Crawford: Park-Ohio Streamlined for Success

John Wolz

Park-Ohio Holdings Corp. CEO Edward Crawford credits his company”s decade-long integration in Asia with fueling new success, though he still believes in “low-cost, quality manufacturing” in the U.S.\
Fastener executives are taking note of Park-Ohio”s success. The Cleveland, OH-based fastener and auto component supplier has seen its stock skyrocket over the past three years, soaring from $1.93 per share in November 2001 to almost $21 per share this month. Much of that stock value increase has come in the past six months, as quarterly results have improved dramatically.
Park-Ohio share prices jumped more than 17% to $20.91 on a strong third quarter earnings report. The company said Q3 revenue rose 37% to $200.9 million, while net income soared to $4 million, compared with net income of $100,000 during the third quarter of 2003. For the first nine months of 2004 revenue rose 29% to $594.2 million, while net income more than doubled to $16.5 million.
The company also reported that it increased its credit facility from $165 million to $185 million.
Recession Prompted Restructuring
Park-Ohio”s success might be surprising to some. Like many industrial suppliers, Park-Ohio went through a tough time during the most recent recession, with annual revenue dropping 15% between 2000 and 2001. The slowdown followed rapid company growth during the booming “90s, when sales jumped from $67 million in 1992 to $754.7 million for 2000, boosted by internal growth and acquisitions.
Crawford told FIN that going into the recession the company adopted an aggressive restructuring program to endure what he and other business leaders thought would be an 18-month market decline.
“It turned out to be much longer and deeper,” the 65-year-old executive explained to FIN.
Over the next two years Park-Ohio continued to streamline operations.
According to its annual reports, Park-Ohio consolidated 28 supply chain logistics facilities and closed or sold 11 manufacturing plants from 2001 to 2003. Included in its actions was the sale of St. Louis Screw and Green Bearing for $7.3 million during the first quarter of 2003. The company also trimmed its workforce by about 30% to 2,500 employees.
With those moves Park-Ohio was situated for success when the market started strengthening. Crawford said he is not surprised by his company”s return to profit, given its operational preparation.
“Quite frankly, we think we”re a better company coming out [of the recession] than going in,” Crawford stated.
Improvements include “dramatically increased sales per employee” in the last two years, driven by heavy investment in information technology.
Park-Ohio operates in three segments: Integrated Logistics Solutions, Aluminum Products and Manufac-tured Products.
ILS provides services for production components, including fasteners, to OEMs, other manufacturers and distributors. Markets include semiconductor equipment, industrial equipment, aerospace and defense, electrical controls, HVAC, heavy-duty truck, vehicle parts, appliances, and lawn and garden equipment. ILS operates 44 facilities throughout the U.S., Asia, Canada, Puerto Rico, Mexico and Europe.
Park-Ohio entered the fastener business in 1995 by acquiring an historic name in the industry, RB&W. Two years later the company acquired Arden Industrial Products Inc., Arcon Fastener Corp. and screw machine products manufacturer Delo Screw Products Co., followed by Direct Fasteners of Ontario, Canada, and Gateway Industrial Supply in 1998. In 1999 Park-Ohio acquired Columbia Nut & Bolt Corp.
Today the industrial fastener logistics business makes up the majority of Park-Ohio revenue, accounting for about 61% of overall revenue.
In addition to piloting Park-Ohio, Crawford owns about 22% of company stock. His son Matthew Crawford owns about 10% of company stock.
Asia Markets Part of Success
Crawford also credits Park-Ohio”s current success to its international business experience, noting the company”s manufacturing facility in China.
“We have been deeply integrated in Asia for 10 years,” he pointed out.
Crawford has personally visited the region 14 times, helping to expand the company”s offshore expertise in securing superior parts.
“There is a growing sophistication in the product they can produce.”
But Asia is a marketplace for Park-Ohio, not simply a supplier, Crawford noted.
And he is quick to add that business in Asia is only a portion of Park-Ohio”s formula for success.
“It”s part of the plan, but it”s not THE plan. We don”t start our conversation every day talking about Asia,” Crawford told FIN.
U.S. Manufacturing Still a Force
There is good product being made in the U.S., according to Crawford.
“I”m still a firm believer in low-cost, quality manufacturing in America,” he offered. “We”re still committed to America.”
One way U.S. suppliers can remain competitive is by learning to buy materials more efficiently which helps keep costs low while converting raw material into a receivable for customers more quickly, Crawford advised.
“The days are gone when you can buy truckloads of steel and leave it on the trucks for weeks.”
Material and labor costs have already been squeezed in the U.S., forcing American manufacturers to replace their traditional manufacturing mind-set with an assembly mentality, Crawford noted.
“They want what they need to build that product that day.” �2004 FastenerNews.com