The DeArment family keeps Channellock competitive with continuous improvement

 

When Channellock Inc. added automation technology to its factory, many employees were intimidated.

“When we first started with the concept of robots, I wasn’t even allowed to call them that,” says Chairman and CEO Bill DeArment. “We called them pick-and-place units.”

Bill DeArment

The company’s workers were afraid of losing their jobs. But Bill says they carefully added the units in places that made employees’ work easier. Channellock also didn’t lay anyone off, relying instead on attrition. It repositioned employees, sometimes retraining and upgrading them into a better paying job.

The company, which employs 365 people, hired more than 50 employees in 2018. About one-third of those filled positions left by retiring baby boomers. The remainder are part of the effort to increase capacity.

“We’re making twice as much product as we did back then with half as many people. So, obviously there’s been a lot of productivity enhancements,” he says of the last 10 years.

To stay competitive and continue to manufacture in the U.S., Channellock uses the lean toolbox to identify and eliminate waste, and invests in new technologies that increase capacity.

“We’re looking at the labor-intense operations, the highly repetitive operations. Those are the kinds of things that we’ve targeted for automation in technology to try to work smarter versus working harder,” says Jon DeArment, president and COO, and part of the fifth-generation of family ownership and operation.

Channellock has a long history in hand tools. The 132-year-old-company, based in Meadville, Pennsylvania, changed its name from Champion-DeArment Tool Co. to Channellock in 1963 to protect its valuable trademark. But no matter the storied history, it works hard to remain competitive.

“The goal is to really get back into a growth mode, which we’ve been in now for about a year and a half,” Jon says.

He says for nearly two years, Channellock has struggled to keep up with demand and get its fill rates back up. It’s working to catch up by investing back into the business.

“A long time ago, somebody once told me, if you’re not reinvesting the amount of your annual depreciation, you’re in liquidation,” Bill says. “That’s just a rule of thumb, but basically you need to make sure your equipment is up to date and running. You need to make sure that you’re not asking your equipment to do things it’s not designed to do.”

Automation and efficiency

You’ve also got to try new things from a manufacturing standpoint, whether it’s robotics or lasers or whatever, Bill says. At the same time, you’ve got to make efficient use of your direct labor, watch your overhead and indirect labor, and be in the marketplace, learning your customers’ needs and trigger points.

Robotic innovation provides repeatability, which is the kind of investment that’s worth spending money on, Bill says. If it’s a new concept, he says there’s a research and development risk. That can be worthwhile to take if it means significantly upgrading a worn-out piece of equipment.

Channellock uses robotics to reduce the cost of labor-intensive polishing. It also added precision CNC equipment to file or mill the cutting edges. Complex machines can combine three, four or five steps to save time, reduce the inventory and ultimately reduce cost with increased throughput.

In addition, the company has two fully automated robotic hammers for its forge. It’s the only hand tool company to use the technology that way, as far as it knows. Jon initially had trouble convincing his father to make the investment. They ended up taking a trip to France to see the equipment in action first.

Channellock is also exploring the idea of co-bots, which are collaborative robots that work side-by-side with humans.

“We have a couple college interns now that are working with the unit that we just picked up to try to see what they can come up with in terms of using that type of technology versus the traditional industrial robots,” Jon says.

Putting everyone on the same page

While the company has a smaller workforce than it did 10 years ago and more of its employees are in their first five years of service, the average tenure is still about 15 years.

“Over a period of about five years, the culture has changed. They’re not intimidated by the concept of a robot. In fact, they kind of like it,” Bill says.

Some of the old guard who were set-in-their ways have moved on, he says. Between the newer people with more open minds, and the proof that people won’t lose their jobs — and could actually improve their opportunities — the culture has changed. Now, it’s much more receptive to the concept of automation.

Channellock doesn’t have as much trouble finding people as some manufacturers do. There’s a lot of resources in Northwest Pennsylvania.

“We can hire basically entry-level operations and associates to come in, and then we train them specifically on the type of gauging or machining we’re doing,” Jon says.

However, the expectations are high. Sometimes the employees might think it’s too high, but Jon says the alternative is worse.

