- Created: 2017-02-07
How Scotchman Industries grew from humble beginnings in a tiny town to celebrating 50 years in business
by Jimmy Myers, senior editor
Art Kroetch made his humble beginnings producing farm-related products in this old structure in the 1950s.
Big businesses in small towns – sometimes it just works. Sure, there are challenges, but Scotchman Industries Inc., located in Philip, S.D., a town of 880 residents, not only made it work, they’re thriving. In fact, 2017 marks the company’s 50th year in operation.
Art Kroetch founded Scotchman in 1967 after years of making and selling farm-related products to area ranchers and farmers out of a small shop starting in the 1950s. Gates and chutes, pickup stock racks, corral panels – these were the staples of Kroetch’s business in the early 1960s.
One of the most important of the early milestones for Kroetch’s company involved the purchase of a patent for a hydraulic ironworker, the first of its kind. The year was 1966 and the machine Kroetch created the next year around that patent would alter the course of his career and offer a staple for employment for the residents of his small town that he held dear to his heart.
Art Kroetch could see the need for hydraulic ironworkers, even if the person who designed it thought the market was nearly saturated.
Art Kroetch founded Scotchman after purchasing the patent for the first hydraulic ironworker. He built his first machines in a small garage before moving the company into an old eight-lane bowling alley in Philip, S.D.
“My dad saw past that saturation,” says Jerry Kroetch, who took the job as president of Scotchman 16 years ago. He says the inventor of the patent made and sold 112 machines, thinking he couldn’t sell more. Scotchman has since sold thousands upon thousands of them. “Hardly a day goes by that we don’t take an order for an ironworker,” he says. “We keep asking ourselves, ‘when will we saturate the market?’”
Today, Scotchman is the oldest and largest hydraulic ironworker manufacturer in the United States and the largest manufacturer of circular cold saws in North America.
Four years after founding the company, Art Kroetch moved production into a former eight-lane bowling alley in Philip. During the past 40-plus years, the company has added onto that building several times over, and it is now spans 120,000 sq. ft.
Scotchman moved into a former eight-lane bowling alley in the early 1970s and has since expanded to a 120,000-sq.-ft. production facility.
Today, Jerry Kroetch is at the helm at Scotchman, carrying on a tradition of proudly producing American-made machines that continue to add value for manufacturers. Kroetch is just as excited to talk about his employees as he is Scotchman’s products.
“There are pros and cons both ways,” Kroetch says of being headquartered in a small town. “The biggest benefit is our employees. Most of them are local people. The community means as much to them as the factory does.”
The town is not only small, it’s also uniquely rural. Kroetch says Philip residents have to drive 85 miles in any direction to find their first stoplight. Like most small towns, the residents know everybody within miles of the city limits, offering a degree of camaraderie that large cities don’t experience.
“Most of us grew up together,” Kroetch explains of Scotchman’s employees. “They take a tremendous amount of pride in what they do and in doing it well. It’s that small-town family aspect that makes Scotchman thrive on a day-to-day basis.”
Another advantage to having employees from a rural area is that many of them grew up on a farm or ranch, working the family land in their youth, and developing a strong work ethic.
“Many start working a job when they’re 14, 15, 16 years old,” Kroetch says. “It’s hard to find that in a bigger city. Most of the residents in bigger cities don’t go out and find part-time work until they’re out of high school and they’re never taught how to work. Our employees were taught how to work long before they started here. It’s a huge asset for us.”
Kroetch is an obvious advocate for his community, but he’s also extremely proud to be part of a company that can tout “American made.” While they don’t see a great amount of benefit from that in a marketing sense, they all take pride in it.
The American-made pride is evident in the production facility as an American flag is draped at either end of the plant.
“American made is near and dear to all of us,” Kroetch says. “Not just myself, but to every employee here.”
Scotchman took a number of products to Las Vegas in November for Fabtech. Kroetch says he had several people come to their booth and place orders for their machines simply because they are American made.
