CRV Electronics
A company dedicated to meeting the
needs of their customers

By Fred Noer

Opportunity. Perhaps no other word best describes CRV Electronics Corp., the
contract wiring harness manufacturing and cable assembly company in Spring
Grove, a small town in far northeastern Illinois.

Opportunity led Calvin Vyduna to found the company in 1967. His son Jim
was presented with an opportunity to become an owner and president of the
firm in early 1992 — sadly, after Calvin's sudden death the previous
December due to a heart attack at age 63. Matt Krueger, Jim's brother-in-law,
also acted on an opportunity to join the corporation in February 1993 as
vice president and part owner.

Today, Vyduna, 49, and Krueger, 42, continue to look at the wiring harness
industry with opportunity in mind. They are seeking every opportunity to
serve existing and new customers and any opportunity to overcome the difficult
challenges posed by the dramatic economic downturn this year.

"We look at all the opportunities and try to determine how well different
companies and their products are matched to our manufacturing processes,"
Vyduna said. "We are not focused on any one product or area, but we don't
go into automotive work unless it is third tier."

Without being specific for competitive reasons, he pointed out that most
CRV customers are second-tier producers of outdoor power equipment,
fluorescent lighting, transformers and motors. CRV also serves manufacturers
of other industrial and electronic products.

CRV's customer base has grown considerably from the firm's beginning.
The company started when Calvin Vyduna, who was involved in wiring
harness and transformer manufacturing since the mid-1950s, decided to leave
Prem Corp. in Johnsburg, Ill., a few miles from Spring Grove. A leading
transformer company now, in the 1960s Prem manufactured wiring
harnesses in addition to transformers.

Some Prem customers followed Vyduna to his firm, and he obtained
other business through his industry contacts. As it does today, CRV made
harnesses for customers in a variety of industries as well as processed
leads for transformers. Early customers included Kleinschmidt, which produced
teletype and military machines, and Knight Electronics, which was part of Allied
Electronics. Parts not only were made for Knight kits, but pre-assembly of kits
was done, too.

Until the late 1980s a large part of CRV's income was gained from the
production of printed circuit boards by using wave soldering. However, when
board production switched to the surface mount method, the elder Vyduna
declined to invest in such technology.

"Dad basically remained the same size all those years," Matt Krueger said.
"The company grew and contracted over the years, but it was strictly a
one-man operation." Jim Vyduna recalled CRV averaging 1-2 supervisors
and 12-15 employees.

A leased building in McHenry, Ill., 10 miles southwest of Spring Grove,
served as the first home of CRV. The same facility was used 27 years before
the firm moved into its new Spring Grove quarters in December 1994.

Staying so long at the same location was indicative of Calvin Vyduna making
few major changes to his business in 24 years. That approach enabled him to
focus on his "passion for quality and doing things right," Jim Vyduna said
about the qualities he learned from his father.

That philosophy served Jim Vyduna well in his career prior to CRV. He
graduated with a degree in research-and-development design engineering
and was hired after college by Hewlett Packard in Colorado. He stayed there
19 years, advancing to the position of R&D project manager, before moving
back to Illinois upon his father's death.

Krueger has a degree in industrial engineering and certification in quality
assurance. He worked in middle management for an Ingersoll Rand division
before it was sold to Stanley, resulting in him moving from Schiller Park, Ill.,
to Wichita Falls, Texas. In 1988 he relocated to Illinois to work for Outboard
Marine Corp. in Waukegan and began courses toward a master's in business administration. In February 1993 he earned his MBA and began working at CRV.

Vyduna and Krueger work well together. "We regard our training and
experience as giving a customer a value-added service," Vyduna said. "We
can walk into customers' businesses and relate to what their end products are.
Then, we can mold our wiring harness manufacturing to their applications."

The two men's formula for serving customers resulted in tremendous growth
for CRV. In 1992-2000 the company grew 900 percent. The business expansion necessitated a move in December 1994 into a new building, CRV's current home.
"In the early 1990s we were experiencing strong growth, and with two of
our biggest customers we found we had to expand our facilities or lose
the customers," Vyduna said.

Designed and built by Vyduna and Krueger, the structure measures 16,000
square feet. "The old building was dark, dingy, hot and dirty, so we wanted
our new one clean, open, well-lit and air-conditioned," Vyduna said. "With the environment that we created, we wanted to say that high-quality manufacturing
was done here. The building shows well to potential customers.

"We worked hard to maintain a nice environment in a manufacturing space,"
he said. "People want to be here, and that reduces errors in assembly. We
have yet to see another harness manufacturer whose building is as clean and
comfortable as ours."

Besides moving into a new building, the owners invested in equipment.
"Over the past 10 years we have put money into the infrastructure," Krueger
said. "We have spent money on computers and software, and we have
reached new levels of automation and manufacturing processes by
upgrading equipment."

