In 2004, longtime local manufacturer Madison-Kipp Corp. was enjoying steady success as a supplier of mostly engine-related parts for large trucks and SUVs.
But its customer base was too one-dimensional, company leaders for the family-owned metal parts maker feared. Madison-Kipp, currently in its 115th year of operation, including the past 110 years in the same location on Madison’s East Side, needed to diversify.
With more than 90 percent of its sales tied up in then-booming truck sales, mostly for General Motors, leaders asked themselves what would happen when that market slowed. The company was often locked into long contracts producing custom parts no one else would want if a given client, such as GM, tanked.
“We had too many eggs in one basket,” said Tony Koblinski, president and CEO of Madison-Kipp, headquartered at 201 Waubesa St.
The company employs about 400 people in Madison and Sun Prairie in its aluminum die-casting processes.
“Our hope was that if we got a broader base of customers, that if any one of them was down, the others could pull you through,” added Mark Meunier, vice president of human resources for Madison-Kipp.
The strategy worked, and in the nick of time. When the automotive industry started to seriously stall as part of a deep recession a few years later, Madison-Kipp had new markets for its engine parts to help ride out the recession, from motorcycles to riding lawn mowers to snowmobiles and ATVs.
By 2011, Madison-Kipp was selling only half its parts to the Big Three automakers and their suppliers, with most of the balance split almost evenly between recreational vehicles and lawnmowers. During that time, the company also adopted so-called “lean manufacturing” processes designed to eliminate waste and make workers more nimble and adaptable.
“If we’re lean and we have more efficient processes, we can change dies (the molds used to make products) more quickly,” Meunier said. “We have people that are willing to do things differently. Therefore, it gave us the ability to shift gears.”
Deb Houden, director of UW-Madison’s Family Business Center, said Madison-Kipp’s willingness to change was a big part of its extraordinary longevity. More than 100 years of continuous operation is rare for any company, and historically only about 12 percent of family-owned businesses survive through a third generation, Houden said, as Madison-Kipp has with the Coleman family.
“What you’re talking about with longevity is the ability to weather storms,” Houden said. “And especially for a manufacturing firm, it’s keeping up with the trends. If Madison-Kipp was an icebox company, they’d be gone. You have to be flexible, with a forward focus.”
Serious and continuing pollution problems notwithstanding, Houden also credited company executives for ensuring the stability of an enterprise that already has employed more than 25,000 people, starting with less than a dozen in 1898.
“For them to last through the Depression, for them to last through the Great Recession, for them to last through the situation with inflation and all the lines at the gas stations in the 1970s — for them to weather those storms and remain a staple of the community, that is a pretty good run,” Houden said. “They’ve had to have had some pretty good leadership.”
Koblinski, who’s run the company since 2011 for current owner J. Reed Coleman, said last week in an interview that Madison was a “tough town for manufacturing.”
He was referring in part to the negative publicity surrounding the company’s contamination of soil and groundwater in past decades with pollutants that at the time weren’t regulated.
Since then, especially for the past 20 years, public frustration has grown over how well and how long it’s taken the company and the state to get it cleaned up.
“(Residents) want the jobs, but they don’t want manufacturing,” Koblinski maintained. “They want the ‘green’ jobs, (they say) bring in the Epics. We’re saying, ‘We’ve been a great neighbor for 100 years and we’ll continue to be a great neighbor.’”
“Things have to be made somewhere,” Koblinski added, “and we’re offering, we feel, nice jobs.”
A brief slowdown
Though not many new jobs lately. Like most companies during the recession, Koblinski said the worst years for Madison-Kipp were 2009 and 2010, when employee wages and most benefits were cut. There were no big layoffs, Meunier said, but hiring slowed, with only about 50 hires in the past five years.
Last week, Koblinski said he expected to hire perhaps 100 people in the next three years, as the company gathers strength and continues recovering from the deep economic downturn of 2008-09.
“We were feeling better in 2011, felt great in 2012, and we’re feeling really good in ‘13,” Koblinski said.
Madison-Kipp is widely seen as a pioneer and frequent innovator in the die-casting industry, which uses molten metal — historically steel or iron, but increasingly the lighter and more versatile aluminum — poured into molds to make industrial products.
In 2010, manufacturers made just more than 1 billion pounds of product, according to figures from NADCA, the North American Die Casting Association.
Madison-Kipp last year made about 36 million pounds of aluminum parts — using all recycled material, Koblinski said — for Midwestern clients including motorcycle maker Harley-Davidson and Kohler Engines, and in the U.S. South, Southeast and Northeast. Madison-Kipp wouldn’t reveal current sales numbers.
Parts through history
Before the focus on automotive engine parts, Madison-Kipp’s products over the years ranged from parts for children’s toys to shrapnel pellets for the U.S. military, after Madison-Kipp invented an industry-leading way to die-cast ammunition in 1938.
The company’s employment peak was in the 1940s, during the war years, when its workforce swelled to 1,500, according to a profile of the company in Hoover’s Inc.
Madison-Kipp also invented a high-speed air grinder for making dies, in 1930, and during the 1960s it made a variety of consumer and other products, including metal knobs for Zenith TVs, parking meter heads, trunk latches, refrigerator and range parts, tractor dashboards and levers for voting machines.
The company bought its first robot in 1976, and now uses robotics extensively, like many manufacturers, for precise or difficult operations such as transferring hot melted metal from furnaces to die-casting machines.
Madison-Kipp today operates 28 die-cast machines and 30 machining centers, where a cast part is finished and cut to more precise measurements.
The equipment is part of a total 330,000 square feet of production space in the company’s three manufacturing plants — two in Madison and one in Sun Prairie, plus a 52,000-square-foot distribution center, also in Sun Prairie. Parts weigh from 0.25 to 20 pounds, and they’re made three shifts a day, five days a week.
Production workers earn $12 an hour to start, Meunier said, and $16.50 on average.
Average tenure of company employees, who have never been unionized, is nearly 17 years, he said, compared to the U.S. 2012 median of six years for manufacturing employees, according to the most recent stats from the Bureau of Labor Statistics.
Madison-Kipp recently created what it calls its Thousand Years of Service Club, which includes 23 current employees with 40 or more years of work experience at the company. One of them is Ken Wipperfurth, who marked his 50th year with Madison-Kipp at a company party last month.
“It’s hard to just walk away,” said Wipperfurth, 69, of Waunakee. “I’d miss the people. I’ve seen a lot of people come and go, and I like just being around people, and working for a good company.”
Going forward, Koblinski didn’t expect the company to stray much from its current emphasis on drive-trains and drive-related parts, including gears and casements, for engines in a variety of sectors.
He cited a few serious challenges, such as getting more young people interested in manufacturing careers and the rising cost of employee benefits.
But he was optimistic overall, predicting continued growth from existing customers and seeing potential new clients in what he called a “real trend” in U.S. companies moving manufacturing operations back from China or other foreign countries to save time and money and to improve quality in the supply chain.
“We think we’ll continue to grow,” he said. “There’s plenty of opportunities in the markets we play in today, and we think we’ve created a great niche.”