By Eric Peterson | Feb 01, 2021
Packaging machinery and contract manufacturing services
NuLine emerged from the product portfolio of Guard Associates, a Denver-based maker of machines that made flower sleeves, Mylar balloons, and bag-in-box products. "It was all revolving around heat-sealing plastic films," says Herivel. "That started the ball rolling."
"In the early '90s, Guard Associates failed, and out of those ashes started Convertec Engineering," says Herivel, who worked for Guard Associates in the late 1980s.
The company was focused on custom machinery, and the project-to-project strategy was notably volatile.
"One of the reasons Guard failed is they were only building custom equipment, which is super tough. When you're custom, you're inheriting everybody's problems, trying to do all these crazy projects which is super difficult. Just relying on the machine business, it's just tough."
Convertec moved to a hybrid model that offered custom machinery as well as contract manufacturing for such customers as Rheem, ProEdge Dental, and Polar Bottle in volumes from hundreds to millions of units per year. "They built equipment for themselves to run procust for other people," Herivel explains. "We could make products for people or build a machine and they can make the products for themselves. We've run with that model ever since."
He took over the company with partners and bought the IP from Convertec in 2008. "Last year was my first year as the sole owner of the place," he says.
The contract manufacturing now accounts for about 60 percent of revenue most years, with sales by about 15 percent in 2020 as total revenue was nearly $3 million.
"It's been totally critical," says Herivel of the hybrid approach. "The contract manufacturing side gives us the stability, the repeatable cash flow that we can rely on to keep the lights on and the doors open. It also gives us innovation, because we're running products every day. We run machines every day, we know what that's like, we know process flows and things like that, so that helps us when we're designing a machine for a customer."
"It's been an absolutely vital part of the business to where there's an effort to continually grow it," he adds. "Last year, we saw the biggest jump ever . . . about a 15 percent jump in total contract manufacturing."
That helps smooth the ups and downs in the custom automation business. "It's a total ping-pong ball," says Herivel. "It jumps all over the place. . . . That was an absolute killer for Guard, and I've been involved in other automation companies in Colorado over the years that have tanked for the exact same reason."
Not that NuLine doesn't take on multi-million-dollar custom projects for a variety of clients. "On the machine-building side, it typically leans towards the bag-in-the-box industry, but it can vary," says Herivel. "It could be food, it could be dairy, it could be bulk packaging. . . . It could be ink, paint, liquid eggs, syrups, tomato paste."
Custom machines and systems range from about $10,000 to $1 million or more. Contract manufacturing services are typically in the "pennies" per unit, adds Herivel. "Some of those, we're only charging labor. The customer's supplying the materials and the boxes and we just do the conversion for them and ship it out. Others, we buy all the raw materials . . . and do 100 percent tunkey parts."
Herivel highlights NuLine's "flexibility and responsiveness" as differentiators. "Typically on the machine-building side, our competitors have their standard lines of products and they don't vary outside of that window too far. If they do, it's so cost-prohibitive for the customer, they don't end up doing it. Because we're in that custom field, we're able to respond and be innovative working on new projects.
"We also have the flexibility on the contract manufacturing side to do custom production-quality samples on one of our sample machines. Typically when you seal a plastic structure together, it's with a heated metal die. We have a sample machine where we can use a computer-drawn configuration, import it into the sample machine and seal a product together. As far as we know, we are the only ones who have done that. It gives us the ability to make complex products without cutting any tooling. It kind of works like a CNC machine, but for sealing bags together."
Challenges: Herivel says he'd like to develop a stock catalog, but it's difficult for the company to commit resources to it.
"We've always had aspirations to have that standard line of equipment: 'Hey, we're going to produce model A, B, or C, and we're going to punch out X amount of those a month, but we really haven't found that sweet spot in the market of what that machine is."
"In the past year or two, it's been labor. Finding people that are available that want to work. Even with all the COVID stuff, finding folks that want to come in and work."
"Most of it is the production stuff," he adds. "The entry-level stuff is just a bear to find."
Opportunities: "The contract manufacturing for sure," says Herivel. "It's the more stable one."
Medical is a target industry that "could really explode," says Herivel, noting the need for such certifications as ISO 13485. "That's on our list," says Herivel. "We're also going to be adding a soft-sided clean room so we can facilitate those particular products."
Needs: "Space is a challenge for us, for sure," says Herivel. He's looking to move or reconfigure the company's current 18,000-square-foot facility in 2021.