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ETS — Harnessing
Technology
By Fred Noer
During the 1990s Electro-Transfer Systems (ETS) doubled its business,
and this decade the firm has set the same goal. To achieve it, once again
the company is relying heavily on technology.
That one facet of manufacturing has earned ETS, based in South Bend
in northern Indiana, a prominent place in the wiring harness industry.
Even the company's motto, "Harnessing Technology," emphasizes a
high-tech approach to meeting customers' needs and to competing
against other firms in the United States and abroad.
The motto was coined by Norman Sagon, 50, vice president of sales
and marketing, to embody the strong technology-based philosophy of
founder and majority owner Thomas Richardson, who continues as
company president. "Because of the marketplace and the industry, we
are very technology-oriented here," Sagon said. "We feel as though
we have stayed ahead of the fierce global competition in the industry.
"We've done that by bringing something new to the table," he said.
"Rather than competing against other companies for a piece of the pie,
we want to be the ingredients and part of the baking process. We are
no longer a 'me too' company, and we are going to distinguish
ourselves with our disciplines and equipment."
ETS Corporate office located in South Bend, Indiana.
To support Sagon's bold claim, ETS continues to have the capability
and the capacity for manufacturing products to rigorous customer
demands — and then some. "My expectation is to be ahead of the
customer," said Sagon, who joined ETS in 1990. "I want to exceed
marketplace and customer expectations."
The latest equipment is one of the main ingredients in the ETS recipe
for success. For example, the firm recently purchased six-position
turret molding machine. High-capacity, automated wire-processing
equipment also has been added at ETS. What is not acquired from
outside sources is designed and constructed in-house, such as
components for assembly lines.
ETS Corporate staff (from left to right) Mark McIntosh, QC Manager;
Norm Sagon, V.P. Marketing/Sales; Tom Richardson, President;
Scott Lee, Controller and Bob Grunler, Engineering Manager.
Technology and automation are companion concepts at ETS, both
dictated by industry competition based primarily on the cost of
labor — high in the United States compared to low in Mexico and
Far East countries. "Especially on our high-volume wiring harnesses,
we have to be automated to offset China and other offshore factories,"
Sagon said. "The larger foreign electrical and electronics companies
are our bigger fear, not U.S. companies or our colleagues in the
Wiring Harness Manufacturers Association."
ETS has been succeeding at overcoming such fear since 1991 when
Richardson and Sagon committed to making electronic products. A
second plant was opened in South Bend, where ETS always has been
located.
"It is a much more sophisticated facility than our other plant where
wiring harnesses are made and molding and stamping operations take
place," he said. "We design, stuff and wave-solder all pcb's. Tremendous
value was added to our company when we did that."
In 1991 ETS electronic products were sold for the first time to two Japanese
vehicle companies doing manufacturing in the United States. The firms are
known as transplants, and the number using ETS has increased to eight.
"We have done quite well in all the old and new markets we're in," Sagon said.
"We do business with many of the Japanese car companies and a few in Europe
and the United States, including the Big Three. We are either a Tier 1 or
Tier 2 supplier to the car companies."
Besides vehicle manufacturers, ETS has penetrated OEM companies that
produce off-highway and agricultural equipment. Work for the U.S. military
is done, too.
ETS insert molding equipment — 30-75 tons.
Products for OEMs include wiring harnesses and connectors for ignition
systems, audio speaker systems, engines, interior, bodies and lighting.
Electronics has been incorporated into wiring harnesses used mainly for
lighting. Contract OEM work accounts for 80 percent of ETS's business.
The balance, 20 percent, is in aftermarket. Products are marketed through
distributors for the automobile, truck, recreational vehicle. ETS supplies
wiring harnesses, adaptors, terminals and connectors as well as electronics.
ETS has achieved notoriety in aftermarket with the firm's Electro-Protector,
a patented and trademarked product. The electronic converter is installed
on a vehicle that pulls a trailer. The device serves to protect the wiring
harnesses of the vehicle and the trailer from damaging overloads from
the trailer to the vehicle and vice versa. Electro-Protector began as an
OEM product in Japanese vehicles and was added to the ETS aftermarket
product mix.
"A lot of my strategy in marketing ETS in the aftermarket is in
brand-name recognition with Electro-Protector," Sagon said. "That began
in the 1990s, and we have taken it to retail stores and 30 distributor catalogs.
With aftermarket, you can develop new products from existing ones by just
expanding on the next logical step.
"There's an endless stream that you can keep adding and improving,"
he said. "New products are riskier because of tooling and other capital
expenditures. It's a lot more involved."
ETS wiring harness assembly with up to 500-plus electrical circuits.
Whatever ETS does, it has the ability to become fully involved in all
aspects of product development and manufacturing. Such
comprehensiveness is part of president Richardson's philosophy that
extends back to his founding of the company.
He started ETS in 1978 after working on wiring harnesses at Harco
and electrical systems at International Harvester. With Jerry Beatty
as Richardson's partner, ETS made wiring harnesses. The company
eventually added electro-mechanical devices and started doing its own
connector molding and terminal stamping. Most of the work was done
for OEM truck, off-highway and military vehicle manufacturers.