CRV's most dramatic growth occurred in 1998 and 1999.  "Those were
huge growth years for us,"  Vyduna said. "It actually caused us a lot of
stress keeping up with customers' needs. We had to figure out how to meet
all the demands of the larger companies we were dealing with without
hurting our smaller customers.

"Whether companies are big or small, they will go elsewhere if you don't
meet their needs," he said. "It was an interesting challenge. We reached the
conclusion that all customers are important, and we had to figure out how
to make them all happy."

Krueger related that his and Vyduna's ability to deal with the growth
depended on their building, equipment, financing strategy and workforce. 
"Due to their time on the job, many of our employees have become more
efficient and knowledgeable," he said. "Their learning curve and training
have been reduced from the 1990s." Productivity at CRV has gained 8-15
percent annually, largely due to the employees' experience.

The number of workers was 10 in the early 1990s. At the peak of CRV's
business boom, that number reached 70, but it has decreased to less than
40 now. Office, management and executive staff comprises 25 percent
of the CRV employees, while manufacturing employees account for 75 percent.
Most of the staff members have been cross-trained in a variety of jobs. "For
example, in the production area people can move from assembly to inspection
to shipping," Krueger said. "A lot of the office staff is flexible, too." Temps are
used as needed.

All people on the CRV staff are rewarded for their efforts, part of CRV's
emphasis on human resources that includes having a full-time human
resources manager. The company has the usual benefits in its compensation
package. In addition, discretionary year-end bonuses are paid, and a gain-sharing
program is in place that pays workers for increased productivity. Also, CRV
matches 100 percent of an employee's contribution to his or her retirement plan
up to eight percent of his or her income.

"People are very positive about our company," Vyduna said. "We have a low
turnover rate. After people have been here a year or two and see how we treat
people and that the facility is clean and comfortable, then they want to stay here."

They also are interested in staying at CRV because of career growth, according
to Krueger. "Our company gives people the opportunity to grow and reach their
potential by learning new skills,"  he said. "It is conducive to high output and
good work."

Besides Vyduna and Krueger, four other people provide company leadership.
Jeanette Vyduna, Jim's wife, is the purchasing manager, while Ellen
Christensen handles such administrative matters as bookkeeping, quoting and
invoicing. Keven Haggerty is the human resources manager, and George
Jacobs takes care of customer service.

With a solid staff in place and production having declined due to the economy,
the current primary focus at CRV is on sales and marketing. In addition to its
own salespeople, CRV uses manufacturer reps paid on commission. "We
were in the pleasant position in the 1990s where most of our business was
walking in the front door," Vyduna said. "Our key accounts were in high growth,
and we didn't have to do much selling because of word-of-mouth advertising."
That changed profoundly when the economy lost its steam. The two men did not
reveal the economic impact on their company, but Vyduna repeated reports from suppliers and other manufacturers about business declining 20-40 percent.
Layoffs are prevalent, and inevitably companies will close.

"Any company in business 20 years or longer has seen changes for better
and worse," Vyduna said. "It's a fact that the business climate changes,
and you just have to weather it out. We're in a good position to do just that."
To maintain that position, CRV "is treating every sales inquiry seriously,"
Krueger said. "You never know from day one what it will materialize into.
It might be low volume at first, but then it will become big. We are sizing
up all opportunities."

Analysis of a potential customer's needs is extensive at CRV. For example,
Vyduna explained that a company doing in-house wiring harnesses might
not grasp fully all its costs from start to finish.

"A customer involved in other things may have underestimated what needs
to be done," he said. "The company may have buried their actual wiring
harness costs. We have to find out if a customer really knows their internal
costs and whether or not the company can meet their capacity with their
own internal capabilities when they're in extreme growth.

"Their resources may be stretched, and delivery times are not being met,
so the company is not good at doing harnesses anymore," Vyduna said.
"They might need more equipment, or they might need their employees to
do other work. Then, it's more efficient to outsource to us since harnesses
are a core competency for us."

Outsourcing, which became common in the '90s, is fickle, Vyduna has
recognized. He stated that if a customer's business goes up or down 10 percent,
CRV's business is affected 20 percent. "There are wilder swings," he said.
Another risk of doing outsourcing for customers with in-house harness
capability is that they can resume their own harness production when
advantageous for them to do so.

Krueger said CRV works best as a supplier to companies that assemble
final products. "Sometimes it's a process of evolution on their part to realize
that they need to outsource," he said. "It may take one or two years until they
fully understand why they should outsource."

CRV is willing to work closely with customers over such an extended
period. Once CRV secures a customer's business, it usually continues for
years. For instance, current customers include those that first placed orders
with CRV in the 1960s.

