Showing its mettle

LUZERNE – Every day he goes to work Jeff Dickson punches holes in the notion manufacturers like him can’t make it in today’s global economy.

Workers at Dickson’s KMS plants here and in South Carolina stamp, cut, and drill thousands of pieces of steel, brass and aluminum into a myriad number of parts from door hinges, truck grills to cream dispensers.

The privately held precision sheet metal fabricator showed its mettle recently when its plant in West Columbia, S.C., scored a spot on the Inc. 5000 list of fastest growing businesses in the country. KMS Inc. ranked 2,673 based on a 127.5 percent increase to $10.7 million in 2006 from $4.7 million in 2003.

Had Dickson not responded to a call for help from plant managers in 2001 there would be no ranking and nothing left of the business his father, William Dickson Jr., and uncle, Charles Kappler Jr., started in 1954. Kingston Metal Specialties, KMS for short, had plants in Kingston, Luzerne and South Carolina when Dickson accepted an offer from a venture capital firm to sell in 1997. The firm eyed KMS for a “roll up” of five or six similar companies into Chatham Technologies Inc.

He stayed on for three years as vice president of North American Manufacturing, leaving in 2000 when Flextronics International Ltd. acquired Chatham. The bigger corporate structure was not the right fit for the entrepreneur able to run the machines on the factory floor and used to making decisions quickly.

And apparently the South Carolina operation did not fit into Flextronics’ plans. At the time the plant had annual revenues of approximately $12 million. “They had run it down to $1.5 million,” he said.

Dickson, 50, of Dallas, started working at KMS when he was a teenager, earned a degree from Penn State in mechanical engineering in 1980 and joined his dad. “I don’t think you can take over a business unless you come from the bottom up,” he said.

His son, Jeffrey, 23, is following the same bottom-to-top approach. He will graduate from Penn State Wilkes-Barre in December and join his father in the business.

For the past four years, his son has been “the lowest paid employee,” the father pointed out.

His dad can say the same of the relationship he had with his father. The two built up KMS, with the established businessman who worked as a metalsmith in the U.S. Navy trusting in the college educated engineer’s ability and sharing his son’s vision of growth through investing in equipment and people.

More confident than brash, Jeff Dickson told his dad William they had to buy a piece of equipment worth $300,000 if KMS was going to grow. “I put the company back into debt,” Dickson said. Had they failed, he and his dad would have lost their houses, he added.

When he told his father of his plan to open up a plant in South Carolina, Jeff Dickson recalled his father asking, “Do you think you can do it?” Dickson said he responded, “No, I know I can do it.”

When the plant celebrated its fifth anniversary in 1992 it was the proudest moment in his father’s life, Dickson said. His dad died a short time after that milestone. Those memories influenced Dickson’s decision to make an offer to buy back the South Carolina plant.

Back to his old ways, Dickson reestablished relationships with customers and worked with his management staff and employees to turn around the business. “I actually gave my former management employees part ownership in my company when we bought it back,” Dickson said.

Back in the Wyoming Valley, he heard a similar plea to get KMS up and running again. “I didn’t even have a customer. I didn’t even have a piece of equipment,” Dickson said.

However, he had a building, having held on to the real estate in South Carolina and Pennsylvania when he sold the businesses five years earlier. He found help from a friend. Diamond Manufacturing was looking to sell its Harvey Metal Products Co. in Wilkes-Barre.

“I said, ‘If you’re a seller, I’m a buyer,’ ” Dickson recalled. During a two-year period, KMS transferred the equipment from the Ruddle Street shop to Parry Street and assembled a staff and work force with many of the people let go in the earlier takeover.

Between the two KMS plants Dickson said he expects to earn $20 million in revenues next year.

The growth comes at a price. KMS will build a 10,000-square-foot addition to its Parry Street plant, Dickson said. “I’m out of room.”

He also budgeted $1 million a year in capital expenditures during the next five years for the plant. Another 20 workers will be added.

The workers, approximately 70 in South Carolina and 60 in Luzerne, deserve the credit for the companies’ success, Dickson said.

The average starting wage is between $8.50 and $9 an hour with benefits. The average wage in the plant is more than $14 an hour.

Skilled employees earn higher wages, but they’re often hard to find. The company will train applicants with some mechanical ability, willingness to work 40 hours a week and who want to learn, Dickson said.

KMS took on approximately 10 employees from the McKinney plant that recently closed in Scranton, Dickson said. The skilled workers are the kind the company looks for and depends upon to be competitive. KMS bids for all of its jobs and relies on talented employees “with a tribal knowledge” of manufacturing processes.

The steady drumbeat of plant closings and jobs lost to countries where labor and production costs are cheaper isn’t heard on the floor on KMS where the plant runs two shifts, six days a week. Dickson pointed to the recent cases of tainted pet food and toothpaste and lead painted toys coming from China as signs of poor quality control. Yet he doesn’t doubt that will change.

“China’s not there yet,” he said. It might take another 10 to 20 years, he estimated, which would give KMS and other stateside manufacturers more time to improve, develop a skilled work force and maintain a competitive edge.

Making its mark

History: Started as Kingston Metal Specialties in 1954 by William Dickson Jr. and Charles Kappler. Jeff Dickson, son of founder, is president and chief executive officer.

Noteworthy: The South Carolina company was ranked 2,673 on this year’s Inc. 5,000 list of fastest-growing private companies in the U.S.

Quote: “I don’t think you can take over a business, unless you come from the bottom up,” said Jeff Dickson.

Jerry Lynott, a Times Leader business writer, can be contacted at 570-829-7237.

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Business

Investing in equipment, people pays off for sheet metal fabricator KMS, which has plants in Luzerne and S.C.

Making its mark

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