NILES — One Southwest Michigan supplier of industrial coatings aims to double the size of its organization through a new expansion project.
Niles-based Toefco Engineered Coating Systems Inc. recently completed the construction of a new $3 million paint line that drastically increased the capacity of components the company can hang, spray and cure.
“It’s just one massive paint line that can do numerous different functions within the body of painting, whether it be powders or liquids,” CEO Artie McElwee told MiBiz. “We built it because we’ve grown with a couple current customers and we were awarded new business with new customers. We couldn’t accept the work due to the capability and capacity of our (current) line.”
The new line will allow the company to lift and spray a 750-pound part with a radius of 10 feet, compared to the 180-pound capacity of its current line, McElwee said. Toefco acquired a new 20,000-square-foot facility at 1919 Industrial Drive in Niles, a mile from its headquarters, to facilitate the new paint line.
The company also invested in a state-of-the-art oven that can cure a 750-pound part in eight minutes, along with several spray booths that have the capability to add robotic painting — which Toefco plans to purchase within two years, McElwee said.
For Toefco, the expansion will allow the company to go deeper in the industries it serves, which includes everything from automotive and aerospace to oil and gas and agricultural equipment.
“I think we’re going to see a sizable growth over the next three to four years, possibly doubling the size of Toefco,” McElwee said.
Presently, Toefco generates annual sales of between $6 million and $12 million.
Toefco’s growth target could materialize as the U.S. coatings industry continues to grow — albeit at a lower rate than in previous years. After declining in the years of the Great Recession, the $28 billion coatings industry grew approximately 3.1 percent per year from 2011 to 2016 as manufacturers and construction firms increased activity, according to a report from IBISWorld. However, that growth rate is expected to slow to 1.7 percent annually from 2017 to 2021 as regulations and a strong U.S. dollar reduce demand for exports, according to the report.
To reach his goal of doubling Toefco, McElwee plans to adhere to a “crawl, walk, run” growth strategy that hinges on going deeper into the markets it already serves while maintaining a diverse base.
For McElwee, the possibilities of the jobs Toefco can take on are limitless and could include anything from automotive gas tanks to large steel weldments.
“We’re just starting to come out of our crawl and getting ready to go online,” he said. “When I joined the company 22 years ago, it was (dominated) by two customers in the automotive world. I came in specifically to leave those two alone and grow it into what it is today.”
Now the company has 10 different divisions handling a variety of industries so that when one industry goes down, the others will keep the business consistent and allow it to avoid layoffs, McElwee said.
Toefco has been a family business from the start. The company was originally founded in Niles in 1955 by Jim Jaden, before being held by another family until McElwee’s parents purchased the business in 1994. McElwee, who had been working as a sales engineer for another company after leaving the military in 1988, joined his parents in the company in 1995.
“I did the leap of faith, swallowed hard and exited correctly from where I was at … and I never looked back,” he said.
While Toefco is bullish on its position in the industrial coatings market following the expansion, McElwee strikes a far less optimistic tone when it comes to talent — something the company has struggled with in the past, he said.
Toefco employs approximately 60 people and is planning to hire up to 20 more workers to operate the new facility. However, that may prove difficult as the company faces a constrained talent pool. Part of the talent challenge stems from its location near the state border, as northern Indiana’s booming RV industry has proven to be attractive to many workers, McElwee said. But the other factor constraining talent comes down to the quality of workers.
“The people that are coming to work are deplorable,” he said. “The millennials, the youngsters today, they don’t want to work, they don’t have any drive. I’m done. I’m literally using seven different employment agencies.”
To overcome its talent struggle, McElwee plans to target the veteran community through advertisements and active recruitment.
“I’m just a firm believer that the military puts things in a person that you don’t get in high school and honestly you don’t get at home unless you’re just in a superb household,” McElwee said. “The military gives you discipline in life.”
Made in Michigan: Niles-based Toefco Engineered Coating Systems Inc. plans to leverage a new $3 million paint line to double its business in the coming years. The company, which was originally formed in 1955, coats parts for a variety of sectors including the automotive, aerospace, heavy truck and agriculture industries. Thus far, Toefco has adopted a slow-and-steady growth strategy that hinges on diversification across industries to hedge against a downturn in any one sector. The company generates annual sales of between $6 million and $12 million and employs approximately 60 workers.