Celebration Corner: Scotchman Industries' 50th anniversary
The company, based in the small town of Philip, S.D., celebrated the birthday of its flagship product, the ironworker, with an open house in September.
The Business: Arthur (“Art”) Kroetch, a native South Dakotan with an eighth-grade education, started working for farmers and ranchers and then opened a junkyard and repair shop. To keep busy between repair jobs, he began making a cattle oiler, a device that applies insecticide on the animals’ skin. He later shifted to making and selling gates, chutes and corral panels for use on farms.
To aid in the manufacturing of these products, Art acquired a revolutionary metal-fabricating device called a hydraulic ironworker, which uses hydraulic pressure to create a force that can punch, bend and shear metal. Arthur purchased the patent for the ironworker and in 1967 began making the device in his business, which by then had been dubbed Little Scotchman Industries.
Art’s son Jerry Kroetch notes that his father was German, not Scottish. The company took its name from a cartoon character created to advertise its products.
The ag-related portion of the business was sold off, and hydraulic ironmakers became the focus.
In 1980, after the company acquired Excel Manufacturing Ltd. of Winnipeg, Manitoba, “We outgrew the word ‘little,’ so we threw the ‘little’ away, and just left it Scotchman Industries,” says Jerry, Scotchman’s president.
Art, who wanted to retire and enter politics, hired a non-family member to run the business. The company grew, expanding into the international market. When the recession hit in the early 1980s, Art realized the company had grown too fast and was hampered by debt. He reestablished himself at the helm of the business and negotiated a more favorable interest rate.
Art also recognized that the company needed to diversify. In 1983, Scotchman began distributing circular cold saws, used for cutting metals and aluminum, for BEWO, a company based in Holland. In 1988, Scotchman entered into a joint venture with BEWO to make circular cold saws in the United States; in 1993, Scotchman purchased BEWO’s interest in the venture.
In the late 1980s, with the company back on strong footing, Art hired another non-family member, Jerry Carley, to run the business and retired again. “And we’ve never looked back since,” Jerry says.
Today, Scotchman boasts, it’s the oldest and largest American manufacturer of hydraulic ironworkers and circular cold saws. The product line now includes measuring systems, tube and pipe notchers and utility band saws. Scotchman products, with their distinctive blue color, stand out from other factory equipment.
Scotchman employs 75 people in its Philip, S.D., plant, plus sales representatives. “To expand is difficult, because the unemployment in Philip is virtually zero,” Jerry says. The 2010 census recorded the town’s population as 779.
Jerry says the company has been able to find factory workers with relative ease but sometimes struggles to fill professional positions. The western South Dakota region is “very, very rural,” Jerry notes. “If you’re not from a small town, chances are you really don’t want to live in a small town. It’s just the way life is.”
Scotchman has been based in the same location, a former eight-lane bowling alley, since 1971. Over the years, the company built additions to the plant; today, the facility encompasses 120,000 square feet. “You can get lost pretty easy, and not find your way back for a little while, because it’s kind of a maze,” Jerry says.
The Family: Jerry, 59, marked his 40th anniversary with Scotchman in November 2017. He joined the company as a welder the year after his high school graduation. In 1980 he became a night foreman and then rotated through various other parts of the operation: the tool crib (tool-storage area), the surface grinder, the parts room and the customer-service department. From 1988 to 2001 he served as sales manager. When non-family president Jerry Carley retired in 2001, Jerry was named as his successor.
“That has helped in running the company, because in theory I started out from the ground up, and did almost every function along the way,” Jerry says.
Jerry’s wife, Karen, 58 — his high school sweetheart — is Scotchman Industries’ CFO. Their son, Joshua, 37, is a sales rep for Scotchman and is based in Savage, Minn. Daughter Brooke Formanek, 35, heads up marketing for the company. “Whether or not [Joshua] will come back to run the company, or whether or not my daughter will want to run the company, that’s to be seen as of yet,” Jerry says.
Gerry Rislov, 62, husband of Jerry’s sister Barbara, is vice president of operations at Scotchman; he has been with the company for 33 years.
Founder Art Kroetch passed away at age 80 in 2007. As a tribute to him, employees donated vacation pay to purchase the last ironworker machine built on the day he died. Today the Scotchman Model 5014 CM ironworker, signed by those who attended Art’s visitation, sits in the lobby of the Philip, S.D., plant.
The Celebration: The centerpiece of Scotchman’s celebration was an open house featuring guided factory tours, machine demonstrations and refreshments. The 50th-anniversary event took place on Sept. 27, from 9 a.m. to 3 p.m.
The company had marked previous milestone occasions in this way. Jerry says open houses have been helpful in calling attention to Scotchman’s standing as an employer in the community. “We’re on Highway 14, right in the middle of Rapid City, S.D., and Pierre, which is the capital of South Dakota,” Jerry says. “And golly knows how many people drive up and down that Highway 14, and they have no clue what’s in these buildings that they drive by.”
