MOND Industries is consolidating its trailer manufacturing at a new 130,000-sq-ft plant and service center that opened in March near Toronto in Mississauga, Ontario, Canada.
By moving from seven different plants to a single plant, the company centralized production of its full product line including refrigerated van trailers, platform trailers, containers and container chassis, and dry freight and FRP vans.
"Operating seven different manufacturing plants was effecting our efficiency and killing us logistically," says Bert Clay, vice-president of sales and marketing. "Some of the plants were 20 miles apart."
Materials were being handled too many times between the different plants, says Denis Arsenault, chief financial officer. Having seven manufacturing locations affected Mond's bottom line, even though sales increased 18% in 1996. Mond's growth was constrained by lack of production capacity.
"Mond was paying rent on seven buildings, paying for seven different phone systems, and maintaining at least seven forklifts and other material handling equipment. Another problem was poor communication between multiple locations."
Overall Business Plan Locating the plant near a major metropolitan area where land and labor costs are higher was a strategic move. Mond's location fits in with its overall business plan to be more than just a trailer manufacturer.
The company hopes to moderate downturns in the trailer manufacturing industry by offering customers parts, service, and repair work. That's why Mond built the plant near major trucking fleets in Canada's largest city. More than a manufacturing operation, the palatial Mond facility has 8,000 square feet of offices, a parts counter, and 18 bays for service and repair work.
"Most trailer manufacturers move to rural locations for lower taxes and labor costs," Clay says. "We believe that's not maximizing long-range market opportunities."
The new facility opened in March and cost $8 million (all figures are Canadian dollars). It is the cornerstone of the Ontario Trucking/Transportation Centre in Mississauga, near the intersections of highways 401, 410, and 407. A Carrier refrigeration dealer is located adjacent to Mond, and a Freightliner dealership will relocate in the center from down the road.
"The trucking center is a major developing transportation hub of greater Toronto," Clay says.
24-Hour Service Center By October, Mond's service and repair center will be open 24 hours a day, seven days a week. Presently, the repair shop is open until 1 am, but four parts and service trucks operate 24 hours a day.
"Service, repair work, and parts sales contribute significantly to our overhead," Clay says. "When we reach our goals according to our strategic plan, with the exception of material costs and direct labor, trailer manufacturing will be almost pure profit."
In a recent three-month period, Mond tripled its parts sales to $300,000 each month, says Randy Papps, parts manager. Not including parts used in manufacturing, the company has a $1-million inventory of about 3,000 parts.
By the end of the year, the company expects parts sales to reach $1 million each month. Sales of parts and service were 5.17% of total revenue in 1996 compared with 4.39% in 1995.
"These figures represent only phone-in orders," Papps says. "Parts sales are just getting off the ground."
Trailer sales figures are equally impressive. In 1996, Mond's revenue was $77,731,862, an increase of 15.6% over 1995.
"Mond is proud of these numbers given that semitrailer shipments in North America fell by 25% in 1996 compared to 1995," says Pat DiLillo, president and chief executive officer. "In 1996, Mond had the only sales increase of any van trailer manufacturer in North America."
Capturing Canadian Sales Mond was able to increase sales, DiLillo says, by capturing sales to Canadian companies that previously bought trailers from American manufacturers.
"An overcapacity exists in the American trailer manufacturing market," DiLillo says. "About 50% of the dry freight and refrigerated van trailers sold in Canada were built by American manufacturers. Mond has reduced to 40% the amount of trailers imported."
Sales of Mond trailers in 1997 are also strong. During a three-week period in April and May, Mond received trailer orders worth $20 million. By the end of 1997, Mond hopes to reach sales of $110 million. Before the end of June, Mond's trailer orders were already $54 million.
"The plant could fill an order book worth approximately $100 million by running 8 1/2 hours per day, seven days a week, all year," DiLillo is quoted as saying in Mond's 1996 annual report.
