Volume 46 Number 2
Alamo`s Witt Whittles It Down
A newcomer to the industry, Jeff Witt, branch manager of Alamo Water Machining, is all about winning new business and new customers. He came on board at the former Matt-Son Inc., now an arm of Alamo Water Refiners, in March at a point when a stagnant economy had left sales flat for nearly two years. In the second half of the year, though, sales jumped 15-20 percent.
He joined Alamo from Goodrich Corp.'s Aerospace Division in San Diego where he was operations director. Before that, he was with the Toro Co., working in its Water Management Group, i.e., irrigation business, in Riverside, Calif. A native of Chicago, the Alamo job brought him back home, with Barrington, Ill., being a nearby suburb.
Witt points out Matt-Son was acquired by Alamo owner The Marmon Group in March 1998 from Robert Oleskow. The company, which specializes in custom machining of plastic parts largely for the water softening/conditioning market, was founded by his father Matthew Oleskow Sr. in 1958. His son Brett Oleskow now runs Safe Water Technologies in Elgin, Ill.
The Alamo branch is only now finding its own identity again, Witt said. After it was acquired, Matt-Son remained independent awhile, while Marmon looked at other complementary opportunities. Alamo Water was acquired in August 2000. Later that year, Matt-Son was merged with Alamo with a continued focus on manufacturing.
"One of the big things Alamo has looked at is how to differentiate ourselves from other manufacturers and distributors of similar product. And we really have had to spend a lot of time this year trying to answer that question. What we've really realized is where we bring some value to the market is on products like mine or another value-added type product," Witt said. Seventy percent of the branch's business is custom-oriented. New business is where most growth is anticipated.
Unlike Alamo Water, which sells to distributors and dealers, Alamo Machining sells primarily to OEMs. Customers include not only Ecodyne, Ecowater and other Marmon Water Group companies, but Culligan, USFilter, GE Osmonics, Hellenbrand, etc., as well as its parent. Based in San Antonio, Alamo Water Refiners also uses the Barrington facility as a distribution warehouse. It has another distribution facility in Odessa, Fla. The Chicago operation comprises roughly a third of its parent's volume.
"One of the new things we're doing is making parts for portable water treatment systems used over in Iraq. They are going to a couple of military subcontractors to get to us, but we are actually making a lot of parts used in a portable purification system that goes behind a forklift-type truck and can be moved around in a hurry," Witt said.
Several new products are under development and at least two are to be introduced in the first half of this year, he added.
Before getting to the interview, here's a few facts on the company:
Alamo Water Refiners Inc./ Alamo Water Machining
Revenues: Minor growth in 2002-2003, except for last six months where up by 15-20%
Management: Jeff Witt, branch manager; Kevin Graff, operations manager; Laura Miller, customer service coordinator; Jim Meyer, senior technical representative
Operations: Makes hubs, distributors, laterals, tank heads and closures for water softening/conditioning market serving from 12- to 72-inch tanks, with over 70% of parts custom-machined
And now for our interview:
WC&P: How long have you been in the business and how did you get started?
Witt: I have only been in the water business for less than a year.
Witt: I came to Alamo Water last March.
WC&P: Where did you come from?
Witt: I came out of the aerospace industry as well as out of consumer products. I was with Toro for a long time, did a lot of stuff for their irrigation division. And then I was with Goodrich Aerospace for five or six years.
WC&P: Where are you a native of?
Witt: Originally, I'm from Chicago, but I've lived in Minnesota and California for most of the last 20 years.
WC&P: Did you attend college?
Witt: I graduated from Valparaiso in Indiana back in '71 and have an MBA from Loyola in Chicago.
WC&P: The position you had just immediately before coming on board at Alamo was what?
Witt: I was the director of operations at B.F. Goodrich's aerospace division out in San Diego. I was doing actually parts for the defense industry.
WC&P: And now you're back home in Chicago?
WC&P: Tell me about the Alamo Water division and your title?
Witt: My title is branch manager. And this division up here in Barrington is the old Matt-Son. Basically, we are the machining operation or the manufacturing operation within Alamo. Alamo sells distributed products out of here, but primarily we're the manufacturing team of Alamo.
WC&P: Talk to me a little bit, if you could, about the history of that company and how it got to become Alamo Water Machining.
Witt: Matt-Son was a privately held family company. It was sold to the Marmon Water Group about six years ago and then merged in with Alamo about two years ago. Basically, we are a custom machining operation. We do plastic machining. We make hubs, tank heads, closures, laterals…
WC&P: By hubs, you mean?
