Thiele Technologies: How This U.S. Manufacturer Is Thriving In Today’s Uncertain Economic Environment
In a 2003 USA Today article on business spending in tough economic times, Larry Smith, president of packaging machinery manufacturer Thiele Technologies, said that his company was using the post-9/11 economic slump as a time to recruit top talent and revamp systems in preparation for recovery. “This is the best time to invest in your core business, when times are tough,” Smith said. “When things do turn around, we’ll be in very good shape.”
Five years later, in the midst of another downturn in the American economy, that statement seems particularly prescient. While many manufacturing companies are struggling, Thiele Technologies is not only surviving but thriving: 2008 looks to be Thiele’s most successful year ever, with more than $60 million in sales.
To understand Thiele’s current success, Smith says, one must dig deep into the company’s history.
That history began back in 1930, when the Bemis Brothers’ Bag Company formed a department specifically focused on providing high quality packaging equipment and systems for a variety of industrial applications. That department eventually became Bemis Packaging Machinery Corporation, and was one of the founding member companies of the Packaging Machinery Manufacturers Institute (PMMI) trade association.
Smith started at Bemis in 1977, drawn by the company’s Midwestern values and industry reputation. “Everybody knew Bemis,” Smith says. “And almost all the talk was positive.” The company was publicly funded but family-run, and already working with processes and systems very similar to what would later become known throughout the industry as “lean” manufacturing practices.
Bob Odom, vice president and general manager of Thiele’s flexible product line, also worked at Bemis, and remembers the early days of developing lean strategies almost from scratch. “We created a team to look at companies that already had programs in place,” Odom says. “We were always looking for ‘best practices’ and ways to streamline our own processes.”
In 1997, Bemis Packaging Machinery Corporation was purchased by Barry-Wehmiller Companies, Inc., a diversified global supplier of packaging, corrugating, paper converting technology, and engineering consulting services. At first, the company retained the Bemis name, with Larry Smith continuing his role as president. The change in ownership was relatively invisible to Bemis customers, but behind the scenes technology and philosophy were beginning to change rapidly.
“One of the things we realized even before we were purchased by Barry-Wehmiller was that our product offering wasn’t really up to speed,” Odom says. “After the purchase, we retained all of our bagging and palletizing strengths, but also added a dedicated research and development staff, updated equipment, and started new lines. We became known as a leader in packaging technology, and gained a foothold in the pet food marketplace with our UltraStar bagging system.”
Those changes quickly turned Bemis into a flagship company for the Barry-Wehmiller organization, and CEO Bob Chapman saw the perfect opportunity to use the things that were working at Bemis to enhance operations at two other Minnesota companies he had recently purchased. Thiele Engineering, known for its reciprocating placers, cartoners, and liquid filling equipment, and Frontier Equipment, a successful casepacking equipment manufacturer, were merged with Bemis to form a new company, Thiele Technologies, to be run by the Bemis management team.
The integration of complementary companies to create a stronger overall organization became a cornerstone of the Thiele Technologies growth model. “Growth is critical,” Smith says. “Both organic and through acquisition, growth is essential to most effectively meet the needs of customers.”
Mark Prok, Thiele’s vice president of information technology and another management team transplant from the original Bemis group, likens Thiele’s acquisition philosophy to building a table. “A one-legged table or a two-legged table has no balance and quickly falls over,” Prok says. “You need at least three legs to make a table stand, and similarly you need multiple product platforms to survive in today’s challenging marketplace.”
Prok says that the Thiele management team took a hard look at the general economic climate shortly before and especially after 9/11, and realized that smaller manufacturing companies were going to have a very difficult time surviving the next decade. “Like a lot of companies, we weren’t really big enough to weather exceptionally lean times. We knew that we needed to expand our revenue stream and open up new product venues, and we knew that we needed to make a conscious decision about who we wanted to be once the lean times were over.”
Larry Smith concurs. “We knew that we had to take a more ‘full-system’ approach,” he says. “We needed to move from simply supplying components to providing complete system solutions. One of the key elements of that was acquiring companies that not only enhanced our current product offering, but also helped us expand into new markets.”
“Basically, we want all the pieces of the puzzle,” Bob Odom says. “We look at acquisitions that offer something we don’t already have, but that make sense within our business model and interweave with our existing products and systems. There may be some overlap, but there also needs to be expansion.”
