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Milton business plans expansion

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JAMES P. LEUTE
August 18, 2008
— When the new ownership team of R&M Manufacturing and Consulting took over July 1, it had a plan to double the company’s sales in five years.

Within days, they checked that goal off their list.


The company had won a big contract that for years was held by ThyssenKrupp in Janesville, the company formerly known as Gilman. ThyssenKrupp will close its doors in September, and R&M picked up the contract.


To accommodate the new work, R&M will break ground soon on a state-of-the-art, 20,000-square-foot expansion to its facility on Sunnyside Drive in Milton’s Industrial Park. The expansion will double the size of R&M’s facility.


R&M also will add several Gilman employees who will be out of work when ThyssenKrupp moves its Janesville operation to Michigan.


It’s another example of how the rise of R&M is linked to the local decline of ThyssenKrupp.


R&M was founded four years ago, when ThyssenKrupp decided to get out of the machining business.


Mark Merk, who worked at Gilman for 25 years before being laid off in 2004, is one of R&M’s founders. A large percentage of the young company’s employees are displaced Gilman workers.


Over the years, R&M, which now has more than 30 employees, posted solid growth. But Merk, the majority owner, said the company hit a wall.


“We reached a point of maturity where we needed a shot in the arm to take us to the next level,” Merk said.


Enter Gary Stetson and Dave Underwood.


Stetson founded New England Extrusion in 1988 in Massachusetts and opened a second plant in Milton’s industrial park in 1998. Stetson sold the company, which makes packaging films, to an Appleton company in 2005.


Underwood was Stetson’s and NEX’s top employee.


“After selling the company, Gary was bored out of his mind and asked me to start looking for a small- to mid-sized manufacturing company to get involved with,” Underwood said.


Underwood found R&M, and Merk on July 1 sold the company to Stetson and Underwood and then bought a portion of it back.


Stetson said he saw in R&M a company that was seriously under-capitalized but one that was still showing a profit.


“There are a lot of possibilities for the company, and it has an extremely talented work force,” he said.


Selling the company, Merk said, makes it more secure for employees and sets up growth opportunities for new employees.


“It’s what was best for the R&M people,” he said.


Last month’s sale came about a month after ThyssenKrupp announced its decision to close its Janesville plant.


“Four years ago, ThyssenKrupp’s philosophy was to get rid of its machine shop, and now all these people at Gilman are losing their jobs based on another of ThyssenKrupp’s whims,” said Merk.


He has many friends at Gilman but not much fondness for its top management.


ThyssenKrupp’s “whim” laid the groundwork for R&M to picked up a big contract with P&H Mining Equipment, doubling R&M’s annual sales from $5 million to $10 million. The P&H contract, which Merk had brought to Gilman several years earlier, involves electrical control panels, machine cabs and other components.


Until it can move the entire P&H operation into its new facility around the first of the year, R&M is leasing about 12,000 square feet in Rockton, Ill.


Underwood said P&H’s decision to shift the work to R&M was a roll of the dice, but one that carries a high probability of success. R&M has a good relationship with P&H, primarily based on past work for P&H and the fact that former Gilman workers will do the work on R&M’s payroll.


“I think it was a pretty easy decision for them,” he said. “They’re so easy to work with. I don’t know how many times they’ve asked what they can do to help us succeed. How refreshing is it to have your customer ask that?”


While the P&H contract has spawned R&M’s expansion and sets the table for continued growth, the company has diversified in the last four years.


When Merk and Richard Spanton Sr. started the company, 90 percent of its business came from parts for automotive assembly systems. These days, that number is closer to 10 percent, Merk said.


“We saw what was happening in auto industry and reacted to it,” he said. “We’re much more diversified now in the heavy industries, medical and food processing sectors.”


In addition to its current expansion, R&M has purchased land for future growth.


Underwood said the company has other potential customers and projects that can’t be made public yet.


“Our address is Sunnyside Drive,” he said. “Right now, for this community and this county, we are a ray of sunshine.”



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