Witt: The distributor hubs that the laterals screw into…
WC&P: These hold the resins in place in water softeners or conditioners.
Witt: Wrong. They regulate the water flow through a vessel.
WC&P: Alright. Tell us about the company in terms of what's new. What's been going on?
Witt: I think the big thing that we have going on here is--and I kind of look at it in three steps--we have a very strong technical expertise in order to work with people at various companies in defining what their application is. And then, because we machine the parts, we have the flexibility to make specific products to meet the specific demand. And I would submit that most of our stuff that's machined ends up being a superior product. It's stronger and more durable than a lot of the molded stuff that's out there.
WC&P: Have you done anything new in terms of upgrading machinery, introduced new capabilities, etc.?
Witt: Absolutely, we've done a number of things in the last year to improve some of our processes, particularly in the lateral area, making laterals and how we clean them and how we slice them. We've improved our cleaning processes…
WC&P: What type of investment? Any numbers you can throw at it?
Witt: No. We don't share that information publicly. Often, it just gets down to efficiency and utilization and how we do things…
WC&P: Doing things smarter?
WC&P: OK, and in terms of how it fits into the Marmon Water Group or Alamo Water Refiners, what would you say?
Witt: We are part of Alamo. When Marmon bought Matt-Son, they had both Matt-Son and Alamo separate. And then, after a short period of time, they put us underneath as part of Alamo. Alamo is headquartered down in San Antonio and they have a facility in Florida as well as here.
WC&P: Didn't they acquire another company that was in the mix? Where did Ecodyne fit into that?
Witt: Ecodyne is another autonomous company within the Marmon Group with a presence in the U.S. and Canada. It was sister company (in Naperville, Ill.). It was split off. It was part of us. They kind of merged us together and then took us apart again. So, Ecodyne is a separate company and part of Ecodyne Canada (in Burlington, Ontario).
WC&P: When did that happen?
Witt: It happened in the first quarter of 2003.
WC&P: Talk to me about the markets that you serve and some of the nuances of those?
Witt: We service a lot of the OEMs that are out there, a lot of manufacturers. Most of Alamo's business is going to dealers of distributed products. I am selling to people who make systems.
WC&P: Can you name a few of them?
Witt: We sell to Hellenbrand. We sell to Culligan Northbrook, US Filter--in Colorado Springs as well as a lot of their operations, Osmonics… I'm also selling to, well, certainly, Ecodyne and EcoWater; but that's only a fraction of our business.
WC&P: Who would you compete with on these types of products? It sounds like a narrow niche.
Witt: Well, what we compete with is more on process. There's a point where people go to molded parts because they are cheaper, but there's a tradeoff there. As I was saying a little bit earlier, we have the flexibility to make parts very unique to specific applications. Whereas, if you're going to mold it, once you've got the mold done, you're pretty well stuck with what you've got. And I think the parts that come out on machined parts come out stronger and more durable in many cases.
WC&P: Have you been able to notice any trends in some of the requests that are being made?
Witt: We are noticing a lot of interest in many of our products. Right now, the basic stuff that we do--which I would say are hubs, laterals and tank heads--is in demand, as well as some kind of little bit different kinds of things. One of the things we're doing is making parts for portable water treatment systems used over in Iraq. They are going to a couple of military subcontractors to get to us, but we are actually making a lot of parts used in a portable purification system that goes (behind) a forklift-type truck and can be moved around in a hurry.
WC&P: Sort of like those ROWPUs (reverse osmosis water purification units) that they drag around?
Witt: I think so, yes. There's been a lot of interest for that this year from two different customers that we're making parts for. It's sort of a good news/bad news thing. You're glad to get the business. You're glad to help do what you can to help the cause. But it's too bad we have to do it.
WC&P: Right. I think everybody kind of feels the same way about that.
Witt: It's kind of tough.
WC&P: I assume there are some pretty interesting commercial/industrial applications that come into play, too, where somebody needs a component specific to a particular application?
Witt: Yes, we're on the phone almost daily with people talking to them about their specific parts needs. It's difficult to tell you a specific story about a customer, but there's a lot of interest. Bottom line, what we do is families of parts. And so, for example, if you have a tank that has an inlet that's different from our standard because of the particular configuration of how the system is designed, then we certainly can do that. And a lot of people just have their own unique twist on what they want. The nice thing we have here is the technical expertise to talk you through that process as you're designing your application and make sure you get what you're looking for. I think if you just go to a general machining shop down the street, you're not going to get that understanding of the market or the application. They may not get what they want.
