Pieces of the Grumman Olson pie

Aug. 1, 2003
AND when the smoke cleared Grumman Olson was a shell of its former self. John Poindexter, CEO of Houston-based J B Poindexter and Co Inc, which owns the

AND when the smoke cleared …

Grumman Olson was a shell of its former self.

John Poindexter, CEO of Houston-based J B Poindexter and Co Inc, which owns the Morgan Corp, had created M S Truck Body in order to acquire Grumman Olson's Sturgis, Michigan, assembly plant, truck products, and name.

The HIG Group, parent company of Specialized Vehicles Corp, which owns Kidron and Hackney body companies, had acquired two of Grumman Olson's manufacturing facilities (Montgomery, Pennsylvania, and Tulare, California), creating what Kidron claims is “one of the largest manufacturers of truck bodies and trailers in North America.”

Grand Vehicle Works, the holding company for Workhorse Custom Chassis and Union City Body Co, had purchased Grumman Olson's intellectual property rights for dry van and refrigerated bodies for $300,000 and was working on introducing two new product lines.

For the Morgan Corp, the developments — which unfolded at a June 13 auction — came one year after it had made an offer to acquire the entire Grumman Olson company. Morgan views its $14.5 million investment as a key toward becoming the industry leader in revenue.

“In total dollar volume, we were neck and neck with Supreme in the $200 million range,” said Robert Ostendorf Jr, president of the Morgan Corp, in a telephone interview with Trailer/Body Builders. “With this acquisition, Morgan will be in the $320-$330 million range, so we're probably the largest bodybuilder in the industry in revenue. Plus, Morgan — knock on wood, and I'm finding some wood in my lounge at the airport — has had a great year. We're running about 25% ahead of our budgeted sales volume and 100% in terms of profitability.

“We've taken a lot of market share. We've taken at least five major national accounts from our competitors. We have 100% of Ryder's business in dry-freight and refrigerated for the next three years, and about 90% of Penske's business, along with major fleet accounts.”

Jobs added

Ostendorf said 80 jobs already have been added at the Sturgis plant (which is going by the name of M S Truck Body and is worth an estimated $50 million), with at least another 150 to come, and the intention is to operate in the black by the end of August.

“Grumman basically was operating at one-fifth of its capacity throughout its bankruptcy process,” he said. “They were carrying an additional overhead burden of the Montgomery and Tulare facilities with no throughput, no production, no volume. We shed all of that overhead. Then we focused all of that business to Sturgis, which is a good central location and very competitive with our only two competitors — Union City Body Company and Utilimaster.”

Ostendorf said that because labor doesn't seem to be an issue — a two-day job fair netted 550 applicants, half of whom had worked at Grumman before, with an average longevity of 16 to 20 years — and M S Truck Body's material suppliers are geared up, he expects to be producing 100 units per week in August.

“At that number, we ought to be in the black,” said Ostendorf, who is orchestrating his sixth turnaround and has the reputation of being an expert at transforming bankrupt companies.

Along with the Sturgis plant, M S Truck Body acquired the walk-in step van business, including all licenses, intellectual properties, parts and services businesses, and all of the assets associated with it. Ostendorf said the company has the use of the Grumman Olson name until 2007 for business product relations needs.

New body

He said 50% of the first year's capital expenditures will go toward developing a new body.

“It really is in the preliminary stages,” he said. “The money's been allocated. We have moved three engineers from Morgan and retained most of the engineers who were here below the executive level. We're working on a more ergonomic body, one that reflects what's happening in the overall truck industry.”

M S Truck Body also has switched the work schedule from four 10-hour days to five eight-hour days to “improve throughput and to tie ourselves tighter to our suppliers,” Ostendorf said. He said Grumman Olson's inventory turns were between four and five, and he wants to increase that to 20.

He also said the break rooms and bathrooms will be renovated and supplied with air conditioning for the first time, at a total cost of $55,000.

“My thought is, how you treat your people is, to a large degree, how they're going to treat the product and the customer,” he said.

Two Morgan executives have been relocated to the Sturgis plant: Stu McGowan, the new general manager, moves from a newly acquired Morgan company in Los Angeles; and John Buttrey becomes vice president of quality control and engineering.

More space for Kidron

Meanwhile, Specialized Vehicles Corp on July 15 finalized the acquisition of the facilities in Montgomery and Tulare, giving Kidron over 350,000 square feet of additional manufacturing space and complementing existing manufacturing facilities in Kidron, Ohio, and Lakeland, Florida.

