Phila. Gear shifts its focus

This article was originally published Feb. 04, 2002.

Carl D. Rapp, Philadelphia Gear Corp.'s new chief executive officer, played pro basketball in Europe 20 years ago.

Now, he wants to teach the fast break to the 110-year-old company, which last year closed its landmark King of Prussia factory to focus on inspecting and repairing gearboxes instead of making them.

For Philadelphia Gear to survive, it has to change from a manufacturer that would take years to design and make metal gears up to 16 feet in diameter to a service company that responds almost immediately when a machine breaks, Rapp said.

Gearboxes are crucial components in many industries. They are used to change the direction and speed of drives connected to fans, pumps, production lines and other machinery. Repairing them often involves replacing bearings and shaving a few thousandths of an inch off the gear's teeth to smooth them out.

The hardest part of Philadelphia Gear's switch to a service operation for longtime employees was the closure of its King of Prussia factory, which opened in 1959 and for a time was considered the best-equipped gear shop in the world.

The last gearbox was shipped from there in July. The executive and engineering offices had moved to downtown Norristown in late February.

"It was a tough decision to make," Rapp said of the plant closure and termination of 65 factory workers and managers.

But the company had gotten close to the point where it had to change - or die, Rapp said.

"You probably could have measured our future in years rather than decades" if the company had not shifted its focus, Rapp said.

Privately held Philadelphia Gear's annual revenues are below the $75 million to $100 million it had seven or eight years ago, Rapp said. He declined to give the current figure.

Philadelphia Gear employs 215 now, including 60 in Norristown. At its peak in the late 1970s, it had 1,200 employees.

"That was before we started feeling the overseas pressure," said Jules DeBaecke Jr., Philadelphia Gear's vice president for customer services.

"We stayed in the market and didn't change what we were doing," he said. By the mid-1980s, "we had a lot of catching up to do."

People in the industry said Philadelphia Gear had a reputation for producing high-quality gears, but had put customer service on the back burner.

Nationwide, imports of gears and related goods, primarily from Japan and Europe, nearly doubled between 1992 and 1999, from $689 million to $1.4 billion. Over the same period, domestic production grew by less than 50 percent, from $1.7 billion to $2.5 billion, according to the U.S. Department of Commerce.

Imports are one reason Philadelphia Gear decided to focus on providing services to the aftermarket.

Many of Philadelphia Gear's domestic competitors, such as Lufkin Industries Inc. in Lufkin, Texas, and Horsburgh &  Scott Co. in Cleveland, are doing the same thing because it is more profitable and offers more opportunities than making gears for new industrial operations.

"The days of the new plant going up are few and far between, but the existing industrial base, while getting smaller, still needs to be serviced," said Dave Long, who manages Chalmers & Kubeck Inc.'s gearbox repair shop in Aston.

Rapp, who has a sales background, said his biggest challenge was replacing Philadelphia Gear's methodical manufacturing culture with a service mentality.

"You have no room for disappointing people, because they have options," Rapp said.

About a year ago, for example, Sonoco Products Co.'s Downingtown paper mill started using Philadelphia Gear for gearbox service after a bad experience with another firm, Robert Miller, the plant's maintenance superintendent, said.

Miller said the Sonoco mill, which recycles cardboard, newspapers and other paper into brown paperboard, probably has 100 gearboxes on everything from fans to pulpers, which are 20-foot-diameter tubs with a beater in the middle like a big drink mixer.

Mike Cleveland, purchasing manager for Keystone Cement Co. in Bath, Pa., said Philadelphia Gear's engineering experience gave it an advantage for some jobs.

Cleveland said Philadelphia Gear's 44,000-square-foot New Castle, Del., service center has a 6-foot-diameter gear from one of Keystone's old stone crushers. The companies are working together to decide the best way to replace it.

If they decide to reengineer the gear, which has been in service since 1929, the new one will likely be made at Philadelphia Gear's 200,000-square-foot Los Angeles facility, which it acquired as part of Western Gear Corp. in 1996.

Cleveland said he uses small shops for certain work. "The difference is, when Philly Gear takes a gear box apart, they are analyzing why they are taking it apart. " And they can redesign it, if necessary, he said.

Philadelphia Gear still makes gears and drives from scratch for Coast Guard ships and for the Navy. But it no longer intends to spend years designing gear systems for other sectors.

Rapp said people sometimes look at him quizzically when he says he works for Philadelphia Gear because they equate the company with the big blue King of Prussia factory on the Schuylkill Expressway near Route 202. The holding company that owns Philadelphia Gear is planning to redevelop the former factory site.

He said: "I think there was the impression that Philadelphia Gear was going out of business, but nothing could be farther from the truth."