WC&P: It may not understand the importance of a particular specification or tolerance.
Witt: That's exactly right. There are just general machine shops that could do what we do, but I think the big thing we bring is the industry understanding, the technical expertise to help you develop what the application is and then making the part to fit your need. That's what sets us apart from general machining. And then, on the flip side, if you're going to go to a molded lateral, it's generally not going to be as strong as a machined or manufactured lateral.
WC&P: How much a part of what you do is in the realm of Alamo Water as a whole? I mean are you 30 percent, 20 percent, something like that?
Witt: We're roughly a third and growing.
WC&P: How does the manager structure work within that?
Witt: I work directly for Chris Wilker, who is the president of Alamo.
WC&P: And then your counterparts on the other side would be?
Witt: Lori Haettich down in our Florida operation would be pretty analogous to me.
WC&P: If you were to pick out a story or anecdote about your experience in water treatment that might add a bit of levity or an interesting highlight, what would that be? It could go back to your days at Toro or just the transition you made a year ago to Alamo.
Witt: The biggest thing for me personally has just been getting used to a whole different industry. I was making stuff for the defense industry before and the water industry is very, very different. The first time I went to the WQA show last March, I had just begun and must admit I wandered around the (trade show) floor and all these plastic parts looked pretty much the same to me. I didn't see much difference. Now, I can go back and see so many differences in what I was looking at that I didn't really understand what I was seeing then. I think the biggest thing I get a kick out of is trying to make customers happy. We get a call back that says, "Hey, thanks. You jumped through a hoop. You got me the part I wanted." And maybe if we helped you design it and think of the ideas you weren't thinking of it helped you run your application better--that's what we're supposed to be doing. That's what we want to get out of it.
WC&P: OK. How much did you have to do with water back when you were with Toro in irrigation?
Witt: Well, I was making sprinklers and controllers.
WC&P: Living in Arizona, I'm very familiar with those. You have to have irrigation in your yard in order to keep anything alive other than cactus, mesquite, yucca or ocotillo.
Witt: That's right. It's a desert out there. If you don't irrigate it, it's gone. I was in the irrigation business for about 10 years.
WC&P: Tell us if you could about a challenge that you or your company faced and how did you overcome it? You can pull this from your business experience or something specific to Alamo, whichever way is fine. It's a question we generally ask to offer a lesson to the reader on a problem and how someone dealt with it.
Witt: One of the big things that Alamo has looked at is how to differentiate ourselves from other manufacturers and distributors of similar product. And we really have had to spend a lot of time this year trying to answer that question. Where are we going and what are we doing? And what we've really realized is where we bring some value to the market is on products like mine or another value-added type product. A lot of companies out there are just distributors of parts. And Alamo really sees itself as a company that brings specific value to the market. We're moving more that way. And a lot of what I do as you see new products come out of my division--and there are several in development at this point--they're going to be aimed at bringing value to the customer other than just being another "me too" distributor of parts. That's really taking hold throughout the company, not only at my company here but throughout all of Alamo. That role of the company and how do we go forth to provide superior service to a value-added type of environment is key. Clearly, I view everything I do here from when I'm making a product to a customer's particular specs as value added. If I look at the parts that I sell out of here, at least 70 percent of them are company specific parts designed to a specific drawing for a specific customer. The remaining 30 are going to be generic tank heads, hubs and laterals that a lot of people use. My biggest customers, I'm making custom parts for, to their needs. That's the thing that I need to play on here: How do we get more of that and how do we become a partner with our bigger customers to better help them define and pursue their markets…
WC&P: From what size system to what size system are the parts you're making?
Witt: We are making parts for basically any tank sizes, taking distribution parts for 12-inch and under as well as the larger 14- to 24-inch and over. We cover the waterfront when it comes to commercial applications.
WC&P: Where's the bulk of business?
Witt: Most of it is in the 12- to 24-inch arena.
WC&P: And where are the things you're looking for future growth or where you see things picking up, whether that's in a particular product area or a particular market?
Witt: I think where we would really like to grow and where we do see some growth is, with our current key customers. They like what we do and we provide them with their tank heads, hubs and all that stuff. So, there's a certain amount of going out and trying to identify those guys that are not our customers and find out why they're not. What we're finding there is that they're either such large volume companies that they are doing…
WC&P: The work in-house?
