SMALL SUPPLIERS TO DECLINing industries have had a brutal time in the 1980s. But beyond the fields littered with casualties are some companies that used the difficult period to rethink their strategy, eventually adapting their strengths to new growth markets.
Independence Foundry and Manufacturing Co., of Independence, Mo., weaned itself from troubled customers in the auto, steel, and agriculturaltool businesses. For decades, the company was a supplier of cast-iron parts. "We felt like slaves to the bigger industries," says Independence president John Mitchell. "We have had half a dozen customers that just sort of ran our lives. We decided we'd had enough of that."
Mitchell focused on the consumer market instead. After scouting retail stores, he decided to use the mill's strengths -- its casting and porcelain-coating capabilities -- to make gourmet cooking pots. Now Independence markets tham through L. L. Bean and Brookstone catalogs, and profit margins have quintupled, reaching 15% to 20% of sales. "We had always wanted to be more market-oriented," says Mitchell. "The cookware business has forced us to be."
Another company, Hall Industries Inc., of Pittsburgh, has undergone a similar reorientation. Since 1966, Hall has derived more than 50% of its revenues by making ladles, furnace parts, and other steel-mill equipment for such giants as United States Steel Corp. and Jones & Laughlin Steel Corp. When the industry collapsed in the early 1980s, Hall laid off half of its 120 employees.
Yet Hall has doubled its prerecession sales to almost $5 million. Seventy percent comes from new business that leverages the company's old production strengths with an emphasis on engineering. Hall now does $2 million of work in transportation, including development of the carriage for Pittsburgh's light rail system. "Because we're small and flexible, we found that our manufacturing could help our engineering, and our engineering could help sell our manufacturing," says Jonathan Hall, the company's vice-president.