Scotchman also held a giveaway contest to honor the 50th anniversary of its flagship product. Customers who bought an ironworker from the company were invited to nominate a U.S. school to receive a new 50-ton Scotchman ironworker. The company that submitted the winning entry also received a $1,000 credit for its own use. That company, Blauch Brothers Inc. of Harrisonburg, Va., obtained a new ironworker for John Handley High School in Winchester, Va.
Early in 2017, Brooke engaged a video production company to create three YouTube videos to commemorate the anniversary. One focused on the founder and his vision for the company, one centered on the factory and the company’s manufacturing, and the third highlighted the fact that Scotchman products are American-made. The company promoted the YouTube videos through social media and on its website. The videos provided “a good kickoff that we could use to help promote our 50 years, and then the upcoming open house,” Brooke says.
The Planning: Brooke, who served as the point person for the celebration, says the family began discussing it about a year in advance, with planning beginning in earnest about six months before the date. “I wanted to make it more like a celebration instead of just factory tours,” she says.
Brooke and her parents had differing visions for the open house. “We went into this as, ‘We’re going to have an open house for our local people,’ and that was kind of our mindset, my wife and myself,” Jerry recalls. Brooke, on the other hand, “kept telling me, ‘Dad, it’s not an open house; this is an event.’ So we kind of had to pull her back.”
The company invited community members through ads in the local paper and postings on social media. But, Jerry notes, “Brooke had just a little different mindset on who she thought ought to show up. She wanted so much more.” Brooke extended invitations to all her advertising contacts. She also invited dignitaries — Gov. Dennis Daugaard, U.S. Sens. John Thune and Mike Rounds, and U.S. Rep. Kristi Noem. Although they did not attend personally, Thune and Noem sent representatives from their local offices.
Other invited guests on the no-show list were President Donald Trump and Jay Leno, the former Tonight Show host. Leno has some Scotchman machines in his Big Dog Garage in Burbank, Calif., which houses his collection of classic cars and motorcycles.
Jerry laughs when he recalls Brooke’s plans. “She wanted the world to know that Scotchman Industries was celebrating 50 years,” he says.
“They’re not going to come if you don’t ask,” Brooke counters.
Brooke won several concessions from her parents. “I did talk them into getting a cake and balloons,” she says. “They rolled their eyes, but it made such a big difference.”
She and her team put a lot of time into creating decorations to honor the anniversary. “We had a poster made that was a throwback to what was going on in 1967, [plus] the ironworker’s 50th birthday.”
“We have boxes and boxes and boxes of old photos from the last 50 years,” Jerry explains. “And she hung up all kinds of [images from the] archives, and she put a lot of time and effort into it, and did a fantastic job.”
Brooke spearheaded a cleanup effort before the open house. “It was the cleanest, I think, our building has been in 50 years. Every employee cleaned up their own personal space, and they just did a great job,” she says. “Even visitors commented for weeks afterward how clean this place is.”
She also tried to institute some updates to the office décor. “I painted the door in the middle of the night, without approval,” she recalls. “I mean, our office building hasn’t changed that much; we still have wood paneling. I told my dad, ‘You’ve got to look like you’ve evolved over 50 years.’”
The Response: More than 300 people attended the open house. “Our town is really small, so that’s quite a [few] people that came through,” Brooke says. News media from Rapid City, S.D., were in attendance, as well.
Brooke notes that the 50th-anniversary celebration drew some attendees from outside Philip, in contrast to Scotchman’s previous open houses, which were attended primarily by the company’s neighbors.
Elderly visitors were driven through the expansive plant in trailers hooked up to golf carts. Also among the attendees were several high school shop classes. Jerry says the company often welcomes high school students to its facility — not only because Scotchman sells its products to schools, but also to encourage the students to consider careers as machinists or welders. “College is not for everybody,” Jerry notes. “So it’s nice to see those young kids come through and get excited” about job opportunities in the area.
The Advice: When planning a milestone anniversary celebration, “Give yourself enough time,” Brooke urges. “And think outside the box. Not every idea is a good idea, but you’ve got to start somewhere. Think big, and you can always scale it back, instead of looking back and wishing you had done more.”
The Secret Sauce: “I’m sure a lot of companies hit that 50-year milestone, but a lot of companies are sold long before they ever hit 50,” Jerry notes.
To what does Jerry attribute Scotchman Industries’ success? “I’m not really patting myself on the back, but I live and breathe that Scotchman blue, just like my dad did,” he says. “We’re very conservative people. We work very, very hard, and we believe in the product that we build. We have a wonderful marketing department and the best dealer network that any company could ask for. What has really made the company stay strong for the last 50 years is our dealers wanting to sell and believing in the Scotchman product.”
Jerry adds, “We’re extremely proud of the product that we build and the employees that we have, and we’re doing it all from a very remote location. The pros [of being based in Philip] certainly outweigh the cons, because the people we have are very dedicated to their jobs and to the company they work for. The person that’s been here the longest is still here, and this year he celebrated 45 years of being with the company. We have four or five that have been here over 40 years. So we’re blessed with the longevity of our employees. We couldn’t have done it without them.”
Copyright 2018 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact email@example.com.