Teamsters unit. And Tom Harmon is president of the Machinists local.
"I don't make anything," said Bennett. "The guys in the shop are the ones that make us money."
Still, having gone through a period of uncertainty when it wasn't clear whether Allegheny Technologies would spin off Portland Forge by putting it up for sale, Bennett is well aware of his obligations to stockholders in the publicly-traded company.
"We need to provide a return (on investment) that's as good or better than they can get on their money elsewhere," he said. "It's all a result of being able to provide a return to the folks that own us."[[In-content Ad]]
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