By Becky Hurley | Sep 27, 2014
Chains and lashings
Pueblo (HQ: Chicago)
President Mike Uhrenbacher says Pueblo is the perfect place for the five-century-old Austrian manufacturer's first U.S. factory.
The pewag group, a European chain manufacturer since 1479 -- yes, you read correctly -- operates in 11 locations throughout Europe and three in the U.S. In May 2014, the company opened a first-ever U.S. manufacturing facility in Pueblo -- far from its 535-year Austrian home.
"To put the company's history in perspective, Columbus discovered the Americas in 1492," explains pewag, Inc. USA President Mike Uhrenbacher. In fact, one of the family-owned operation's first products was chainmail used by European knights in the 1400s.
Today pewag is best known for high-quality car and truck traction chains, industrial chains, hoists and lashing as well as specialized tire protection products. Its affiliates (wholesale and retail distributors) span the world, from Uruguay to Australia, from Ukraine to India and from Poland to Indonesia and beyond.
"We looked all over the West before selecting Pueblo," Uhrenbacher says. While city officials provided important financial incentives and help with getting key business grants, it was Pueblo's reputation that sold company executives on the city.
"Pueblo knows what it does well. They take pride in steel-making as a craft," he says. "From grandfathers, to children and now the grandchildren, they pass their (steel-making) skills on to the next generation."
Traction chains for ice, snow, and muddy conditions represent 40 percent of the company's product sales. Another 40 percent is chain, hoists and lifting systems that are sold to industrial users. The remainder includes heavy duty tire protection chains for mining and other industries.
All the steel used in the U.S. plant is from domestic suppliers, but not from Pueblo -- yet. Ultra-local sourcing could be in the company's future. "EVRAZ North America, a leading steel manufacturer, for example, is right here," Uhrenbacher says.
The Pueblo plant -- a 30,000-square-foot, IKEA-esque building -- is a model of high-tech automation. A team of 20 people currently runs the operation. Chain production involves custom-designed equipment that forms rounded wire strands into squared links, welds them together, and then calibrates the link's torque and pitch. The chain is then run through a zinc electroplating line which was specially designed and installed by a Michigan company.
Plant manager Ron Francis estimates this year his operation will produce about 16,000 pairs -- or more than 400 tons -- of steel snow tire chains. In 2015, output will increase to about 750 tons. Payroll and materials costs, including imports, account for the majority of the company's operational overhead.
Sales and distribution are handled out of Chicago and Sacramento by another 50 employees. While the market for traction chain remains generally stable, company officials are sensitive to a changing market.
Orders can vary a great deal, and are largely based on weather. Energy is another sector that affects sales. As more utilities companies move to wind or solar energy and coal production lags, so does the need for heavy industrial chain and hoists.
About 25 percent of pewag's total revenues are generated by sales in the U.S. FedEx and UPS are clients, and pewag's U.S. distribution networks are expanding. The Pueblo plant already has an option on adjacent land to accommodate future expansion.
"We had a record year in 2011, just after the recession," Uhrenbacher says. "We believe it's a good time to grow."
Challenges: "We're working on translating the Austrian tradition of manufacturing know-how to our U.S. operations," Uhrenbacher says. "Translators help. We're also training our employees to work with the metric system."
Opportunities: "There's a tremendous opportunity to better serve our U.S. market. That's because if we make our product here, there will be fewer import costs. We have large warehouses in Illinois and California to store our product so we can keep plenty of supply on hand. As a result, time to market will also be much shorter."
Needs: "More customers who understand that a high-quality product will last longer and perform better. We've already seen many trucking customers that have used lower-quality snow traction chains made in China make the switch. Safety and reliability are what we are selling."