How to Buy New Equipment
An authority in the job shop market explains its decision-making process on several capital improvement projects. JODI LUMSDEN, THE DOTSON CO., MANKATO, MINNESOTA
A
review of the financial statements for Te Dotson Co., Mankato,
Minn., will show a manufacturing facility in great condition with next to no debt. While some large publi- cally traded manufacturing compa- nies use numbers to hide all sins and stop projects from moving forward, Dotson uses a conservative, long- term approach and constant focus on employee involvement to support the future health of the company. According to former Dotson
president and current chairman of the board Denny Dotson, the company does not make equipment purchases without input from the employees on the front line. Dotson said his first capital purchase was a manual mold- ing line in 1974 he expected would lower costs and increase productivity. It didn’t work out that way.
“An operator matter-of-factly said
to me, ‘I could have told you it wasn’t going to work,’” Dotson said. Now, with help from the front lines, Te Dotson Co. focuses on reinvest- ment and technology improvement. During the economic challenges of the early 1980s, sales dropped off more than 80% in a little over a year and threatened the survival of the organi- zation. According to current company president Jean Bye, the company learned during this period to continu- ally manage debt, push employees to stay involved and keep the metalcast- ing facility moving forward through small annual investments rather than major projects every 10 years or so. In 1983, Dotson downsized to a
single gray and ductile iron casting facility and began making annual investments to upgrade its operations. It started by converting from cupola melting to induction furnaces and installing automatic molding lines. It
became the first metalcaster in North America to add automatic CNC grinding lines (Barinders) for lower volume castings in 2002. In 2004, Dotson added a molding line (Rob- erts Sinto FBO) that included North America’s first automatic pouring line for horizontal molds. New technology and automation
continue to be at the heart of Dotson’s strategy today. In the past eight years, the company has reinvested 7% of its sales dollars, compared to an industry average of less than 3%. In 2011, rein- vestments totaled more than 10%. At the same time, the company maintains a debt to equity ratio of 0.38 or better to ensure its future health.
The Magic Number Early lessons about the need for
informed reinvestment evolved into the $10,000 Project program, launched about 15 years ago. At Dotson, any investment valued at more than
April 2012 MODERN CASTING | 25
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