Kentucky Trailer makes the most of a time when sales are at their least
Jul 1, 2010 12:00 PM, By Bruce Sauer
NO ONE wants business to tank. But if it does, what should you do about it?
In the case of Kentucky Trailer, you build for the future.
The company, founded as a covered wagon manufacturer in 1879, knows a thing or two about making it through downturns and depressions. There have been plenty of them in the 131 years that Kentucky has been in business. Last year was simply the latest — albeit one of the worst.
Recognizing that bad times come and bad times go, the company did what may seem counterintuitive when business is bad. It moved into a new plant.
The decision really had nothing to do with a downturn in business or even an upturn in business. It had everything to do, though, with having a “right-sized,” more efficient manufacturing operation — one that would better position Kentucky Trailer for what tomorrow's manufacturing will look like.
As it turned out, the timing was ideal, says Gary Smith, president.
“The severity of the downturn made it possible for us to be able to move in a way that we couldn't when business was booming,” he says. “We had the ability to shut down production in order to get things set up the way we wanted them. We were completely dark for four weeks, and for seven weeks total we were at less than our capacity.”
But with the move — and apparently the latest recession — behind them, the decision has begun to pay dividends. Example: 67% reduction in electricity costs, and a whopping 80% reduction in heating expense, both of which can come in handy at a time when every penny counts.
The idea of moving into a new plant was something Kentucky was considering long before the downturn. Things got serious when Smith became the company's president in 2007.
“From Day One, I wanted to modernize our facilities,” he says.
That's because Kentucky Trailer at that time was building trailers at the same place where it used to build wagons. Like many manufacturers with long histories, the plant had been expanded numerous times. The result was a campus of multiple buildings, one that limited Kentucky's ability to manufacture efficiently.
When new, the Kentucky Trailer plant was on the outskirts of Louisville. The University of Louisville, founded in 1798, was in the general vicinity of the wagon manufacturer.
Today, the site is in the heart of Louisville, and the University of Louisville has surrounded it. In management's way of thinking, eventually the university would need the property, and Kentucky Trailer would need to find a new place to manufacture.
At the company's strategic planning meetings in December 2007, negotiations began with the university to acquire the property. Parallel with that, Kentucky began the search for a new location. Initially the company considered leaving the state, seriously considering moving to a site in southern Indiana. That caught the attention of government officials back home.
“When the City of Louisville and the State of Kentucky learned that we were considering a move, they asked us what it would take to keep us here in the Louisville area,” Smith says.
New home
After an extensive search, Kentucky found a building that had been built on spec as a warehouse and had never been occupied. The building provided Kentucky with high ceilings, good ventilation, good lighting, and (perhaps most important) the ability to fit its entire production under one roof.
Kentucky closed on the sale in November 2008 and took six months to move trailer assembly into the new location. The company began assembling trailers in June 2009, with fabrication and painting remaining at the old location. Since then, Kentucky has moved fabrication to the new plant and plans to have paint — the last operation remaining at the old facility — up and running by the end of the year. At that point, Kentucky Trailer will turn the property over to the University of Louisville.
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