In 2002, the owners of American Control Electronics based in the Los Angeles area, asked (now President) Dan Schnabel, to research the best place to move their company. Dan put together a research effort with a list of factors that needed to be considered in making a move.
The company designs and produces a wide variety of AC and DC electronic control systems and power products used in industrial, commercial, EV, medical and home automation markets. It has also developed several “Green” products that control motors from battery and/or photovoltaic power.
The company had started as a repair shop in the L.A. area but had grown to manufacturing its own products. It was in a location that made finding qualified employees troublesome and had also established a nice customer base located in the Midwest.
Dan was from the Milwaukee area originally. The company owner knew about the “Midwest work ethic” which is not as prevalent in Southern California. The decision was made to move operations to the Midwest.
After much research and study, the company narrowed its choices down from 20 locations to a top 3. Dan and other employees researched where they wanted to live based on the original decision factors. They visited the communities, asked questions of the communities, studied the education systems, and looked at the housing and amenities in the communities.
The company’s market is industrial motors. Dan says he did research to identify where the motor manufacturers in the U.S. were located. He identified 60 of them and found half of them were in Illinois or adjacent states. “That put Illinois in the bullseye.”
Dan says the available plant location located in South Beloit, Illinois, scored the highest. He visited possible locations in South Dakota, Wisconsin, Missouri, and Indiana. They chose South Beloit because of the available workforce and the strategic location. He really emphasized the quality of the workforce that made it possible to move all the business across the country and be up and running quickly.
Dan says the Hononegah School District is an excellent system. The average ACT scores of the entire student body is 23.5 compared to the national average of 21.0, for example. He says the team looked at affordable housing costs as a great advantage over California. They looked at quality of the workforce, closeness to interstate highways, international airports, and air freight facilities. He says the final choice in South Beloit scored very high in all categories.
The company found a 20,000 square foot facility that had been built in 2000. They bought the facility in 2002 and added 15,000 square feet on the six-acre site. The company moved all their equipment from California. The plant already had 1800-amp electrical power, air conditioning and a humidity-controlled environment. The State of Illinois helped with the move by enabling a $1,000,000 line of credit based on the number of full-time employees that American guaranteed would be working after one year.
Dan sees further growth for the company. Although he acknowledges that the manufacturing “density” of business is down from a few years ago, he says the advantages of knowledge and know how, and the ability to create ideas and products is still very much evident in the U.S. He sees his company as being able to work with customers to create customized motor controls and maintaining a chain of invention and transfer of subsequent manufacture to lower cost countries.
Dan also notes that the number of cars manufactured in the U. S. is level with several years ago, thus not growing his market, but he notes the penetration of electronic controls into consumer and commercial markets is greatly increased, and thus the market for the company’s deliverables is growing strongly.
Dan says the company is always looking to hire people with electrical engineering and technical expertise. He says 20% of the employees are degreed engineers. He sees opportunities for people with experience beyond the classroom as well as recent graduates. If the company cannot find new hires, the team works extra hours to meet demand. He is also proud that over 60% of the employees have been with the company over ten years.
When the company moved from California 12 years ago, 20% of the employees transferred to Illinois, and half of those had not even been to Illinois. However, they saw the great education system and the affordable housing. Most were not able to own a home in California.
Dan is proud of the company’s reputation as being “a small company with a big heart.” He says the company and its employees support many community efforts including blood drives, United Way, and food pantries to name a few. He says his employees, on average, have a lot of work and life experience. They appreciate the importance of community and, as a result, they are more likely to contribute time and money to help.
Looking into the future, Dan says his company has been acquired by a private equity firm and now has a sister company that is a gear manufacturer in St. Louis and another company that manufactures motors in China. This gives American more capability to put together product packages and not sell only the controls portion of a customer’s requirements.
Fifteen years after the decision to move the company here from California, Dan conveys a strong satisfaction with the move and the effect it had on his company.
By JAC, RAEDC Correspondent