Hytrol aims for future growth
Conveyor maker benefited from online retail’s surge
JONESBORO — Hytrol saw 30% annual growth from 2020 to 2022, supplying the conveyors e-commerce companies needed during their pandemic boom as customers shopped online.
Shipping and receiving companies have always been a big part of Hytrol’s business, and outfitting warehouses and distribution facilities makes up the vast majority of its work.
“We sit here in Jonesboro, Ark., and quietly process tens of millions of pounds of steel a year,” said Bob West, Hytrol’s vice president of corporate development since 1994, in a recent interview. “If you pick something off a shelf somewhere in the United States, there’s a pretty good chance it went across one of our conveyors on the way.”
Technological ingenuity and canny business decisions that have gotten the business into nearly every sector of the economy have helped Hytrol (a contraction for “hydraulic controls”) grow since its 1947 founding. Strategic planning now incorporates artificial intelligence and automation in manufacturing.
Tom Loburg founded Hytrol in the Milwaukee suburbs and the Loburg family still controls the company. It moved the business to Jonesboro in 1962 in part because of state and economic local incentives.
“Tom’s facility in West Allis was right down the street from Allis-Chalmers,” said West, referring to the 20th-century Wisconsin agricultural machinery giant. “He got tired of training employees and losing them down the street, so he was looking for a place to relocate. He wanted to get away from all the industrial competition in the
northern part of the United States.”
Aside from Colson Casters, West said Jonesboro had “almost zero industrial manufacturing” in 1962. “Everything else was agriculture or food,” he said.
But agriculture was mechanizing then. Loburg’s first 25 Arkansas employees were former farm workers, and West said their mechanical skills enabled them to quickly learn how to make conveyors.
Henry Ford first employed conveyors in a recognizable way, and Loburg was one of the first to establish himself in the emerging industry. Conveyor systems began incorporating more computer systems in the late 1980s; Hytrol technicians now spend a lot of time figuring out whether problems are because of hardware or software.
Today, Hytrol is the largest conveyor system manufacturer in the United States, making everything from gravity-powered sloped conveyor systems to high-speed sorting equipment. Products, parcels and other goods have bar codes that are scanned and sorted into the right lane to get into the right truck. Such systems are hundreds of feet long, powered by 40-horsepower motors and can handle thousands of packages an hour.
Hytrol pioneered technologies that ensure packages never touch along the conveyor, protecting them against breakage; the gaps also allow for sorting.
The company headquarters, main factory, technology development center and 150,000-square-foot warehouse are in Jonesboro; another manufacturing facility opened in Fort Smith in 2021, in part to ensure production could continue if anything ever happened in northeast Arkansas and in part because of hiring difficulties in the region.
“Unemployment in the Jonesboro metro area is 2.7%,” said West. “We’ve been thinking for some time about how we can expand. We can expand this building — we have expanded it many times — but we can’t expand the employee pool, and it’s getting smaller.”
Though West said Hytrol has some kind of presence in every industrial sector, the overwhelming majority of the company’s business is for parcel handling companies like UPS and FedEx and product distribution for companies like Amazon. Warehousing and distribution is seeing the most growth right now.
“People don’t know who we are, generally, because our go-to market strategy is, and always has been, that we don’t sell directly to end users of the product,” West said.
Hytrol sells through local integration companies, typically industrial engineering companies, who get specifications on what customers need. Hytrol then works with the companies to design a system to solve their problem. Loburg considered himself an inventor, not a salesman, and therefore had a distribution network, around 95 domestic and 25 overseas, set up for his company.
Hytrol’s competitors include Atlanta-based Dematic and Charlotte, N.C.-based Honeywell. The Jonesboro area itself has developed as a conveyor industry center: other local companies include FMH Conveyors and the Roach Manufacturing Corporation in Trumann.
“They’re all spin-offs from other companies or consolidations from companies that got bought,” West said of the big competitors. “We’ve had the same ownership, the same kind of structure. And the big difference between us and the other players in the industry is, if the customer or project gets big enough, the manufacturer will go directly to the end user and cut out the integrator.”
West compared the distribution system to motor vehicles. Manufacturers sell to most customers through dealerships, but big enough customers can go directly to the manufacturers for orders. Not having a sales team saves Hytrol money. Akin to a wholesale network, every Hytrol integrator buys at the same price, which encourages efficiency and the integration companies’ price competition; West said Hytrol hardware typically costs around 30% of a project, and integrators can charge whatever they want for the rest.
The integration companies don’t only sell Hytrol conveyors. The diverse network of integration companies all sell to specific industries, which engenders diversification in Hytrol’s business.
“Even when business turns bad nationally, if there’s any conveyor business to be had anywhere, we know about it, because we have an integrator in there working with those folks,” West said.
The Jonesboro factory is becoming increasingly automated. West said existing employees will be trained to handle engineering and design work as automation continues.
U.S. labor participation is expected to decline over the next decade. West said Hytrol is “fairly rapidly” beginning to see it.
“We have to automate everything that doesn’t require a lot of brain work and use those brains for things we need them for,” he said.
Hytrol stopped mass-production manufacturing in 2005, instead making products just as they were needed. West said there were 200 more employees than were needed back then, but they transitioned away from workin-process and material-handling roles to “jobs that were a lot less mundane than just moving things around,” West said.
Hytrol was an essential pandemic business and supported the boom e-commerce experienced, to the degree that it had to turn business away.
Hytrol’s growth has slowed since then, in part because retailers are still integrating all the equipment they bought during the pandemic. But business picked up again last year. Companies that want to get ready for the Christmas season rush have to buy conveyor equipment by May at the latest: Hytrol’s small systems (orders of $100,000 or less) take two or three weeks to manufacture and ship out, but big systems take 10 to 12 weeks.
Artificial intelligence is now causing a second transition. Hytrol has millions of technical plans for conveyors from its 77 years in business, most of which have been forgotten, necessitating the models have to be designed again. “What AI’s going to allow us to do is, as soon as we see a new order come in, it’s going to scan everything we have and everything we’ve ever done and say, ‘Here’s what we did before,’” West said.
Hytrol engineers “are still going to be doing designs, but we want them to be doing the next greatest thing,” West said. “If we can find AI advantages that AI reveals to us, then we’ll use those, obviously.”
He said payroll and other office jobs can be automated with artificial intelligence. Robotics are “co-working” with employees on the factory floor: humans are putting materials where they need to be, and the robots weld them.
“We know we have to have more ‘co-bots,’ we’re going to have to have more automated processes,” West said. “The shrinking employee population is boomers retiring, and there aren’t as many people coming into the workforce. We have to automate that. The other part of that is there’s a gap there where a lot of the people that we hire have no experience other than sitting in front of a keyboard.”
The economy will continue to change and industries develop, all supported by fewer employees.
Layoffs are not planned; West said one of the benefits of being a private company is no shareholder demand to maximize profits by cutting payroll. He said Hytrol is considering mergers and acquisitions as it plans for the future, but that the business is not for sale.
“The family doesn’t want to sell, employees don’t want to sell. Amazon probably would have bought us if they had the opportunity; it’s not for sale,” West said.