story by Jamie Smith
In an economic age where many companies are returning their manufacturing operations from overseas to in part satisfy consumer demands and also save money, an Arkansas-based company already has that advantage.
Pace Industries’ corporate headquarters are in Fayetteville and it’s the central office for the company’s 17 locations (10 divisions) in North America (United States and Mexico), and 3,600 employees.
According to the Pace Industry’s website, “Pace Industries was founded in 1970 with a small die casting facility located in Harrison, AR. From that one location Pace Industries has become one of the largest and most diversified die casting companies in the world.”
Die casting is the process of using various metals to produce key components for a wide variety of products – from car engine components to kitchen faucets to small connector housings for electronics.
John Wisdom, director of marketing, said they’ve seen a lot of businesses moving their operations to North America. He said the company also has seen interest from a couple of potential customers seeking U.S. manufacturing services as a result of Wal-Mart’s onshoring manufacturing jobs initiative.
But the major uptick in demand Pace continues to experience began more than two years ago among the manufacturing sector as a whole. Wisdom said the company has an annual revenue in excess of $400 million. The company’s revenue growth is single digit and the goal is to increase the profit margin to double digits
“We have a capital intensive business,” Wisdom said. “We’re looking at our infrastructure and processes to get to double digit growth.”
“People have the desire to have things manufactured closer,” he said. “We’ve had some customers who left and are now coming back to us. We’re putting people to work.”
Jobs are available in manufacturing with a growing number of jobs available at Pace.
“There are jobs out there that aren’t getting filled in manufacturing,” he said.
Mike Harvey, chief financial officer for the Northwest Arkansas Council, said the gap between skilled workers available and the number of job openings continues to widen. In the local market he said there are two openings for every one welder certified last year. Machinists, tool & die makers, industrial maintenance and installation repair as a local employment sector reported 382 openings last year, according to Harvey. At the same time local schools graduated 57 workers with those certifications.
“Many of these are $15- to $17-per-hour jobs, in the mid-strata range but good paying. We hear that local companies can’t find enough of these qualified workers. They will often recruit for the higher wage $30-per-hour jobs. They rely on the local workforce for the mid-strata range jobs and there’s a shortage across the entire country,” Harvey said.
Wisdom said Pace is working with the North Arkansas Community College to offer more vocational programs in hopes of attracting more students to fill the hole in the manufacturing sector as more jobs are returned to the U.S.
Harrison is where the company opened its first die casting facility and it’s also where a large fire last April destroyed the facility. Pace was able to continue serving customers by moving some operations to other locations while they rebuild the Harrison location, which is expected to be complete next quarter, Wisdom said.
“We’re reinvesting back in Arkansas with the Harrison location,” he said.
Pace said it was never tempted to shutter the Harrison plant and permanently shift operations after the devastating fire. Pace employs around 530 workers in Harrison, and it opted to rebuild and expand as opposed to moving that production to one of its other facilities out of state or in Mexico.
“We could see more demand coming and took this opportunity to rebuild the plant and separate out the B&C zinc die casting operations into its own facility. We displaced some workers to other facilities and flipped the operation from one end of the building to other to keep working as long as possible,” Wisdom said.
He said the rebuild took about 18 months and recently held its grand reopening. The project allowed the company to build for extra operating capacity and storage making a $49 million investment back into Harrison and the state of Arkansas.
Pace is owned by New York-based private equity firm Kenner & Co. who repurchased it in 2008 from Leggett & Platt. Kenner & Co. said it plans to expand the company’s North American footprint in an effort to build upon planned growth in the market.
DIVERSIFICATION GAME PLAN
Through the years, Pace has diversified to offer engineering solutions, die casting and manufacturing. Its customers include a wide range of sectors such as telecommunications, military, aluminum fencing, furniture and appliances, commercial construction and the automotive industry.
Wisdom said Pace has worked to find industries that are evolving and are in need Pace’s type of services and strategically developing those relationships. One example is the automotive industry, which includes the need for lighter but sturdier vehicle frames.
“That’s an area where we excel,” Wisdom said.
Pace has also diversified over the years to offer the “cradle to grave” approach, which means the company offers engineering services to customers that answer problems the customers are having. Pace can then manufacturer the solution its engineers developed. Pace has won an award for creating a solution that reduced the number of parts needed in a design from dozens to only two parts.
They’ve also worked closely with employees to be strategic partners who are equipped to be problem solvers for customers. That includes the quality and engineering support that the company developed.