In the next three months, Madison-based Swift Manufacturing & Engineering will move into a new building, doubling its square footage to 5,000.
In the next six months to a year, the company will add five employees, more than doubling its head count from 4.5 now, including company co-owners Charles Heidenreich and Reidar Aamotsbakken.
Swift also will add three large machines for manufacturing to a machine shop that currently has four, and it will significantly expand its office space, which at its current location on Voges Road might best be described as negligible — one smallish room, with two overflowing desks crammed into it, and little else beyond the machine shop floor immediately behind it.
The new offices, at a building the company’s landlord is putting up for them about one block away, will even have a little space set aside for staff from a few other startup companies for which Swift, founded in 2011, will do some manufacturing work, the co-owners said.
All of that’s for sure, driven by Swift’s own growing portfolio of business from new and existing customers and by a $150,000 equipment loan from the Madison Development Corp. (MDC), a nonprofit, quasi-public economic development agency that focuses on helping to support hard-to-finance small businesses.
But what’s more tantalizing is what’s possible for Swift over the next few years if things go as its co-owners hope and current industry trends continue. The company, specializing in contract manufacturing and new product development, hopes to dramatically increase its workforce. It will hire 150 to 180 people over the next three years, Heidenreich said, if ongoing contract negotiations are successful to move the machining work of a Dallas-based company from where it’s done now in China. The new work would be done at a future Swift plant based, perhaps, in Janesville or Beloit.
“A business always evolves over time, and over the past 2½ years, there’s been growing interest on our part to try to provide more jobs and try to bring work back from China,” Heidenreich said.
Heidenreich, 41, and Aamotsbakken, 45, said they started talking seriously with the Dallas company, which they wouldn’t name, in mid-October. The work, if it happens, would involve making parts for toys, and lots of them — the contract would be for $3 million to $6 million in product annually, Heidenreich said.
“That’s closing a factory down in China and bringing all that work here,” Heidenreich said.
And it could be just the start for Swift and other area manufacturers in need of new business amid a 28 percent drop in manufacturing jobs in south-central Wisconsin between 2000 and 2012, according to a new report from the Wisconsin Taxpayers Alliance.
The state’s broad manufacturing sector, while shrinking, is, crucially, still Wisconsin’s single biggest employer. This is despite adding statistically zero jobs in the 12 months that ended in June, according to the most recent report from the state Department of Workforce Development, based on the comprehensive Quarterly Census of Employment and Wages.
That makes bringing back U.S. manufacturing work from China and other low-wage countries, where it was moved starting in the late 1970s, more important, advocates say, and more possible now that overseas wages and other involved costs for companies have begun to climb, according to economists .
Evidence of any large-scale return of manufacturing work as of yet, though, has been hard to find. Heidenreich expected that to change over the next five to 10 years, when he said the overseas cost for manufacturing would be “near equal” with the U.S.
“We’re going to get more and more interest in this (from clients),” he said. “There’s going to be a craze to start shifting the work to the U.S. Our thoughts are that we need to start planning for this now — develop the business plan, and get the numbers together.”
Dave Schultens, MDC’s vice president of lending, said Swift’s focus on returning work from China gave the company points in its loan application for being “forward-looking.” Swift was also credited for the strength of its current customer base and the demonstrated expertise of its owners, who between them have 35 years of experience from prior jobs in engineering, product development, machining and medical devices.
“The overriding feeling on Swift was that they’ve got a lot of experience between the two of them, and they have a great mix of talent,” Schultens said. “We like some of the clients they’re working with on a monthly basis now, and we really like the direction they’re going, the projects they’re looking at and bidding on.”
Swift’s current customers include well-known local medical device and biotech companies, such as Exact Sciences and FluGen, for which they made laboratory equipment and a device designed for the delivery of flu vaccines, respectively. The company also has made parts used in high-end auto racing, and consumer products including a plastic clamshell device that fits around electrical plugs to help parents restrict their children’s use of electronic devices at home, for a Madison company known as Electronic Recess.
Additional steady clients include Advanced Assembly, Sani-Matic Corp. and The Tool House, for which Swift makes parts for circuit boards, for cleaning equipment for the food industry and for hoists, respectively.
A primary aim is to provide a full spectrum of services, so that if required they can take a proposed part from a “napkin-sketch kind of thing,” Aamotsbakken said, to a 3-D prototype to trial runs to full production.
Before the MDC loan, Swift’s owners financed their business through personal savings and two traditional loans from Associated Bank. Those loans were appreciated, they said, but the MDC loan — which is bigger than the two bank loans combined — offered more attractive terms for a young company.
“The banks will give you terms of three years on a loan for a large machine,” Aamotsbakken said. “MDC (gives) 10 years. These machines have a long life, and trying to pay one off in three years is very tough.”
Swift’s MDC loan, which was for the maximum amount MDC provides for traditional small businesses, also requires Swift to hire five people in the first five years. The owners said the company plans to pay starting wages of $14.50 an hour for operators and assemblers, per the MDC agreement. Those with more experience will earn higher wages, such as their two current machinists, who earn closer to $20.
“Our focus is also on job generation, and quality jobs is the key,” Schultens noted. “Obviously with this expansion, they’re going to create several well-paying jobs, as well as some training jobs.”
Swift’s two machinists also are completing a state-approved apprenticeship plan at the company that will expand their skills as they work more hours and make them certified journeymen within four years.
“They not only run the machines, they program them,” Aamotsbakken said. “So they do some fairly advanced work. Using a software program we have, they start with a three-dimensional model, and they translate that into the required (cutting) paths.”
Aamotsbakken and Heidenreich had little patience for the oft-heard concern expressed by many Wisconsin manufacturers in recent years that there aren’t enough qualified laborers to do the needed work.
“The companies complaining that they’re having a hard time finding skilled labor are the same ones that have dropped their apprenticeship programs,” Heidenreich charged. “So where is the problem?”
“You’re supposed to find skilled labor from within,” Aamotsbakken agreed.
Looking forward, Swift’s owners said they couldn’t predict how long negotiations would take on the possible contract to return work from China. They aren’t putting a hard deadline on getting a yes or no.
“We know that our raw pricing is competitive,” Heidenreich said. “What we’re negotiating right now is how many units the customer is going to commit to, and that’s what we’re going back and forth on.”