When I first sat down with Jim Zak, Plant Manager for Graetz Manufacturing, he laid it right on the line. “When we got the first bill with the new electric rate last June and it had almost doubled from the month before, we had some hard decisions to make. Alton Graetz [President of Graetz Manufacturing], Jamie Graetz [Vice-President] and I sat down and discussed how we were going to handle this. Of course, the electric bill was not the only increase we saw in the last year. Our options were to drastically downsize the plant, move the plant to another state or stay here and work through this,” Jim explained. “Graetz Manufacturing is a family business in its fourth generation and this area is home. We didn’t want to shut down any part of the plant and we didn’t want to move so we decided we had to find a way to absorb the extra costs that are coming at us from many directions while staying competitive.”

And that is exactly what Graetz Manufacturing has done. With some creative thinking from management, employees and Oconto Electric, Graetz Manufacturing has been able to reduce expenses while still producing high quality parts for a number of industries.

HOW IT ALL GOT STARTED

Graetz Manufacturing, located west of Pound, Wisconsin on State Highway 64, began as a blacksmith shop named C.S. Graetz and Sons in 1936. Edward Graetz and his father, Clarence, repaired farm machinery which usually involved making machine parts of some kind.

In 1941 a local farmer approached the two Graetz’s wanting to reduce some of the day-to-day work of farming so they designed and forged the first barn cleaning apparatus which used horses to power it. An electric silo unloader was designed soon after. At this point the business grew very quickly and more Graetz family members joined the company so they officially changed the name to Graetz Manufacturing.

During the 1970’s Graetz Manufacturing employed nearly 400 workers. The plant was wall-to-wall machining equipment. These machines required a lot of electricity to run which made the plant OEC’s largest customer.

CHANGES IN THE INDUSTRY

For many years Graetz Manufacturing relied solely on the farming industry for its income. With the changes that have taken place on farms over the past two decades, Graetz Manufacturing has also had to change to stay profitable.

The company has diversified and now makes parts for many industries including aviation, logging, foundries, automotive, marine and food service. Today much of their competition comes from foreign markets. The company holds several patents on parts that they have designed, the latest of which occurred in 2006 for a non-detaching barn cleaner chain used for both modern farms with pits and pumps and the logging industry. Jim explained that it is very difficult to enforce those patents in overseas markets. He also told me that due to lack of governmental regulation of safety, pollution and employee wages, it is very difficult to compete financially with overseas manufacturers. So when the electric rate increase came along, raising the price of their products was not an option.

CHANGES INSIDE THE PLANT

One thing that needs to be made clear is that when Jim, Jamie and Alton sat down together to decide what would happen to the company, it wasn’t just the price of electricity driving the discussion. During the past year the price of steel had doubled. Other fuels such as propane and gasoline had also increased dramatically driving up the cost of producing quality products and any person in any kind of business knows what the cost of health insurance has done to companies.

After making the decision to keep the plant running right where it is, the three men went to the employees. They explained what was happening with expenses, the fact that they can’t simply increase the price of their products and asked for ideas in how they would handle this. At the same time, Oconto Electric sent Steve Stackhouse to Graetz’s to explain what is specifically driving up their cost of electricity. Steve, a long-time friend of OEC, recently became the cooperative’s consultant to large business accounts. It is his job to help large commercial and industrial accounts cut costs while at the same time, helping OEC save money by reducing demand.

You may have read about how demand affects Oconto Electric in past articles but I would like to explain it again. Demand is the measure of how much electricity OEC is purchasing at any one time. During a billing month, OEC pays a demand charge for the one-hour in the month when we require the most electricity. This will almost always occur during a period between 8 a.m. and 8 p.m. Monday through Friday. The demand charge is hundreds of thousands of dollars each month - a significant expense to OEC. The more we can reduce the demand, the more money that OEC will save and that benefits all of our members.

Everyone who purchases electricity contributes to OEC’s demand but industries and large commercial accounts, such as Graetz Manufacturing, contribute much more than the average account. Oconto Electric bills these large accounts for the demand they contribute to the system. This is a large component of Graetz’s power bill each month. So the issue for them is not so much to reduce the number of kilowatt-hours they use, but how and when they use them.

EMPLOYEES WORK TOGETHER TO REDUCE EXPENSES

Once the employees understood the situation, they came up with several excellent ideas that would help reduce the demand and other expenses of the company.

• First they changed the hours they work. The plant begins operating earlier to avoid a late afternoon demand peak. Not only does it reduce the cost of electricity, the employees seem to really like the new hours.
• Lighting is another huge expense to the company. They are currently working on retrofitting their lighting fixtures with new bulbs that use less electricity and provide more light.
• They have also come up with some new processes that make production more efficient. Jim Zak explained, “Every time we touch a part, it adds to the expense of making that part. The more we can integrate the processes so that a part automatically goes from one process to another without an employee physically having to touch that part, the more efficient we become.” Employees are rewarded if they come up with an idea that can be put into practice and they have been very creative.
• Management has also been investing a considerable amount of money to change the way things are done. Many old energy-hogging machines have been replaced with new state-of-the-art CNC machines. CNC stands for Computer Numerically Controlled. Once a CNC machine is programmed to create a certain part, someone simply loads the raw material into the machine and it will run on its own, making as many pieces from start to finish as it has material for.
• Each machine in the plant needs to have compressed air available. Graetz used to have one 60 horsepower air compressor for the entire machine shop. Recently they purchased a new higher efficiency 40 horsepower air compressor that will reduce energy consumption considerably. A sizeable investment but one that will pay off in a relatively short period of time.
• As part of Oconto Electric’s Load Management program, we have installed an alarm system at Graetz Manufacturing which lets them know when we are about to reach a demand peak. When they receive the alarm, they immediately begin shutting down machines to reduce their load on our system.

GRAETZ MANUFACTURING – A GOOD MEMBER

Working together, Graetz Manufacturing and Oconto Electric Cooperative are making a huge difference not only for each company but for every member OEC’s serves. I enjoyed visiting with Jim Zak and meeting Alton and Jamie Graetz who, by the way, can all be found working right alongside the other employees in the shop. They are all enthusiastic about seeing Graetz Manufacturing continue to be a local, family-based company that cares about their employees and their products. It will be interesting to see where that enthusiasm takes them in the future. Wherever that is, Oconto Electric Cooperative will be right there to do whatever we can to help them.