From the good times now, it's hard to picture that just five years ago Ellison Technologies Automation struggled to cope with the effects of the Great Recession.
The Council Bluffs manufacturer's sales dropped from $18 million to $12 million, and it was forced to cut 40 of its more than 100 workers.
The company programs robotic automatic systems for clients in agriculture, construction, medical, automotive and military industries, and President John Burg watched as clients sliced orders, production wound down and things around the 65,000-square-foot operation got much quieter.
Since then, Burg said, the company has been “clawing back.” And as it celebrates its 30th anniversary, Ellison is back to 100 employees, made $25 million in revenue last year and has a string of new clients. Burg said his company, through automating production, is just one example that manufacturing is back.
“That's been a good and bad,” he said, noting that robots don't require health insurance, but in his experience haven't displaced a human from work. “The good side is that manufacturing is returning to the U.S.”
Reviving domestic manufacturing has a been a lively discussion, and some call the resurgence a slow uphill climb driven by factors like rising labor costs in places like China and long, expensive transit times for delivering products from countries thousands of miles away.
In his February State of the Union address, President Obama called “making America a magnet for new jobs and manufacturing” his first priority and cited evidence it's already happening. He said that after losing jobs for more than 10 years, U.S. manufacturers have added about a half a million jobs over the past three years.
“Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. After locating plants in other countries like China, Intel is opening its most advanced plant right here at home. And this year, Apple will start making Macs in America again,” Obama said.
U.S. manufacturers last year contributed $1.87 trillion to the economy, according to the National Association of Manufacturers, up about 8 percent from $1.73 trillion in 2011. And considered alone, U.S. manufacturing today would be the 10th-largest economy in the world.
However, the Institute for Supply Management reported earlier this month that U.S. manufacturing fell in May to its lowest level since June 2009, citing overseas economies and a pullback in business spending, new orders and production. The manufacturing dip happened as construction spending rose.
But Burg said he continues to see examples that manufacturing is coming back elsewhere in the U.S. Whirlpool is now making appliances at a plant in Tennessee. With a strong agriculture industry, manufacturers can't put machinery together quick enough. And Automate 2013, a trade show, had its all-time highest registration this January in Chicago.
The record registration was driven by companies trying to figure out another way to do their production, Burg said. “We had a lot of people come there that really had no idea if robots could work in their facility or what they might be able to do.”
Ellison in Council Bluffs is a wholly owned subsidiary of Ellison Technologies, which has 22 locations around the country with corporate offices in Santa Fe Springs, Calif., and Chicago. Bluffs employees develop and program robots tailored to do a job for a customer.
Oftentimes, they're programming robots to piece together equipment made of metal, from steel and aluminum to brass and bronze. A typical job would be programming a robot to put together a cab for a piece of construction equipment.
Using automation ensures laser-sharp precision, lower costs and increased productivity, Burg said, and that all means better results for clients, better profits and a more attractive way of doing business in the U.S.
Burg, who is a University of Nebraska-Lincoln marketing graduate, started the business in the early 1980s after noticing a newspaper advertisement for a robot. Interested, he approached his dad, Marlo Burg, who was a majority owner of National Crane Corp. in Waverly, Neb., about taking a look at it. His dad asked what a robot did and why they should consider one.
“I said, 'because I think we should be in the robot business,” recalled Burg, noting he didn't know much about robots or their capabilities but sensed they were part of the technology movement taking over the machine tool industry. He saw their potential.
They partnered with Omaha's Fuchs Machinery, where John Burg worked at the time, and later branched off so Automated Concepts could become a stand-alone operation. Burg moved Automated Concepts from Omaha to two existing buildings in Council Bluffs in 1990 because of incentives Iowa offered. Now he serves on the Pottawattamie County Growth Alliance, an economic development group.
In 2004, machine and tool distribution company Ellison Technologies approached Automated Concepts about buying the company. By October, they made a deal, but it wasn't until 2008 they changed the company's name to fit with the Ellison brand.
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Ellison's $5 million, 65,000-square-foot building in Council Bluffs features a 50,000-square-foot integration floor, plus another room where equipment is prepared. There they work on medical devices the size of a thumbnail up to heavy equipment like combines with Fanuc robots that can lift equipment that weighs from a few pounds to a few tons.
Today, the workforce includes robot technicians, engineers and assemblers. One is paid intern 16-year-old Frasier Dew, who attends Lewis Central High School in Council Bluffs. Between two other summer jobs and football practice, Dew is writing mock programs for robots and soon will start working on the integration floor on actual client inquiries.
This week, he was rewriting a program that tells a robot to pick up aluminum cylinders and place them elsewhere on the table. Dew said the internship fits great with his goal of studying engineering at Iowa State University next year.
“I've taken every engineering class in school,” he said.
Burg said hiring interns is the company's effort to expose younger generations to manufacturing. People don't understand how complex and technical the industry has become, he said, and his latest challenge is finding workers with the skills or the desire to do the work.
Automation not only has helped to grow businesses but also upped the need for skilled workers.
The challenge illustrates the crossroads that manufacturing is facing: The industry needs workers with high technical skills and some education, something that traditionally wasn't required in the industry. At Ellison, its largest group of employees is its robot technicians, followed by engineers. There are fewer assemblers, mechanists and welders.
“One of the things I try to tell young people is: I don't think every young person coming out of high school should necessarily go for a four-year degree,” Burg said. “I will tell you that they probably can't stop, even if they get a job here. They need to continue their education and, ultimately, get a four-year degree in some discipline.”
Burg said while low unemployment in the Midlands makes hiring tough, he's satisfied in the direction the industry is heading.
It's far from the industry he started in when he created the company 30 years ago, but Burg likes that automation is increasing the need for education and bringing jobs home. Plus, he's glad he was right about robots playing a role in manufacturing.
“At the end of the day,” Burg said, “you thought, 'Oh, this could grow into a business.' It worked out.”