Bringing it home
LSH Materials brings slitting services in-house to preserve profit margins, open new revenue stream.
By Contributing Editor Linda Casey -- Converting Magazine, 1/1/2008 2:00:00 AM
In 1992, the company officers at Hutchison Miller Sales Co. (HMS), a manufacturers' agent for the paper, film and fabric industries, faced an opportunity that would thrust them to another side of the materials-distribution supply chain. The company, which was started in 1967 by Bob Hutchison and Bob Miller, enjoyed a reputation as a resource for customers looking for a variety of materials.
So, it wasn't unusual when a prospective customer contacted HMS looking for a very specialized adhesive film for squeeze applications in the health-and-beauty industry. What was unusual was the customer's vendor requirements prohibited it from buying through a manufacturers' agent. Honoring its long-time relationships with its materials-manufacturer partners, HMS first tried to find a suitable product from one of the many companies it represented.
After exhausting all opportunities to refer the business to a partner, the HMS officers decided to pursue the opportunity by creating LSH Materials, Ltd. Although the new company was created to develop and market Cothene adhesive film, which in its current formulations does serve a range of applications, the company officers wanted to pursue business beyond just adhesive-coated materials, e.g., they saw profit potential in supplying face stock for label converters.
Helping hand
Four years after successfully augmenting their business portfolio with a full-fledged materials distributing arm, LSH Materials management was ready to make the leap to converting at its New Britain, PA, facility. LSH Materials president Rob Hutchison, who also is the son of co-founder Bob Hutchison, explains, “Looking at our costs, we saw that we should bring slitting in-house.”
Coming from a manufacturing representative background, Hutchison felt it was important to find a slitter manufacturer who would work with LSH Materials as a trusted advisor. When he chose to install a Phoenix 950FC, Hutchison made an investment in a machine and a local supplier that proved to be more than a faceless corporation. “Phoenix Machine was a great resource, and they are local” [in nearby Flanders, NJ], says Hutchison. “We could go to them and visit throughout the process; we could see the slitter being manufactured.” The companies' close proximity to each other also allowed them to travel easily between locations. Phoenix staff would go to LSH Materials' headquarters and answer the soon-to-be converter's questions; LSH Materials staff would visit the Phoenix manufacturing plant. “We could go to them and visit throughout the process; we could see the slitter being manufactured,” Hutchison recalls.
Thin slitting, wide margins
Because the Phoenix 950FC would be the only slitter at LSH Materials' 7,000-sq-ft plant, it would have to slit a large range of materials. The 32-in.-wide duplex, center-wind slitter has a minimum slit width of 3 in. and runs at speeds up to 1,500 fpm. The unit also has shear- and razor-slitting capabilities, which Hutchison says give LSH Materials an edge over its competitors because the slitter can handle thinner films. LSH Materials uses the Phoenix 950FC to slit products ranging from papers to polypropylene film down to 70-gauge thick.
The converter and distributor's product line now includes several films and fabrics, such as security films, polyolefins, top-coated polypropylenes, satin-cloth fabrics and thermal-transfer fabrics, and papers and boards, such as foil-laminated, thermal-transfer boards and coated stocks. The company still needs to contract out wide-web slitting for customers more than 1,000 miles from New Britain, PA. The Phoenix 950FC allows LSH Materials to slit narrow-web materials for its own local customers, while pursuing contract-converting work from other companies. While Hutchison worries about “margins continuing to erode” throughout the converting industry, he is confident the slitter will help LSH Materials to continue to grow at more than 10 percent a year, which is the company's annual growth for the last five years.
Not at full capacity
The Phoenix 950FC slitter's 1,500-fpm operating speed more than meets the LSH's current needs. “We aren't running a full shift as of this date,” says Hutchison. “We still have a lot of capacity left.
“From the straight economic standpoint, I expect to reach ROI within the next three years. We've been able to meet our existing customers' requirements, and we've been able to pick up some new customers.”
For companies interested in purchasing their first slitter, Hutchison has this advice: Remember a slitter takes 12 to 20 weeks to build, so take your time and visit as many existing installations of the slitters you are considering. “If someone wants to buy a Phoenix machine, they should try to find someone who has a Phoenix slitter,” Hutchison says. “If you're looking at a Dusenbery slitter, for example, try to visit a working installation of a Dusenbery machine.”
Hindsight hasn't changed Hutchison's opinion of the Phoenix 950FC; he would buy it again. Expressing the one thing he would change about the actual machine, Hutchison quips, “We also might have added a few more bells and whistles.”
| MORE INFO: | ||
| CONVERTER: | ||
| LSH MATERIALS LTD., 215/345-1824,fax: 215/348-4604, www.hutchisonmiller.com/lsh.htm | ||
| SUPPLIER: | ||
| PHOENIX MACHINE, 888/754-8932 (SLIT-WEB) fax: 973/691-8939, www.phoenixmach.com | ||