Thiele divides its product lines into four primary business units: flexible packaging, rigid packaging, dairy packaging, and feeder equipment. The Thiele customer base stretches across a wide range of industries, including pet food, feed and seed, health and beauty, pharmaceuticals, beverages, and snack foods.
“The business unit approach really improves our efficiency,” Odom says. “Each business unit is almost like a small company under the overall Thiele umbrella, with a lot of a history and a tremendous amount of ‘tribal knowledge’. At the same time, there’s a single administrative and financial entity, and a ‘big picture’ management philosophy that understands how all of the individual business units fit together to form what we like to call ‘one company, one team’.”
Since 2005, Thiele has made six important acquisitions to complement its existing offering: Edmeyer, which provided a completely new revenue stream — dairy equipment — without a lot of cost; Streamfeeder, which allowed Thiele to expand into feeder equipment for the mailing and graphics industries; SWF, which added tray and bliss forming, vertical cartoning, and casepacking to the Thiele family of products; Nigrelli Systems, whose high-speed beverage packaging equipment was a perfect enhancement and expansion of Thiele’s own beverage line; Slidell, which offered a significant aftermarket revenue stream; and Hudson-Sharp Machine Company, whose pre-made bag and pouch making machinery added to an already extensive bagging line.
Mark Prok notes that aftermarket is something many companies overlook. “When you acquire a company,” he says, “you not only get their new installations, but their aftermarket as well. Machines are expensive, and companies need to keep them running for a long time. Aftermarket parts and service is a huge part of the overall customer experience, and can be extremely profitable.”
Bob Odom adds, “Our aftermarket support shows customers that we’re in it for the long haul. We’re still providing parts for older machines that many companies would have abandoned by now. That’s part of our red-carpet TECX initiative — the Thiele Exceptional Customer Experience.”
Another aspect of the Thiele customer approach is its continuing dedication to lean principles and practices. “We’re lean, but we’re not bare bones,” Odom says. “When Barry-Wehmiller purchased Bemis, our lean program — our World Class Journey — dovetailed perfectly with their Guiding Principles of Leadership. We’d already been incorporating lean practices for twenty years, so it was an ingrained part of our culture and remains so to this day.”
Thiele’s long involvement with lean practices has benefits beyond cost savings and a safer work environment, Odom points out. “Everyone gets involved,” he says. “Everyone feels they have a personal stake in making the company successful, keeping our practices lean, and making customers happy. That sense of ownership helps us retain quality employees, and long-term employees continue to contribute to the ‘tribal knowledge’ that helps drive our success in specialized markets. It’s all part of the big picture.”
It’s perhaps worth noting that Thiele Technologies is two to three times the size of most other packaging companies in the United States, employing some 600 associates at seven different locations. “That type of size and financial strength has obvious benefits,” Larry Smith says. “Because we have a large presence and a strong, healthy infrastructure, we’re capable of providing the kind of corporate partnership strength that many of our larger customers require. We’re able to successfully partner with Fortune 100 or even Fortune 50 companies. We’ve also created an environment in which we can manufacture any of our machines or systems at any of our facilities. We’ve standardized components, controls, software, and training so that we can respond to customer needs quickly and efficiently from any one of our locations.”
Even more important than the fact of Thiele’s size and strength, according to Mark Prok, is the approach the company has taken to attain those attributes. “One of the things that strikes me about Thiele Technologies is the way in which we truly strive to integrate the companies we acquire,” he says. “We try to be sensitive and compassionate when bringing new companies into the fold, and we want everyone to understand our business model and to benefit from the additional tools and territory management we bring to the very markets they’ve been serving all along. We’re not there to destroy the companies we acquire; we’re there to make them better. And we want every single employee to be fully vested in the results.”
Larry Smith points out two core leadership mottos from the Barry-Wehmiller organization: “Achieving principled results on purpose,” and “We measure success by the way we touch the lives of people.”
“Every machine or system we produce does something that directly impacts real human beings,” Smith says. “Whether it’s the way pet food is bagged or milk cartons are filled or soft drinks are packaged for transportation and storage, our processes and solutions all have real-world application. It’s important to us that we deliver a great solution, provide true value to our customers, and offer rewarding and fulfilling work to our employees all at the same time. These are the values that have made Thiele Technologies an American manufacturing success story, and they’re integral threads that connect us to the companies we’ve acquired or partnered with throughout our history. Even though the economy is once again experiencing some stormy weather, the forecast here at Thiele is only upward, outward, and ever better.”