Most orders are for trailers and containers needed for exporting Canadian products to other countries. Mond recently sold 147 van trailers and 65 flatbeds worth $4 million to Transport International Pool Inc in Philadelphia, Pennsylvania. The trailers will be based in Canada at TIP's terminal in Mississauga, near Mond's plant.
New Trailer Orders An order for 100 van trailers worth $3.5 million was received recently from Transport Besner in Saint-Nicolas, Quebec, Canada. Canadian Tire in Toronto ordered 200 more 53-ft containers to add to an order of almost 500 built last year by Mond. Recently, another 200 van trailers were sold to X-Tra Lease, and Mond made a $5.5-million quote on 400 container chassis for CN Rail in Montreal, Quebec.
"About 50% of our trailer orders are from new customers," Clay says.
Through aggressive marketing and advertising, Mond seized a large share of the Canadian market for refrigerated van trailers. "The company's market growth is unmatched for a small, regional manufacturer," Clay says.
Trailer quotes are structured as if every order is custom built, he says. Sales presentations are tailored to each customer.
In a proposal, laser prints of trailers have the prospective customer's graphics printed on the sidewalls and rear doors. Flexi Sign-Pro is a software program that creates the graphics used in the presentations and outputs the designs to a decal cutting machine.
"The Flexi Sign-Pro software can design and produce a company decal and logo from scratch," says Ed Weiss, a graphic designer at Mond. "Our graphics division saves customers a lot of downtime. They don't have to take a new trailer out of service to have it decaled at another location."
High-Quality Specifications Trailer decaling is one example of the services Mond offers customers to create a competitive advantage, Clay says. Another way Mond increases sales is by offering two standard vans with specifications such as dip-galvanized rear door frames that are more corrosion resistant, and stainless steel rear door frames.
Whenever Mond sells a sufficiently large trailer order, the company also offers the customer a preventive maintenance program. Mond does preventive maintenance for several large fleets at its service and repair center. The company employs 30 mechanics including three that service and repair refrigeration units.
"A key area for us is selling fleets a comprehensive preventive maintenance program," Clay says. "At our service and repair center, we want to support all facets of the trucking industry."
Mond's business approach has enabled it to establish a unique niche in the Canadian trailer market, Clay says.
Increasing Market Share "With increased production capacity at our new plant, Mond is in a position to capture an even larger share of the market for refrigerated vans," Clay says.
With its new plant and workforce of 350 employees, this year the company expects to build between 4,000 and 4,500 trailers - an 18% to 30% increase in production. Mond built 2,450 trailers in 1995 and 3,400 trailers last year.
Most recently, the plant was building 14 trailers a day on one shift. On two shifts, the maximum production capacity of the plant is 25 trailers per day. If sales continue increasing as they have in the last 30 days, Mond will go to two shifts this summer.
Mond attributes its increasing sales in a waning trailer market to a nationwide dealer network and new product offerings. The company has 10 distributors, at least one in each Canadian province.
"Our dealers contributed 20% to our figures for total sales in 1996," Clay says.
In 1995, the company wanted to expand sales beyond Ontario to all of Canada. Clay was hired at Mond as manager of dealer development. His first task was to set up a dealer network, which he accomplished in about eight months.
New Product Introductions The other important factor in Mond's increasing sales are new product introductions. Over the last four years, the company has introduced new trailers and an intermodal container, all built in lengths up to 53 feet.
In 1993, Mond began manufacturing fixed and extendible container chassis. Intermodal containers were added to the company's product line in 1994. In 1995, Mond introduced its aluminum sheet-and-post van trailer at the Expocam `95 truck show in Montreal, Quebec. The Mond Arctic refrigerated van trailer with pour-foam insulation was introduced at the TruckCan `96 show in Toronto.
"With its new products, a single manufacturing plant, a solid business plan, and national dealer network, Mond is positioned for further growth," DiLillo says. "But having a more efficient manufacturing plant is the most important factor in Mond's continued growth.
"The new plant is a big transformation for us. Consolidating seven plants into one was very chaotic. But this is not a company that sits still waiting for new things to happen."