Witt: They do it in-house or they've gotten so big and so standardized that they've gone to molded parts or there are some kinds of operations that just really don't look at value--they look at price. And those are playing a price game and finding a variety of lower-end sources that may or may not have long-range durability. We really aren't interested in getting into that game. We're about quality for the long haul.
WC&P: How do these issues play into when you're talking about domestic vs. international business?
Witt: We are about, I would have to say, 80-20 domestic on a percentage basis. But we do a lot of stuff for Autotrol in France, we sell certain stuff to Japan, there's a nice base of business of certain parts that we export every month. It's about 20 percent of the total.
WC&P: Are you looking to grow that?
Witt: We are. Alamo is looking toward expanding its presence in Asia and everywhere we can. We have a natural focus on Mexico because of proximity. It's been a great market for water treatment systems and we're concentrating on bringing additional value-added products to this and other international customers that we have, whether that's in Asia or Europe.
WC&P: From your perspective in the market, where do you see the industry going--if you could evaluate it at this point?
Witt: Well, hopefully, larger. After all, 2003 was kind of a slow growth year over 2002.
WC&P: What sort of factors affect that do you think?
Witt: I think a lot of it has been just a general state of the economy. That's what I'm seeing.
WC&P: What are some of the indicators you look toward in a more positive picture for 2004?
Witt: We're getting a lot of quoting. We're quoting a lot of new applications right now, so I'm hopeful that 2004 is looking good. Actually, the last (few months) since September, our bookings have been trending upward and we're holding steady. You don't want to get too excited too fast. So, starting in September, we had a very good looking month. And we said: "OK, that's good." Then, October was pretty good and November was pretty good. In December, I said, "It's going to fall off because of the holidays." But, on a daily basis, December is doing just fine. We have picked up certainly considerably since early summer when things were pretty dead.
WC&P: What's the one hot-button issue facing water treatment dealers or the industry that you think will have the most impact over the next few years? Are there things that affect your business that stand out, whether it's regulatory issues, indirect qualifiers on your market or macro-issues going on with the economy?
Witt: You know, I'm hard-pressed to answer that because I'm still industry-illiterate in some areas. I would say the economy certainly would be a big thing and would probably tilt the comment that way. I know that, on issues, how water softeners are treated in California continues to be a watch point, but I'm really not the right person to go into that in any depth on that.
WC&P: It became a brand.
Witt: Now, we're really trying. We've done a lot of work on who our customers are and going back to them to determine who are our key customers now that are my dream customers, as I call them, and what can I do for those guys to make them happier. How do I become their supplier of choice when it comes to anything to do with machined parts? And we're really focusing our efforts on getting into those relatively small couple handfuls of customers to see what we can do to be partners with them and really give them what they want.
WC&P: One thing I wanted to ask was when you mentioned new products Alamo Machining was working on--at what point do you expect to be rolling them out?
Witt: I would expect that by mid-year--some time in the next three to six months. There are at least two new products we're working on that will be ready by then.
WC&P: I assume you'd like to have one available for unveiling at the WQA show in Baltimore?
Witt: It's possible but it's better to say when everything is ready, we'll roll them out.
WC&P: Are they in a particular niche? Would you be able to describe them in some fashion, maybe as far as the application?
Witt: I can't, other than to say they will be great products which will have unique value to our customer.
WC&P: Who else is on your team there? Who's below you?
Witt: Laura Miller is the person most people get a hold of on the phone when they call.
WC&P: She is?
Witt: She runs the customer service and sales group. Jim Meyer is our head tech guy and is just a gem. He's been here a long time.
WC&P: What's his title?
Witt: He's our senior technical representative. Laura runs the customer service department. And Kevin Graff is the operations manager. We have also recently added Chris Hanish, from Hanish Marketing International (HMI), as our manufacturers rep for machined products. He has a long history in this business and we’re looking for great things from him. I expect Chris to help get our story out to new customers as well as reinforce our capabilities to existing customers.
WC&P: OK. Those are all the questions I have, I believe. Is there anything else you'd like to say?
Witt: No, I don't think so.
WC&P: Well, thank you for your time and sharing this information with our readers.
Join us next month for our interview with Brian Applewick, vice president of G.A Murdock Inc., of Madison, South Dakota.