Feb 18, 2014
Ice making equipment
Kevin A. Fink proudly describes himself as an "ice geek." And the label definitely fits.
Fink is president of Ice-O-Matic, the world's fourth largest supplier of commercial ice machines. The company supplies ice-making machines to the likes of Starbucks, 7-Eleven, Buffalo Wild Wings, Subway and a huge range of smaller restaurants, convenience stores and other commercial eateries. Ice-O-Matic is a "highly independent" business of Ali Group, an Italian family conglomerate that is the largest food equipment group in the world with a portfolio of around 70 companies.
Today, Ice-O-Matic generates about $100 million annually--a figure that has doubled over the past several years--via its 200 employees at its 145,000-square-foot manufacturing facility at 11100 East 45th Avenue in Denver.
But, as Fink explained, Ice-O-Matic's business hasn't always been this hot.
In 2006, Ice-O-Matic faced a "critical juncture," Fink said--the company could either outsource its manufacturing to Asia, or it could keep that work rooted in the United States. "We needed to move the facility or invest in the facility," he said.
The company decided to keep its Denver manufacturing plant in place, at a significant cost. "In the last eight or nine years we've invested north of $9 million into automated fabrication," Fink said. "We brought in this automated fabrication system, and that basically took the number of people in that department from about 23 to 3. But we didn't lay anybody off." Instead, Fink said, Ice-O-Matic's executive team worked with the company's employees to explain why the company needed to automatic its manufacturing process. "We worked hard early on with the direct labor force to help them understand why we were doing this and why it was beneficial for them, and that helped us to be successful." Some employees move to other departments, some retired and some moved to other opportunities.
"The net result is that, here in Colorado--which is not known to have a low cost labor force--we compete effectively against both foreign and domestic suppliers, here and abroad." Fink said part of the reason Ice-O-Matic has been successful is because it does not need to work with suppliers that are "10 time zones away and speaks a different language," Fink said. "We've got the entire staff right here."
So, instead of waiting 12 to 14 weeks to meet a customer's request for a modified product, the company can make that change almost immediately.
But the market is not standing still, Fink said. Ice-O-Matic continues to invest in its manufacturing process to eke out efficiencies--just last year the company put $3 million into expanding its manufacturing capacity. Fully 98 percent of what Ice-O-Matic sells is built in its Denver manufacturing facility.
These changes are significant for a business founded in 1952 by an inventor who epitomized innovation. Founder Dave Allen took his new ice machine design to a trade show but couldn't afford a booth, and instead invited buyers to his hotel room to show off the machine in his bathtub.
Fink said Ice-O-Matic hopes to continue that scrappy approach as the company battles its larger competitors. To do so, Ice-O-Matic must first expand with its customers into new markets: The company has worked with Starbucks since Starbucks opened its first store in Seattle, and has been with the coffee vendor every step of the way. "It's a very significant piece of business for us," Fink said.
And Ice-O-Matic is working to stamp out new opportunities. As Fink explained, the company recently designed an ice machine to complement Coca-Cola's Freestyle touchscreen soda fountain. Ice-O-Matic is hoping its innovations on top of the Freestyle dispenser will help it unlock new customers.
"This is one of the better opportunities we've had," Fink said.
Challenges: Aside from improving its products, breaking into new markets and fighting off competitors, Fink said Ice-O-Matic too is dealing with the complexities of a global business. He said the company has hired a full-time global regulations officer whose job is to make sure Ice-O-Matic's products meet the stipulations and requirements of each market it sells to. "We've got one [regulations officer], and if things don't sort out, we'll need more than that someday," Fink said.
Opportunities: As restaurant chains spread beyond the United States, they continue to need more and more ice machines to power their expansions. This expansion, in turn, is driving local businesses abroad to purchase ice machines to match the competition from these restaurant chains. "We're very, very focused on expanding our global presence," Fink said. "Outside of North America is where the growth is happening."
Needs: "We've got a great team of people. We need a bigger team of people," Fink said, explaining that Ice-O-Matic's expansions have put a strain on its existing workforce.
Additionally, he said, Ice-O-Matic will need more capital from its parent company to continue to evolve its manufacturing processes.