October 15, 2015 by Charlie Nixon
Scranton Manufacturing will venture into the car dealership business once it finalizes purchase of Macke Ford. The Scranton-based firm was founded in 1971 by John McLaughlin and his brother, Bruce. It was primarily a business which manufactured ag-related products such as cattle gates and horse trailers. Not surprisingly the business hit some rough patches during the ag crisis during the 1980s.
“It took about everything we had to survive and keep the doors open in Scranton,” Michael McLaughlin told the members of the Coon Rapids Rotary Club last week. “We tried lots of different products through the years and nothing seemed to work.”
By chance, McLaughlin said his father saw an ad in the Wall Street Journal for a garbage truck company in Des Moines called New Way. They called the owner.
“The company had been building trucks since about 1968 or 1969,” related McLaughlin. “He (the owner) didn’t have any money, and didn’t have the marketing know-how to grow his business. Obviously we didn’t have much money, so we decided -- you know what -- let’s structure this deal as a royalty deal. If we do good, you get paid more. So we did that, and he came over and taught us how to build garbage trucks.”
The New Way business slowly started to build and build and in 1992, John McLaughlin asked his son to come back and help grow the business. At that point, Michael McLaughlin and his sisters bought out his father’s interest in New Way.
“We were building 50 trucks a year, about $3 million in sales,” Michael continued. “My dad said, ‘You need to learn the business from the ground up’. So I got thrown into the back where I welded, tarred the roof, etc. I said, ‘Dad, you know what? I’m the owner of the company now, I came back to grow this thing, so I need to be selling trucks. So I sat down with him and my CFO and we talked about it for a couple of hours and they finally said, ‘Yea, go ahead. You’ll be lucky to sell one truck the first year’,” he said....
“I’m a pretty driven guy. Four hours later I came back with a purchase order for two trucks. I asked my dad, ‘I get the year off, don’t I?’”
The younger McLaughin said the firm put together some lofty sales projections which they were able to hit, thanks to the development of a strong dealer network throughout the United States and improved products.
“We redesigned all of our product lines in order to bring them all up to industry standards and specs, and continued to have some success.”
Today, New Way is one of the leading manufacturer of garbage trucks with annual production capacity of over 2,000 trucks.
By 2007 the company was doing quite well and the family decided it was time to diversity. A small company in Lake City, Bowie Manufacturing, was building mobile veterinary clinics but had cash flow problems and was on the verge of closing.
“We looked at what needed to happen and acquired the company and had them making money again in less than 30 days,” McLaughlin stated.
Six months later the family bought out Bowie’s only other competitor in Iowa -- Porta-Vet – and moved it to Lake City as well. In 2009, Scranton Manufacturing purchased Custom Fiberglass Coaches, a manufacturing firm which builds mobile animal control and animal transport units.
The McLaughlins moved the firm to Lake City. Scranton Manufacturing created a fourth manufacturing company for its Lake City location with Hurricane Motorsports. The company manufactures a 427 Roadster car kit complete with all of the parts one needs to build it while requiring no welding, fiberglass work or metal bonding. The company has become one of the most talked-about names in replica car production.
Scranton Manufacturing has acquired several other companies along the way, including K-PAC compaction equipment, which are stationary refuge compactors that are typically used in the backs of Kmart or grocery stores. K-PAC was a business purchased in northern Iowa and moved to Scranton.
Attention to Detail
McLaughlin said his family’s businesses grow because of the attention to details.
“When we enter a business, we are very methodical, very good at marketing, very good at manufacturing, very tech-saavy, so that’s why we’re so excited about coming down here to Coon Rapids,” McLaughlin said. “We’re very excited to learn the car business and grow that car business. Yes, we’ll be able to double it in size in the next 12 to 18 months.”
Rotary Club member Doug Carpenter asked McLaughlin how he sees the business expansion to support his growth projections, given that the Ford dealership is situated in a less populated part of western Iowa.
McLaughlin didn’t miss a beat. “Our company has grown so large we now have over 300 employees,” he said. “Where do you think they are going to buy their vehicles?” he deadpanned.
McLaughlin said Scranton Manufacturing has very tight partnerships with all their vendors, who are all potential Ford vehicle customers. “We probably spend $40 million with our vendors,” McLaughin said. When I go sell them a new truck, they’re going to say, ‘yes’”.
The various business divisions of Scranton Manufacturing will also be good customers.
“On our veterinarian side, 90% of those mobile units go on F150s and F250s,” said McLaughlin. “On the animal control and transport units, almost 100% of them go on Ford products, either F250s of F550s. And take the garbage truck industry – we build a small little Diamond Back which is a six yard rear loader or a 6,8 or 10 yard side loader -- all fit on the F550 trucks. Now I can buy all those trucks from myself rather than partnering with someone else,” McLaughlin added.
Gus Macke also chimed in about the question of where the customers will come from.
“Our attorney who is working on this in Cedar Rapids has sold nine dealerships this year in Iowa and 60 total himself,” Macke explained. “When I explained to him what our trade territory is, he said, ‘that’s impossible.’ You can go from Coon Rapids all the way to the Iowa border and there’s not another Ford dealer. There’s not one in Jefferson, there’s not one in Perry, Winterset, or Audubon, There’s not one anywhere. Realistically, it’s possibly the biggest, most populated area in the United States that doesn’t have another dealer in it,” Macke added.
“Yea, we’ll be able to double it in size in the next 12 to 18 months,” McLaughlin said confidently.
Courtesy of Charlie Nixon, The Coon Rapids Enterprise 10/15/15.