Urschel Laboratories Inc. has never laid a single employee off in its 106-year history.
The company, the world leader in food slicing and dicing equipment, has had stable demand even during downturns because "everybody's got to eat," President and Chief Executive Officer Rick Urschel said.
But the Porter County-based company, whose customers include McDonald's, Lay's, Gerber and Progresso, also does things a little differently than most employers to keep people on the job.
Employees work 45 to 50 hours a week so when there's a recession the company can cut back on hours rather than let people go, such as during the Great Recession of 2008 when the company responded to slowing sales by tightening its belt and delaying capital projects.
"When we can keep full-time employees, we can focus our time and effort on the business instead of training new employees," said company President and CEO Rick Urschel. "It (a layoff) does a huge disservice to employees, which is why we extend the hours so we can retain them and never have layoffs."
That philosophy, both caring and business-savvy at the same time, is just one example of why Urschel has come to dominate the global market for food cutting equipment.
A 106-year record of persistence, innovation, customer service and generosity within the community also have driven that growth. Those qualities were never on display more than in the past year, when the Urschel family constructed and moved into a brand new $80 million plant, bankrolled a public ice rink in downtown Valparaiso and sold the company to their 385 employees.
That's why Urschel Laboratories was chosen by a panel of community leaders as The Times Business & Industry Hall of Fame's first-ever "Enterprise of the Year."
"It's been a tremendous asset to Valparaiso to have a company with that kind of presence and reach worldwide," said Valparaiso Chamber of Commerce President and CEO Rex Richards. "They've been successful for 100 years right here in Porter County, which is a great example. Most family-owned businesses don't last more than two generations. It's very rare to have a company go four generations, and selling to employees means they will remain here for many years to come."
Steady growth leads to sale
Growth has been more or less steady since company founder William Urschel invented the gooseberry snipper in 1908 to serve the then-strong demand for gooseberry pies. Urschel moved to a 200,000-square-foot plant in Valparaiso in 1957, and expanded 28 times until the site was no longer large enough. The company moved to nearby Chesterton after it ran out of space and needed undeveloped land to grow.
The new $80 million, 350,000-square-foot headquarters plant in Chesterton has enough additional land to accommodate another century of growth in Porter County. Combined with the sale to its employees, it's a move that all observers believe will keep the company rooted in Porter County.
"It's a game changer not just for Chesterton but for the entire Region," Town Manager C. Bernard "Bernie" Doyle said. "We're blessed to have them stay in the Region. At one time they were looking at a lot of different spots outside the area. It's a fourth-generation company, and it's world-class and known outside the Region."
The Urschel family plans to continue to run the company for the foreseeable future. There were concerns about whether the fifth generation would take over, so the Urschels looked for a way to protect the company's values and make sure decisions were made in the best interest of employees.
"As we started doing due diligence and went further and further down the rabbit hole, we found an ESOP (or employee stock ownership plan) would be the perfect fit," Urschel said. "When I first heard about the concept, I wasn't against it, just ignorant of it. So I typed 'convert to ESOP' in my web browser and the first thing that came up was a list of the top 10 reasons to convert to an ESOP, and I could check off nine reasons. The only thing that didn't fit with our goals was an exit strategy."
Part of the issue was the company has restrictive stock that can only be passed onto descendants, but the shares were starting to get diluted after a few generations. An ESOP turned out to be a way to stop the dilution and buy everyone out.
It could have turned out very differently.
"I probably got three to five emails a week inquiring about sales," Urschel said. "A lot of venture capitalists and investment banks want a manufacturing business that has been in the industry so long, and that is profitable."
'Quality place to do business'
Urschel has long been community oriented, donating to the Boys & Girls Clubs of Porter County and bankrolling the Valparaiso Family YMCA expansion and the William E. Urschel Pavilion ice rink in downtown Valpo.
The company's recent decisions bode well for the area, given the international reputation it's earned while making food-cutting equipment that is used to process Campbell's, Hershey's and Yoplait products, Duneland Chamber President Maura Durham said. Other companies might now be more inclined to give the area a serious look.