“We employ nearly 10 percent of the people in Philip,” Kroetch explains. “American-made is a big deal for this community and we are all proud of it.”
Throughout the years, Kroetch hasn’t been passively involved in the company. In fact, he’s held just about every position in the company since he was a kid. He’s swept floors, taken on welding and machinist responsibilities, and worked in customer service and as a sales manager. Even though he’s president, he still makes a point to get to know the employees if he doesn’t already know them, and he’s not above tackling ground-floor positions when required.
“I’ll still go out and load trucks if it’s needed,” he says.
Kroetch says the company started out producing a 30-ton machine in the 1960s. Fifty years later, they manufacture 13 different models of hydraulic ironworkers, from 45- to 150-ton machines. They produced a machine years ago that was classified as single-operator, and now offer dual-operator machines, so two people can work with the machines at the same time.
For a short time after his father retired in the late 1970s, new management began importing circular cold saws from Taiwan. It made sense to expand into these saws because they pair well with ironworkers. However, the quality of the product from Taiwan at that time was lacking, so they began reaching out to a manufacturer in Holland.
The quality was phenomenal, Kroetch says. Scotchman imported a high volume of the circular cold saws until 1988 when they started a joint venture with the Dutch company to manufacture the saws in Philip. In 1993, the Dutch partner went bankrupt, leading Scotchman to buy out the 50 percent ownership from the Dutch company, making all their products truly American made once again.
Scotchman has also added bandsaws and tube and pipe notchers to their product lineup.
While Scotchman holds on tightly to its traditions in western South Dakota, they’re not immune to grasping on to new technology to add value. Mike Albrecht, national sales manager for Scotchman, says they are currently invested in automation, particularly in their advanced feed system. Ironworkers aren’t going to change much, he says, but they are working on automated systems to make their ironworkers and circular cold saws more efficient and effective for the customer.
For instance, ironworkers can now be equipped with automated punch systems, which the company rolled out at Fabtech in November. With this automated feature, operators no longer have to take the time-consuming steps to lay out each hole that needs to be punched on the material. The automated system allows the operator to index each hole and let the feeder system automatically run the material exactly where it needs to be for each punch.
“It simplifies the punching process by taking that step away from the operator,” Albrecht says. “All the operator has to do is step on the pedal to make the hole when the pusher moves the material into position.”
Albrecht says automation drastically improves production. However, Scotchman won’t fully automate a machine due to safety concerns. Ironworkers have multiple stations running at the same time, which would make full automation dangerous for operators, Albrecht explains.
The feeding/stop system for the ironworkers also works with Scotchman circular cold saws. In some cases, it’s used as a pusher and in others it works as a programmable stop. Using a Windows-based tablet, all indexing can be done via a touchscreen. Training a new operator on the system, Albrecht says, can take as little as four or five minutes.
While Scotchman continues to eye new processes to evolve its offerings, it continues to make parts for machines that are still in use by customers after 50 years.
Albrecht says he sees the future of the company focused on quality saws and ironworkers, yet with value added in the peripheries.
“Ironworkers and saws are a staple in any fab shop, which I see continuing forever,” he says. “They’re the base machines that do the bread and butter work. I don’t foresee them ever going to full CNC, full computerized machinery. They’re still some of your basic manually operated machines. We’ll just continue to add value to our product line.”
Kroetch says he has no intention of ever moving Scothman’s headquarters out of Philip, let alone out of the country. He might have had doubts about this many years ago during the winter when temperatures plummeted to sub-zero, prompting him to inquire of his father why he decided to found a company so far north. He wondered, “Why not go south into more moderate climates?”
“You should have seen the evil look he gave me,” Kroetch recalls. “My dad was born and raised on a farm 15 miles north of Philip. This is home. It’s always going to be home. My dad spent a lifetime making sure Scotchman Industries stayed in Philip, and I’m going to try to do the same thing.”