In the late 1980s Richardson bought out Beatty's share of the company.
Sagon arrived in 1990 as the sales and marketing VP. He also has minority
ownership of the company, the only other person besides Richardson with
ownership. Sagon had worked in OEM and aftermarket for Atwood Industry
in Rockford, Ill., and Morgan Industry in Pennsylvania. The two companies
specialized in metal and plastic products for automotive and truck industries
worldwide.
"Tom is not a person of high visibility," Sagon said. "He stays in the
background. He's always had the business strategy internally. I am
more external, but I am active with the company internally by keeping
abreast of the manufacturing, quality, systems and communication functions.
"The reason Tom and I have clicked is our passion for technology," he said.
"I've had the vision for technology outside and Tom inside. With a
commitment from Tom and my support, we realized we could differentiate
ourselves in the marketplace by using technology to integrate electronics
into wiring harnesses."
To maintain control over product design and manufacturing, ETS is
largely a self-sufficient operation. Engineers have CAD equipment that
is connected to customers for direct design integration and interaction.
Product testing is done with ETS-developed computer software and hardware.
All continuity and functionality testing is done internally. The testing lab
contains chambers to simulate practically any environment — hot, cold,
wet, etc.
ETS Electronics Plant for PCB assembly and wave soldering.
Products are built using equipment such as 20-plus molding machines for
connectors and four stamping machines for terminals. ETS does its own
tooling for molds and dies. Product certification also is done in-house,
as is packaging of aftermarket products.
Customer services also include electronic data interchange (EDI) and
Internet quoting. EDI information provides customers with daily
production schedules and shipping details such as times, weights,
quantities and billings.
To further refine its operations, all ETS departments must adhere to
ISO 9000 and QS 9000 standards. "We achieved QS 9000 last year,
and not many companies have both certifications, especially among
small to medium companies," Sagon said. He noted that OEMs
require QS 9000.
He related that QS 9000 requires short-term (1-2 years) and long-term
(3-5 years) business plans. They are prepared by corporate executives
as well as department heads. The plans are reviewed quarterly by QS.
The QS and ISO ratings only enhance ETS's stature among current and
prospective customers. They are reached through articles and advertisements
in industry trade publications and OEM journals such as Ward's Automotive,
Automotive Industry and SAE Automotive. National distributor catalogs are
used to reach aftermarket customers.
Sales and marketing also are done through membership in trade associations.
In addition to the Wiring Harness Manufacturers Association, they include
the Society of Automotive Engineers, Automotive Industry Action Group,
Specialty Equipment Marketing Association, Automotive Aftermarket
Association, Warehouse Distribution Association and Recreational
Vehicle Industry Association.
OEM and aftermarket trade shows are attended by Sagon and other
company officials. "We go to 12 to 15 shows annually," Sagon said.
"That's probably three times what most companies attend."
Catalogs are published by ETS, and its product information also
may be accessed on CD-ROMs. A Web site is being developed.
All of the promotion helps to produce new OEM and aftermarket
customers on a regular basis. They complement the ETS customer
base that includes many companies using ETS products since the
company started 23 years ago.
"We have enhanced our aftermarket and OEM products," Sagon said.
"We have bigger OEMs with higher volumes, and we have a bigger
market share in the aftermarket. We also have lost a few customers
by choice because they were not the best fit. For example, by
attrition and design, military is a much smaller part of our business
than 10 years ago."
Even though the market has been soft since the beginning of 2001,
Sagon continues to develop new customers. "We are continuing to
automate and go with plans for a lot of new business after this
adjustment year," he said. "It's out there if you have the infrastructure
to serve it.
"We are planning for decent, incremental growth of 10 to 20 percent
a year," he said. "It's not all based on how the economy does but by
us enhancing our OEM products through molding and stamping and
being serious about electronics. With a high visibility there, we can
give companies value-added products, and that means high growth."
ETS can accommodate growth at the company's current facilities, two
buildings totaling more than 75,000 square feet. They should be
adequate for 2-3 years, but in 3-5 years the firm may have to expand,
Sagon pointed out. Growth will mean adding employees, current at 105.
The figure includes 30 administrative staffers. The highest number of
employees was 180. Many workers, who fit into job classes, belong
to a union, with which Sagon reported the company has had good
rapport. No strikes have occurred.
"I think our employees look at ETS as a good workplace," Sagon said.
"We're on the cutting edge in terms of benefits, services and opportunities.
We have good working conditions, promote from within and provide
good training. And with the technology, I think people are excited to
work here."
Other key employees are Mark McIntosh, quality manager; Bob Gruncer,
engineering manager; Sherry King, customer service manager; and
Scott Lee, controller.
The collective effort of the employees has been recognized with
several awards and honors. They have been presented by customers,
associations and trade shows primarily based on ETS's quality and
delivery. Recognition also has been received from the South
Bend Chamber of Commerce.
For further information contact Electro-Transfer Systems, Inc.
1916 South Main Street, South Bend, IN 46613. Phone (219)
234-0600 or Fax (219) 289-0107.
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