Atco Products, Flexible parts

Manufacturing in Action, Source : The Manufacturer US

Facing an increasingly demanding customer base and enhanced overseas competition, Atco Products has focused on quality certifications, expansion, and production improvements, as executives tell
Keith Regan

With a history that stretches back to 1968, Atco Products has seen numerous changes in the automotive parts industry. The company, which provides both OEMs and the aftermarket with automotive air-conditioning components, has seen its share of internal manufacturing changes as well.

Today, Atco is part of Deerfield, IL-based Jordan Industries and operates two facilities in North Texas, less than an hour from Dallas, with about 115,000 square feet of space and 150 full-time employees, with some seasonal spikes and dips. The company designs and makes some 4,600 different A/C fittings part numbers, receiver driers and accumulators, and hose coupling systems and assemblies. It also holds a patent on a widely used hose crimping tool and serves as a contract manufacturer in some instances.

With competition from overseas, including China, and automakers and others increasingly demanding cost savings and high-quality parts, the ability to change quickly is as important today as at any time in the company’s history.

The company recently proved it can adapt quickly when necessary. When Atco purchased some manufacturing assets of a Dallas-based evaporator and hose assembly maker, it was able to move them into its own facility and be up and running in a matter of weeks. “Some of the key assets and product lines were only down about two weeks,” says general manager Jeff Jenkins. “But it was a pretty smooth transition.” Jenkins attributes the ease of integration to additional up-front planning. Atco had to make room for several key pieces of equipment, including a 12-foot-by-80-foot brazing furnace. “That was really the most critical piece of equipment in the acquisition,” Jenkins adds.

The other major challenge facing Atco today is overseas competition. “We’re seeing competition in virtually all product lines from overseas,” Jenkins says. “China has been a big factor in selected products over the last four to five years.”

Atco has begun to source some products overseas to combat the price competition, with a large portion of the receiver driers and accumulators it sells now coming from China, about 25 percent of the hose assemblies from offshore, and smaller amounts of other products being sourced that way. “We’ve retained the ability to produce everything here, but the pressures got to the point where we had to acknowledge them.”

As the industry has changed over the years, so has Atco’s approach to manufacturing. “We’ve been in batch processing mode, in cell manufacturing mode. We’ve done a little bit of lean manufacturing in various areas,” says Jenkins. “Because of the diversity of the product lines, some things work and others do not. We still do batch processing in certain areas. We’re flexible and try to adapt to what makes sense for that particular product. We look for ways to improve costs by being more efficient and apply what we can.”

One way that Atco is able to keep costs down and compete with overseas rivals is that its business is not heavily capital-intensive. “We probably have screw machines on site that were built in the 1950s and 1960s,” Jenkins notes. “There haven’t been as many innovations in this industry as in some others.”

Atco has seen changes as a result of its position in the automotive supply chain. Jenkins says customers often “ask for new ways to do things to cut costs, even if it involves us seeing something in their plant that can be improved.” The overall industry supply chain is dramatically different than in the past. “It’s really been compressed. Twenty years ago it was probably a four-step to five-step chain of distribution between the manufacturer and end-user.

Now there are cases when it’s only one step and others where it’s two steps.” At the same time, major suppliers to OEMs and industry associations have ratcheted up their own quality and production standards. Atco’s product lines meet or exceed standards such as SAE J2064 and Delphi’s SD2-254.

Atco’s own supply chain remains stable, with the company striving to cut its own materials costs by buying directly from steel mills and other producers where possible. In the bulk hose area, rubber makers such as Goodyear and Parker are major suppliers and Atco does source some material from overseas as well.

Quality assurance manager Rusty Scott says Atco’s Ennis OEM plant has been QS 9000 certified for several years. With that certification being phased out, the company is gearing up to have both facilities brought up to ISO 9001-2000 standards, to bring “both facilities under one quality management system.

“If you’re going to be a large supplier to any major company in this industry, you have to have a high quality certification,” Scott says. “In the auto industry, it’s all but expected. The automakers have been very aggressive in looking for that.” Scott believes the certification process will be a smooth one, with both plants needing fairly minor changes to achieve the new standards.

Looking to the future, Jenkins says Atco sees opportunities in supplying the heavy-duty bus, ambulance, and industrial vehicle market, producing parts and assemblies for their specific air-conditioning needs. The Air-O-Crimp line of products would target people-mover buses at airports, city buses, and even the recreational vehicle market. “It’s a very specialized product line with a lot of specific requirements, but we see growth potential there,” he adds.

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