The acquisition is part of Kidron's business strategy to be a national provider of insulated truck bodies and trailers and to be able to provide fast service and product deliveries for customers and dealers on both coasts. The acquisition also meets the strategic goal of continuing to expand the Kidron product portfolio with additional product lines.

Kidron will be offering a comprehensive product line consisting of insulated truck bodies, dry freight van bodies, cut-away bodies, service bodies, and refrigerated trailers. It is anticipated that all facilities will produce the entire product portfolio. Kidron has also secured a chassis bailment pool to serve the dealer markets.

“This exciting plan helps us attain some enviable goals,” Kidron president John May said. “We can offer one-stop shopping for our van body customers, a national distribution system with four strategically located plants, and we can strengthen our niche as the leading high-quality insulated truck body and trailer supplier in the US.

“Our one-stop shopping advantage will be available to customers through a variety of sales channels — through leasing companies, select distributors, a nationwide dealer network, or buying direct from the manufacturer.”

Market update

In Kidron's Web site, May gives this market update:

“We're looking forward to a firming up of the refrigerated van market in the coming months — a slight recovery from 2002, which saw the market decline 7% or more in a continuing slide since its peak in 2000. In 2003, we expect aging reefer van fleets will require replacements, and the food-service and dairy companies will begin to find ways to more efficiently deliver products with an array of new refrigeration and support technology options.

“In the insulated trailer market, we experienced a bounce back in 2002 as large fleet buyers began to shift their focus on capital equipment rather than power, spurred by new emission standard mandates. Most insulated trailer manufacturers' backlogs grew in the last quarter of 2002, expecting a bright 2003.”

The Tulare plant sold for $1.9 million and the Montgomery plant for $1.3 million.

Frank Papa, president and CEO of SVC, said that he expects a slow restart at Tulare, but that there will be an estimated 50 workers within a year. Production will be similar to what it was under Grumman Olson, he said, and no major retooling is anticipated.

Grand Vehicle Works, meanwhile, was “still making some decisions about what we're going to do,” according to Ryan Billet, vice president of strategic development.

Billet said GVW will be introducing the Freight Star dry freight van and WorkMax shop van product lines back into the market under a Union City Body Co umbrella. He said he is formulating that plan with senior management and will announce specifics in September.

Union City Body, founded in 1898, was purchased by Andrew Taitz in 1993 and returned to profitability from bankruptcy. Taitz decided to take the company away from being a small-order manufacturer to the builder of thousands of walk-in vans.

It has over 1,500 customers, including large fleets such as Airborne Express, Aramark, Federal Express, Frito-Lay, the US Government, and UPS.

A decade of change

Grumman Olson went from $132 million in sales to less than $80 million last year and had been operating in Chapter 11 since Dec. 9, 2002. Here are some of the company's key developments in the decade leading up to that:

1994 — Northrop purchases Grumman Corporation.

1995 — The Mayfield plant is phased out, while the Montgomery facility rejoins the Olson division of Grumman Allied after the completion of the Postal Service LLV contract. A major capital investment upgrades facilities, equipment and processes in the Sturgis, Montgomery, and Tulare facilities.

1997 — Grumman Olson management acquires the company through a buy out and continue the philosophy of the previous owners.

1999 — Acquisition of Complete Refrigerated Truck Bodies, Inc. of Alvaton, Georgia allows Grumman Olson to add refrigerated truck bodies to their product line.

2001 — Grumman Olson formally launches its new line of refrigerated trucks: FreshGuard. The FreshGuard is made available in three versions: Heavy-Duty, Light-Weight, and Slip-In.

February 2001 — Grumman Olson attains ISO 9001 certification.

February 2002 — Grumman Olson launches the WorkMax shop van. Specially designed for contractors, the WorkMax features exterior compartments and interior shelves to help keep tools and materials organized.

About the Author

Rick Weber

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

Reliable EV Charging Solution for Last-Mile Delivery Fleets

Selecting the right EV charging infrastructure and the right partner to best solve your needs are critical. Learn which solution PepsiCo is choosing to power their fleet and help...

Overcoming Common Roadblocks Associated with Fleet Electrification at Scale

Fleets in the United States, are increasingly transitioning from internal combustion engine vehicles to electric vehicles. While this shift presents challenges, there are strategies...

Report: The 2024 State of Heavy-Duty Repair

From capitalizing on the latest revenue trends to implementing strategic financial planning—this report serves as a roadmap for navigating the challenges and opportunities of ...

Fleet Industry Benchmarks: How does your fleet stack up?

Discover how your fleet compares to industry benchmarks and gain insights from a 2024 Benchmarking Report on maintenance spend, turnaround time, and more. Join us to identify ...