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Saturday, 11 August 2012 10:20

Alternative Engineering credits SBA loans for turnaround

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GRAND RAPIDS — Thanks to two substantial Small Business Association loans, Alternative Engineering will soon be moving operations from their cramped Broadway Avenue location in the RT London complex to a location on West River Drive.

Alternative Engineering is a designer and manufacturer of material handling equipment such as conveyer belt systems, lifts and their specialty: conveyor systems that interface with factory robots.

These conveyor systems were quite popular with clients in the automotive and construction equipment sectors, such as General Motors, Chrysler and Caterpillar. However this niche focus made Alternative Engineering particularly affected by the economic downturn, according to Robert Rodriguez, owner of Alternative Engineering.

“In (20)09, when the bottom fell out for all of us, we learned we had to be more efficient,” Rodriguez said.

In addition to increasing efficiency, Alternative Engineering had difficulty stabilizing its finances. Sales dropped dramatically from $2.7 million to $600,000, and Rodriguez was forced to cut 15 staff members. In 2009, Alternative Engineering received its first SBA loan amounting to $360,000 as part of the American Reinvestment and Recovery Act. Rodriguez credited the loan with helping the company stay afloat during the recession.

“Without the SBA we wouldn’t be here,” said Rodriguez.

During the recession, Alternative Engineering also diversified and adapted to the changing market. However, with the auto industry picking up and the diversification efforts paying off, Alternative Engineering had to turn to the SBA for help once more, but this time with the opposite problem.

Sales rebounded in 2011 to above pre-recession levels, and Rodriguez projects sales to increase to $20 million and staff to increase to 65 by 2020.

“We’re growing like mad right now,” Rodriguez said. “We’ve got more work, so we’ve got to spend more money to keep up with the demand.”

In addition to hiring more employees and buying new machinery, Alternative Engineering needed more space. Its new 44,000-square-foot factory will be nearly three times the size of Alternative Engineering’s current space. The space is also pre-outfitted with compressed air and nine cranes left behind when the previous tenant went bankrupt. According to Rodriguez, Alternative Engineering acquired the space for less than half its estimated value of approximately $2 million.

Marie Johns, deputy administrator of the SBA, said she was pleased to see that the loans backed by the SBA were paying off when she visited the soon-to-be former location of Alternative Engineering on Aug. 9. In her remarks prior to a tour of the facility, Johns credited the economic recovery policies put in place by President Obama for helping small manufacturers and businesses grow.

“These are President Obama’s policies in action,” Johns said. “When all of our sectors work together, then we can really get things done.”

Read 873 times Last modified on Tuesday, 14 August 2012 09:17

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