A new direction
Business has been so good in fact, the 35-year-old Peake has been working up to 18 hours a day, seven days a week — and he wouldn’t have it any other way.
“It was a hectic night last night,” he recalls during a break on an atypically slow day in September when Snips paid a visit. “Quotes going out left and right. I love it.”
So with the economy slowing and other nearby sheet metal shops laying off workers, what’s Midwest’s secret?
It’s simple, Peake says: Midwest Metal is strictly a fabricator, concentrating on making spiral and rectangular duct and fittings for hvac contractors in Ohio, Indiana and Michigan. Because they only do fabrication, Peake says they can usually do it quicker — and cheaper — than a shop that fabricates in-house and also installs the ductwork. Lead times on most projects are less than a week. With a 20,000 sq. ft. shop equipped with the latest in sheet metal machinery and the ability to transport it on short notice, Peake says he’s found a formula for success.
A frustrating experienceIt was a sense of frustration which led to Peake’s decision almost two years ago to consider starting his own hvac sheet metal firm. He watched the shop where he was working lose bids because it lacked the latest equipment; employees were still making most duct by hand. And it upset him to see bids go to non-union shops that paid far lower wages. He was convinced a shop with a coil line and spiral machine that concentrated on fabrication only and did not deal with installation could be a success. He was also sure he could do it profitably with union workers.
“I had done some research and talked to quite a few contractors in the area to see how they would receive it,” Peake says. “It’s gone over very well.”
He found a pair of like-minded individuals in Jon and Jason Neuman. The father and son both had experience in sheet metal fabrication, management and sales. They liked Peake’s idea of doing fabrication without installation. The three men became partners. To come up with the considerable capital it would take to create a shop like the one Peake envisioned, they sought unconventional financing sources, including a regional loan program from the Ohio Department of Development. The program targets economically distressed areas such as Lima and covers up to 50% of the cost associated with acquiring the land, machinery and facilities to start a business. In exchange for the low interest rate loan, the partners agreed to create or retain a job for every $35,000 they borrowed.
For Midwest Metal’s fabrication shop, they found an abandoned warehouse in an industrial section of the city. It had once been used as a manufacturing plant by Westinghouse Electric Co. Except for a few electrical renovations, the building was ready to use. Brightly lit and well organized, it has plenty of room for equipment and storage.
Not far off I-75, the shop’s location is ideal, according to Jason Neuman, vice president of sales for the company. “We’re about an hour from Toledo, an hour from Columbus and an hour from Dayton.”
With a location decided on, the next step was to purchase equipment. Peake knew he needed a six foot coil line, and he chose an Engel. “It was the first thing I bought,” he says.
A well-stocked shopWith the six foot Engel coil line, Midwest is able to offer five or six foot lined or unlined duct with TDF or S and drive. The shop also has Chicago Brakes, an Atlantic Shear, Engel Pittsburgh and a free standing TDF, which Peake says allows the company to be more cost effective on ductwork and fittings. The shop also has a six-foot Beadmaster, a six-foot Vicon plasma table and recently purchased an Ovalformer spiral machine. Midwest also sells DuroDyne and Ductmate products.
When it came to picking the right pieces of equipment, Peake says he was a hard sell. Not content to take the word of a company representative, he traveled across the country, visiting shops and manufacturing facilities where he could see each piece in action. “I have this saying — I don’t buy it unless I can see it run. If I can’t see it, you can’t sell it to me,” he says.
Much of the equipment was bought from Central West Machine in South Bend, Ind. Peake says the assistance of Central West owner Kim Trinkley proved to be beneficial. “He’s helped us locate a lot of our equipment and we’ve gotten a lot of good deals through them on some good used equipment.”
As they were preparing to open last January, the economy started to soften, both in west central Ohio and nationally. One nearby sheet metal shop cut its workforce from 25 employees to five. However, Neuman and Peake were undaunted. “We knew (the economy) was starting to soften, but we knew we had a niche in this market,” Neuman says. They also knew four new public schools were scheduled to be constructed within a 20 mile radius and those projects would not be affected by the economy. Fortunately for Midwest, their bids on two of the schools were accepted.
“The schools have been our biggest shot in the arm, keeping us busy,” Neuman says. “We’ve been pleasantly surprised.” Other projects the firm has worked on include office renovations, hospitals and factories, including some work for Cincinnati-based consumer products giant Proctor & Gamble. “We’re shipping ductwork all over,” Peake adds. Recent jobs have seen Midwest-made ductwork go to Warsaw, Ind. and Holland, Mich.
Experienced workersAll of the equipment is run by Midwest’s seven experienced workers, all members of Local 24 of the Sheet Metal Workers International Association (SMWIA) of Dayton. The company is also a member of the Sheet Metal and Air Conditioning Contractors National Association (SMACNA).
“I like the guys that are out there in the shop right now,” Neuman says. “They’re sound, they’re presentable and they have a good work ethic.” And while many shops are cutting back on hours or staff, Midwest has regular overtime opportunities and is looking to add to its staff, Peake says. The company is even forgoing the usual seasonal layoffs.
“I told these guys we’re going to produce and keep (them) on staff,” Peake says.
Peake and Neuman say they know Midwest won’t succeed if they don’t convince mechanical contractors in the area that they can make the duct contractors need in less time and with less cost than the contractor’s own in-house operations. So how do they do it? By running a lot of duct on their own truck and fabricating it as soon as the order comes in whenever possible.
For example, Peake says a contractor recently called on a Friday afternoon, saying he needed 10-in. and 14-in. spiral pipe and elbows and wondered if Midwest would be able to get it to the job site by Monday. Peake told the contractor he could do better than that — he would fabricate and deliver it to the contractor personally the same day. The contractor was more than pleased, Peake says.
Midwest also routinely labels each piece to make it easier for workers in the field to install. “It’s the little things like that that make us think we can (make a difference) as newcomers,” Peake says.