"It validates what we've been saying about this being a quality place to do business," Durham said.
The new state-of-the-art facility in Chesterton features a sweeping mural by the well-known Indianapolis artist Justin Vining and a museum that documents the company's rich history, which includes the development of the Klondike Bar and slicers used to make crinkle cut fries.
The new plant is on 160 acres at 1200 Cutting Edge Drive in the Coffee Creek development off Ind. 49.
"I say this tongue in cheek since we now have critical mass and we aren't Boeing, building airplanes," Urschel said. "But we could add onto the plant for the next 100 years."
The new plant allows better efficiencies than the 50-year-old one Uschel just vacated, he said. Parts flow through better. It's designed to support cellular manufacturing, a type of just-in-time manufacturing that generates as little waste as possible.
In cellular manufacturing, a part might go to a work cell that has six operations, each done on a different machine, Urschel said. The part might go onto a lathe and then another machine next to it, so it's always moving from Point A to Point B and then to Point C.
"The building itself is a mass overhaul in how things are laid out," Urschel said. "We had very little flexibility before, but now we can do more advanced manufacturing where we center all these operations."
Urschel machines slice pretty much all the potato chips you can buy in the United States, as well as other potato dishes, pickle relishes and soups. They can dice 2,000 pounds of potatoes in an hour, or up to 10,000 pounds of cheese.
The machines the company makes can be adjusted to produce any sort of food products.
"There are only so many foods and ways to prepare them. A potato can only grow so big before the inside will start rotting," Urschel said.
The last big revolution came in the mid-1990s when salad in a bag caught on as a trend for customers who appreciated the convenience. Urschel designed and started making machines that would take a whole head of iceberg lettuce and dice it into 1-inch-by-1-inch pieces.
"They bought them as fast as they could," he said. "They came to us looking for a solution. But largely it's an incremental business."
About 28 percent of Urschel's business is selling new machines, while another 28 percent is replacing the knives, Urschel said. The biggest chunk — 44 percent — is selling spare or replacement parts.
That's because Urschel machines are built to last. Many have been around 30, 40 or 50 years. Historically that has been one of their biggest selling points.
"The kind of philosophy we've had is that if we build something that breaks in five years, customers won't be nearly as satisfied as if it lasts for 30 years," Urschel said. "We teach customers how to maintain the knives and spindles, and lubricate it for the long haul. We're not fly-by-night. We've been around a while."
Urschel products are associated in the marketplace with quality and longevity, he said.
"Historically, with 106 years of history servicing processing customers, we see a lot of overlap," Urschel said. "When employees change careers, they don't go from Johnsonville to NASA. They tend to stay in the industry and go from Johnsonville to Kraft. If they've found our equipment to be reliable, they're going to promote our equipment. That helps us a little bit and lends itself to new opportunities."
The world has gained a much better understanding of hygiene and germ theory since Urschel first manufactured many of the machines currently out in the field, so now it's making more hygienic replacements where bacteria can't gather and grow in crevices. The surfaces are smoother because of improvements in metal and machine tools.
"Nothing lasts forever," Urschel said. "We have to maintain the goal of making more sanitary machines. We stay sensitive to customer demand."
Urschel has roughly 90 percent market share and its closest competitor only has about 10 percent. The company has sales offices all over the world, including in Argentina, Italy, Spain, Portugal, Germany, India and Thailand. It also does business in countries like Turkey where it doesn't necessarily have enough customers to justify having a sales and support team on the ground.
"We sell on every continent except Antarctica," Urschel said.
For a long time about half of Urschel's sales were in the United States and half were overseas. But now about 45 percent of its business is domestic, and about 55 percent is abroad. Europe accounts for about 28 percent of total sales. Urschel has seen increased demand in the South American market, where it opened a new sales office.
Growth has been occurring in developing countries like India, which turn to centralized food processing when they build up their roads and infrastructure, Urschel said.
"The main growth drivers are more people and more people," he said. "We have the philosophy of running a marathon, not a sprint," he said. "We've carved out our own blue ocean here in the processing world and we're quite happy with what we've got. We don't need to expand like the house is on fire. We can stay steady."