“Our people think: ‘Your bar is too high. We can’t do all these things.’ But I’m thinking: ‘If we don’t, we’re not going to be competitive. Our costs are going to go through the roof and we’re going to have to go to the market with a price increase, which just triggers line reviews at all our retailers and that opens the door for more competition to come in and steal our hooks,” he says.

Jon, who has been in his current role for three years, taking on more responsibility as his father steps back from the day-to-day operation, is working to improve his communication skills so employees can feel comfortable with all the changes at Channellock.

While he finds it easy to fall into a technical role, such as writing a report, filling out a spreadsheet or looking at a process, interacting with people on a high level doesn’t come as naturally. He’d rather get into the details of how many pliers are being made today or what happened yesterday.

“It’s more so, ‘Does everybody understand what’s happening and communicating with the workforce and getting everybody on the same page.’ That’s been a big change for me,” Jon says. “And just doing things like sharing weekly updates with everybody and trying to get to as many department meetings as I can, with the focus on high-level strategic topics versus the day-to-day operations.”

He’s discovered networking with other executives and presidents to be useful.

“Networking outside of the organization is a big part of my personal development, and I think that helps the company as well,” he says.

For example, he got the idea for a weekly email blast that shares what’s going on in the company. It should take 20 minutes or less to write it, and five minutes or less to read it or it’s too long.

“That was something I heard at one of the meetings, and I said, ‘Oh, that sounds easy enough.’ It’s hard to do, to stick with it, but I think it’s effective if you’re consistent,” Jon says.


Quality comes first

Channellock prides itself on making as much as it can in its factory. If that’s not possible, it tries to source it from another quality U.S. manufacturer. Only as a last resort does the company look overseas, Jon says. Right now, about 94 percent of Channellock products are made in the U.S.

The key is to make sure the quality is still there, such as the company’s adjustable wrenches that come from Spain, he says. But everything doesn’t always work out so smoothly.

With the Code Blue plier line, a customer asked for a comfort slip-on grip for professional users. When Channellock had trouble finding a domestic source, Jon says they worked with that customer to find a Taiwanese company that could mold the grips. The individual cost was lower, but Channellock had to manage the supply chain and an extended delivery time.

Unfortunately, the Taiwanese company shut down. Its doors were locked and Channellocks’ molds were gone.

“It was like, ‘Uh oh, what are we going to do now?’” Jon says. “I actually worked with a friend of mine from high school who was in plastics engineering. He says, ‘You know, we can do this. Let’s put our heads together and figure out how to do this.’ And we were able to design a new mold, have it manufactured locally, and then took it to a plastics house in town here.”

While the cost was higher, the end product was better quality.

“You have to focus on quality and value to your consumer, your customer,” Jon says. “If you do those two things, I think you can be competitive. But to do those things, you have to be steadfast in continuous improvement. The way you did things today isn’t going to be good tomorrow.”

Takeaways:

  • You can stay competitive with a focus on quality and value.
  • The way you do things today won’t be good enough tomorrow.
  • High expectations require extra communication efforts.

 

The file:

Name: Jon DeArment
Title: President and COO
Company: Channellock Inc.

Born: Meadville, Pennsylvania
Education: Bachelor’s from Gannon University in Erie, Pennsylvania, studying business management

What was your first job and what did you learn from it? My first job would have been riding the tractor and cutting the grass over at Plant 2. I learned to make sure you come to work. When you’re the boss’s son, not showing up is a bad thing.

Did you always want to work in the family business? I think so, honestly. When I was younger, at one point, I wanted to be an architect. But as I grew up and became more in tune with the company and what it was, and the products, and what all was involved, I thought it was definitely something I wanted to do. I wasn’t sure what exactly.

I spent many summers working in maintenance or the machine shop — around the machines, cleaning, painting, scrubbing, you name it. When I started college, studying business, I started to look at the operations side more and more. I spent an internship in engineering, doing a little work on layouts and lean manufacturing ideas. That’s where I found my niche, in the operations side.

How many family members are involved with Channellock now? My father is the chairman and CEO. My brother is vice president of sales and marketing. At this point, that’s it. I have a high school daughter who is taking the path that I did, working in the factory in the summer.

What’s the best business advice you’ve ever received? Keep track of the pennies and the dollars will take of themselves.

Where is someone most likely to find you on a weekend? I enjoy boating, water sports, golfing and riding motorcycles in my spare time.