"Over the years our relationships with customers become stronger and stronger,"
Krueger said. "The same thing applies to our suppliers, too. The key aspect of our
relationships is that we spend a lot of time in face-to-face meetings by visiting
customers' and suppliers' facilities and by having them come here."

Through CRV, Krueger and Vyduna helped found the Wiring Harness
Manufacturers  Association (WHMA). Vyduna serves as a member of the
association board of directors, a position he has held four years. Krueger is
cochairman of WHMA's Statistical Benchmarking and Human Resources Committee.
Outside the association, every effort is made to attend customers' and suppliers'
special functions such as golf outings, baseball games and picnics. "We
participate in events outside the business environment because any
opportunity is good to try to get to know the customer's needs," Krueger said.
Those needs may include greater efficiencies in inventory control and production
material supply. CRV can accommodate all forms of purchase orders such as
Kan Ban cards, build-to-order and just-in-time. All are traditional methods.

CRV also embraces alternative ways. "We can serve as an extension of the
customer's purchasing department by doing planning and looking at production
requirement reports," Krueger said. "Then we initiate the purchase order, and
the quantity and delivery are determined by us.

"Such a method requires a high level of trust to allow us to go into their
facility and stock room," he said. "It takes a while to develop, but it's
good for the company because we're like free employees. There aren't any
costs to the company for us to do it this way."

Such service is necessary for CRV to remain competitive, which is more
and more difficult. "Due to the economy, buyers have a lot of time on their
hands, and they are being told that lower-cost sources are needed," Vyduna said.
"There's a lot of activity to find the lower cost.

"With that in mind, a big concern is the industry's profit margins," he said.
"Some companies are running at zero profit to offset their overhead. Quotes
are being waved in front of current vendors from other sources to get better
prices. There are a lot of competitive pressures, and sometimes it's difficult
to determine what's real."

Unmistakable is the ferocity of competition from China. "It is major
competition for us, a lot more than Mexico," Vyduna said. "The price pressure
is so great that companies can get a completed assembly from China for the
cost of materials in the United States."

He stated that many companies can work directly with Chinese manufacturers,
but "other companies struggle due to quality issues, quick payments required
and long lead times. Matt and I have developed contacts and sources in China,
so CRV can act as a buffer or liaison between companies and China to deliver
products to customers."

Vyduna and Krueger have offered the service approximately four years.
"It's a small part of our business, but we provide it as an added value to a
customer," Vyduna said. "The quality function is the most important because
products have to meet a customer's specifications. To do that, we can run
interface with China with samples and drawings."

Besides watching the competition closely, Krueger said strong attention
must be paid to technology. He is keenly interested in the possibilities of fiber
optics. "Everyone in the industry is involved with processing copper wire, but
what about the evolution of fiber optic cable and new technologies doing the
same as copper?" he said. "We have to be in a position to process new products,
and fiber optic cable is one of the top items."

Although on-time delivery and high quality are taken for granted in manufacturing ,
Krueger pointed out that CRV is planning to meet ISO and QS standards.
However, he said they are not a high priority because they are not required by
CRV's customers. "Our quality systems and procedures would meet QS and ISO,"
he said. "We only need the documentation, but since we're a small company
with small customers, we have more personal relationships so the paperwork
isn't necessary."

A more tangible challenge facing CRV and the wiring harness industry is
cellular manufacturing, according to Vyduna. He noted the process has to
address work-in-process inventory for the cell model to work.

"Early manufacturing phases start out as batch processes because of the economy
of quantity,"  he said. "Then you have a lot of money in inventory. The latter
stages of assembly are best accomplished in cell manufacturing mode. The
challenge is in balancing the economies of front-end batch processes with the
just-in-time needs of the customer."

Obviously, even overriding manufacturing processes and other issues pertaining
to the industry is the state of the general economy. Its improvement, which Vyduna
predicted might not occur until the first or second quarter of 2002, holds ultimate
significance for CRV and all other companies in the wiring harness industry.

"We keep trying to ascertain answers to several questions," Krueger said. "Are
we at the bottom? When will things look better? If they don't look better, what
do we do because we can't change the economy? We've always had a strong sales
approach, and we just have to continue that effort of finding which companies
need our products."

Such a challenge in a difficult economy is one that both Krueger and Vyduna
would consider as another opportunity to apply their business skills. "The best
thing I like about what I do is the entire business ownership process," Krueger said.
"Every day is different, and I like dealing with many issues at once and seeing
how the business evolves over time."

Variety also holds a strong appeal for Vyduna. "I wear lots of hats, whether
it's quoting a new project, handling a manufacturing issue or planning a building
expansion," he said. "Every morning it's hard to tell where my day is going to
go. But that's what keeps me interested."