SpecSys may carry a small name but it's building for the big boys
GRANITE FALLS -- A local company with a not-so-well-known name has become a rising employer in the region by custom manufacturing and designing products for companies everyone knows.
AGCO, Caterpillar, Loram, Toro and Volvo are just a sampling of the companies that turn to Specialty Systems, or SpecSys Inc. It manufactures everything from a rail car that is 40 yards long and uses a 700-horsepower vacuum to suck up rock ballast to sophisticated oxidation ovens that produce the super strong, lightweight carbon fibers being used in ultra-modern jet planes and cars.
Company founder Kevin Wald started it all with a Gateway 486 computer in a spare bedroom of his house in Montevideo 15 years ago. Now it's all part of Ritalka, a holding company that includes SpecSys, Ingram-Rollers and RVI, a Redwood Falls-based firm that repairs electronic equipment.
Together they employ nearly 200 people and have a payroll of $7 million a year.
Add Ritalka's payroll, purchases and all the rest together, and it has a direct economic impact on the region of $75 million a year, Wald told employees and guests at an anniversary celebration on May 24.
It was held at the SpecSys manufacturing facility in Granite Falls, a 120,000-square-foot complex that the company moved into in 2002. The company has its engineering and headquarters in Montevideo and, since 2008, an 83,000-square-foot manufacturing facility in Benson as well.
As Wald readily admitted, building and designing products for clients all over the globe as a small, startup company had its challenges. The company took on the challenge of buildings its first Loram Rail Vac knowing that its manufacturing facility was not large enough for a machine bigger than the largest dinosaur to ever walk the earth. "We had to cut the building open to take it out,'' said Wald.
Company president Dave Gelhar coined the phrase "in the spirit of SpecSys'' to explain the company's willingness to take on any type of challenge. "What that really means is we're going to figure it out,'' said Wald.
Yet what really took some figuring out was how to build a business in the face of a series of daunting challenges.
One of the biggest to hit the company was the flood of 2001.
Wald arrived at the company's manufacturing facility in Montevideo's Smith Addition to see National Guardsmen carrying automatic weapons and geese at the front door.
He soon saw red ink. "When cash flow goes to nothing, it takes a long time before it comes back,'' said Wald. The flood had forced a costly, weeks-long shutdown of operations.
Wald had left a good-paying position with Tyler in Benson to start the company. In his first year as company owner, he had no income.
Glen Herfurth, a retired Montevideo banker and former economic development director, warned him that ups and downs are the bane of custom manufacturers. With that advice, Wald purchased Ingram-Rollers with the intent of having a product to build during slump times.
No sooner had he purchased the maker of machines for paving roads than the road construction industry went into a tailspin. Herfurth bought two of the asphalt paving machines to help Wald weather the resulting cash flow crisis.
Herfurth also put together a group of private investors, including Wald's former boss at Tyler, Don McGrath. They provided bridge financing to see SpecSys through a later cash flow crisis.
The city of Granite Falls played a similar role when Wald moved some operations there.
The 2001 flood experience had convinced Wald of the need to move from the floodplain in Montevideo.
Granite Falls had already suffered its own "gut punch'' at the end of 2000 with the closing of a hydraulics manufacturing facility, and the 175 jobs it represented, according to Granite Falls Mayor Dave Smiglewski. No one was sure what to do with the cavernous, empty hulk of a manufacturing facility that had been occupied since 1962. The city rejected the advice of a state economic development expert to raze it to make room for housing.
When Wald came looking, the city was ready. Along with the building, Granite Falls had federal and state funds intended for its economic recovery from a tornado and floods. The funds provided SpecSys with a critical infusion when lenders made good on their threat to call the notes if the company moved from Montevideo to Granite Falls. Lenders didn't believe the company could weather yet another interruption in production.
The company has, and more. Wald said the company could not escape the national recession -- it reduced its employment from 165 to 120 during the worst of it -- but is now on the rebound and "bullish'' about what's ahead.
Custom manufacturers do best when the economy picks up from the low point. Large companies see more demand but aren't yet willing to add staff, so turn to custom manufacturers, he explained.
The company recently signed a purchase agreement for a 65,000-square-foot manufacturing facility in New Ulm. It will soon open a design and engineering office in Cloquet.
Wald credits the company's success entirely to having good people on his side. "You don't do this on your own. You do this with a group of dedicated people who are willing to fight through the tough times,'' he told employees gathered for the celebration.