By Eric Peterson | Jul 23, 2016
Contract manufacturing services
The Whites' great-grandfather, Fred, bought out his partners and named the company Denver Machine Shop 100 years ago. Grandfather Ed passed it to father Jim, who ran it until Scott and Eric bought him out in 2002.
The business model was established early in the company's history. "Back in the day, they had no way to buy spare parts," says Eric. In the early 1900s, Fred would use the restaurant that's now McCormick's in the Oxford Hotel to conduct business with suppliers and customers -- there were no telephones.
The company made spare parts for the agriculture, mining, steel, and railroad industries "before parts were available," says Scott. As much as things change, they also stay the same. "The big difference," he continues, "is today we focus on machines where parts are no longer available."
Planned obsolescence "works for toasters and TVs, but for large mining equipment, the machines are too expensive to throw out," Scott adds. In fact, an entire chapter in A Simple Path to Sustainability was dedicated to Denver Machine Shop's notably green strategy of keeping old machines going. "We make the active life of equipment longer," Scott says. Much of the equipment the company services is at least 50 years old.
Ranging from Pueblo steel mills to aggregate mines in the high country to car recyclers, the company's clients remains similar to 1916. The railroad work has been largely supplanted by construction and property maintenance business -- fixing 100-year-old Otis elevators in downtown Denver is a specialty -- and oil and gas work. The business has always been low-volume -- lots of one or two or 15 parts, not hundreds or thousands.
At the century mark, Denver Machine Shop is pivoting again. "Some of our traditional markets are really dropping off," says Eric. "It starts with coal." There's a domino effect. Coal on the ropes means less work with railroads and coal-fired power plants.
"We're seeing a change in the market," says Eric. "We went through the Great Depression and everything else. We've had to change industries a great many times."
But craft brewing fits the company's skill set. (It also doesn't hurt that Scott's an avid homebrewer.) "We want to get the word out that we're here to service them and provide any kind of custom equipment they need," says Eric.
He wants to position Denver Machine Shop as the "go-to guys for any kind of repairs or custom brewing equipment." The company is also working with Birko to market its services to breweries and other clients in food and pharma.
A recent acquisition dovetails into the strategy. In March 2016, Denver Machine Shop acquired Kendo, a Commerce City-based metal fabrication shop that's been in business since 1960. "They have capability to build stainless steel vessels and do all kinds of custom brewery work," says Eric.
Avery, Great Divide, and Breckenridge are among the company's brewery customers. The work has included repairing bottling and canning lines and grain hoppers and manufacturing everything from spare parts to tap handles.
"We can repair and make replacement parts for canning and bottling lines, rebuild pumps and motors, repair threads on stripped fittings, and manufacture many items that are needed for day-to-day operations," Eric explains.
That's something of an understatement. The company's history parallels Colorado's -- the ledgers are akin to tree rings of booms and busts in mining, construction, oil and gas, and now craft beer -- and the development patterns in Denver.
For most of the first 100 years, the company was located in 6,500 square feet at 14th and Blake streets in Lower Downtown Denver. Then the LoDo boom pushed them out -- precision was a casualty of constant jackhammering -- so Denver Machine Shop moved to a 7,500-square-foot shop at 32nd and Denargo streets in the area now known as RiNo in the late 1990s, and the boom followed them northeast.
When the Whites got an offer on the property, the company "took the money and ran,” says Eric, and moved again in 2013 to a 30,000-square-foot facility in Henderson with 30-foot-ceilings and 60,000 pounds of craneage on the roof.
With the new facility's capabilities -- and in spite of some of the markets hitting a skid -- the company continues to grow. Sales grew 10 percent to $4.7 million in 2015. With the Kendo acquisition, the forecast for 2016 is north of $7 million.
Challenges: Workforce. "We're creating jobs, but it's difficult to find people who want manufacturing to be their career," says Eric.
Education and training are critical factors, and strides are being made at the state and national level, the Whites say, but there's another strategy at Denver Machine Shop. "We don't retire people early," says Scott. "We let people work as long as they want."
Another challenge is having parents pass knowledge down to their kids. There are several father-son manufacturing teams on the payroll. "It's hard to train people to do what we do," says Eric, noting that it once took the company's apprentices five years to become journeymen.
Opportunities: Craft brewing, food, and pharma. For breweries, Denver Machine Shop can rebuild all manner of pumps, valves, and other equipment. "There are so many breweries out there," says Eric. "We want to jump into that market full-force."
"I really think we can help them," he adds. "We've really stopped concentrating on heavier industries. Now we want to focus on local breweries and local manufacturing."
Needs: "We plan to purchase one piece of capital equipment a year for the next several years," says Scott. "We think we have to continue to invest in technology to remain competitive."