Last month, Wisconsin-based JARP Industries, a manufacturer of custom hydraulic cylinders, purchased Ordered Motion Systems Inc. (OMS), a nearby producer of large bore, telescopic cylinders. I spoke with JARP CEO, Kevin Kraft, about the combined company’s direction and outlook.
Kraft explained that, as the NFPA’s market statistics readily show, almost all of the company’s markets are down this year.
“We see continued weakness in commodity driven markets, like mining especially,” Kraft said. “One exception is the utility truck industry, which is typically less volatile for us. We are expecting things to bounce back in 2017 with stronger numbers in certain defense applications, marine, forestry and construction. We think mining will remain weak in 2017.”
Kraft explained that the company is focused on working with small to mid-sized OEMs that are not traditionally experts in hydraulics.
“The trend of engineering shortages is especially tough for smaller companies and we can serve them well with our engineering group,” he said. JARP has also partnered with several hydraulics integrators, to bring more resources into play.
JARP’s acquisition of OMS comes at a tough time for the oil and gas industry, but Kraft said he believes in taking advantage of slowdowns to invest. He noted that the company did the same thing a few years ago with an expansion in plant and equipment.
“We’ve always maintained some cash reserves so we can take advantage of these opportunities,” he said. “We have been growing in the oil and gas market for a few years and saw the purchase as the opportunity to jump in with less risk than at the peak of the market. We see the aftermarket as one way to get the most out of the market in the short term. The equipment that is running needs repairs to be done—and we are in a good position to do that. Additionally, we are seeing a lot of interest in prototypes and new product development as customers prepare for the eventual market upswing. Beyond oil and gas, there are opportunities in defense and civil applications that we can now take advantage of.”
Kraft explained that JARP is not operating in the former OMS facility. He said the company has been able to integrate OMS’ equipment into the existing JARP facilities—one is dedicated for new builds and the other for repairs and remanufacturing. He said he feels that they will grow the total workforce as a result of the acquisition. Building and repairing telescopic cylinders is a special challenge that requires larger cranes and infrastructure, not to mention more floor space.
“Fortunately, with our plant layout and the new equipment we acquired, we are in a good position to handle all of the unique aspects of these cylinders,” he said.
Kraft sees more value-added services coming from distribution.
“Our integrator partners are providing more turnkey solutions to their customers, with our cylinders as a centerpiece of the package,” he noted. “Additionally, value-added features like position feedback sensors create an opportunity to improve the performance of our customers’ equipment when combined with the controls expertise of an integrator … we are seeing our relationships with integrators deepen with these trends.”
JARP’s customers, according to Kraft, seem to be feeling pain points relative to the slow market conditions around today. He said that they are all sensitive to inventory levels, while at the same time looking to offer the shortest lead time they can to their customers. JARP has responded by making its system as flexible as possible, so the company can respond to changes in demand and smaller batch sizes.
And Kraft thinks the Internet of Things offers a fascinating opportunity for the industry.
“We are working integrating existing technologies, like position sensors, while pursuing our own research and development to take advantage of this trend,” he explained. “I think customers are interested in anything that can improve system efficiency and reduce down time. I can see both being accomplished with new technologies.”
Moving forward, Kraft sees the upcoming IFPE show in March 2017 as a big focus for the company, as well as a way to build name recognition.
“It is really a great opportunity to network with customers and prospects, he said. “Traditionally, we haven’t had a presence at the show, but we will be displaying at a booth in 2017. We want to get our name out in the market more than we have in the past. Our reputation has always been strong with those who know us, but the reality is a lot of people don’t know who we are. We’re hoping to change that and IFPE will be an important part of that effort.”