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Franklin Power Products.

Recycling finally has come into vogue in a big way, and no one could be happier about it than Mike Jarvis.

Jarvis' business has nothing to do with aluminum cans or glass bottles. He and his co-workers at Franklin Power Products recycle engines.

And remanufactured engines look and perform like new when they leave the factory. A worn diesel engine that's unloaded at Franklin Power Products may have propelled a truck in excess of a quarter of a million miles, and it's not a pretty sight. Employees inspect the engine to discover missing or damaged parts, and if the engine passes inspection, it is cleaned with a chemical bath and burning. Worn parts are discarded. Employees bore the block to restore it to original specifications, bore and hone cylinders. The block surface, cranks, camshafts, heads and connecting rods are inspected and machined as necessary, and engine parts are reassembled by hand. The finished product undergoes tests that include running on its own power so performance data can be monitored. What was a grimy, oily, worn engine is transformed into a clean, brightly painted product that looks and runs like new.

"I think with the emphasis on conservation today, remanufacturing's future looks very bright," forecasts Jarvis, president of the Franklin-based company. "The remanufacturing business is the fastest-growing segment in the automotive industry."

"People now are starting to recognize the need to salvage and reuse materials," Jarvis notes. "With the labor and raw materials that are put into new products, it's foolish to throw them away when you can remanufacture them back to a new state."

Not only is it foolish to ignore a worn engine's potential for new life, it simply doesn't make economic sense, says Barry Soltz, president of the Buffalo Grove, Ill.-headquartered Automotive Engine Rebuilders Association. "With the price of a new vehicle and with the quality of rebuilding, you have to weigh the economics."

The economics of engine remanufacturing have been clear to those involved with Franklin Power Products for some time-in fact, before the company's birth seven years ago. Prior to the summer of 1983, what is now Franklin Power Products was the remanufacturing division of international Harvester Co. Times were tough for Harvester, which now is known as Navistar International Corp., and the company chose to divest itself of its interest in remanufacturing the engines it built.

Jarvis, who had worked for International Harvester for 16 years, teamed up with co-worker Larry Light, acquired the necessary venture capital and bought the remanufacturing business from International Harvester. Thus, through the troubles of a manufacturing giant, a small, independent remanufacturer came into being.

And Franklin Power Products was small. There were about a dozen workers and a handful of managers who rebuilt about five engines a day. Though the employment and capacity of the Franklin plant are now about eight times what they were seven years ago, Jarvis says the business is successful in part because it still feels small. "We're a much bigger company than most people in Franklin believe, but we're just not flamboyant."

That's just the way Jarvis likes it. "We're common people. Employees call me 'Dad' and my wife 'Mom.' We have a close-knit group of people and that's one of the reasons for our success.

"Our whole business is focused on the talents of our employees," Jarvis continues. "Sure, we have quality equipment, state-of-the-art technology, but our whole key is our ability to hire good, competent employees who are a hard-working crew."

That crew always has worked the most on International-brand engines, even though Franklin Power Products is no longer affiliated with Navistar, maker of the International line. "In our first four years of business, 100 percent of our sales were to Navistar," says Jarvis. "That's a dangerous position to be in. However, when you're dealing with a major truck producer like Navistar, it's also an enviable position to be in.

"Our long-term position focuses on expanding production and our product mix so that we're not tied entirely to Navistar," he adds. "We do not want to lose any Navistar business; we'd like even more, in fact. But we're looking to opportunities that enhance our operations."

One of Franklin Power Products' biggest new opportunities-the conquest of the Canadian market-was inspired by Navistar. Franklin Power Products was the leading supplier of remanufactured International engines, but it was becoming less and less feasible to service Canadian customers from an Indiana base. Navistar urged Franklin Power Products to consider setting up operations in Canada, and in the spring of 1988, the firm acquired engine operations in Toronto and Montreal and a water-pump factory in Windsor. In one step, Franklin Power Products was on the map in Canada.

"We're now the largest remanufacturer in all of Canada," Jarvis says. "The Canada operation is allowing us to expand our sales and distribution in the Canadian market." Jarvis is quick to point out that the Canadian operations are there to serve Canada. "We do not distribute products from Toronto back into the United States, but rather throughout Canada."

Franklin Power Products' U.S. operations also focus on much more than just remanufactured diesel engines and the city of Franklin these days. The company has locations in Indianapolis, the 0hio cities of Toledo and Findlay, and in New Jersey. "We have a second facility in Franklin that remanufactures diesel fuel pumps, fuel injectors and turbochargers, and a separate business that manufactures marine diesel engines," Jarvis says. "Our marine business has just begun and we anticipate selling 700 units in the first year. "The New Jersey facility acquired last year manufactures new stem drives as a part of Franklin Power Products' entry into the marine market.

There are more market possibilities on the horizon, according to Jarvis. "We're looking at possibly expanding our product base to include electrical components, transmissions and brakes." And the more automotive areas Franklin Power Products gets involved in-offering either remanufactured or new product lines-the closer the company gets to being able to meet one of Jarvis' long-term goals: offering a remanufactured truck.

"That's a very big task and undertaking, but that's my goal," he says. "It would be a new frame and cab and all other components would be remanufactured. We could do this by providing good component parts already available at prices to consumers that are 35 percent to 40 percent lower, and offer a new warranty." Such a plan is sometime down the road, Jarvis says, for among other things, there are government regulations that would have to be examined and dealt with before such a dream could become reality.

At this point, rebuilding engines is the company's mainstay, and that aspect of its operations also has grown more diverse since the days when Navistar was the sole customer, Jarvis says. "We run about 20 different engine variations of International, Ford and Chevrolet applications."

According to Jarvis, the past decade has been a turning point for engine remanufacturers. In earlier years,some firms stressed price more than quality, but such an attitude now will get a company nowhere, he says.

"The quality is constantly improving," agrees Soltz of the Automotive Engine Rebuilders Association." It can, in fact, be better than original equipment because problems in the original-equipment design can be corrected in the rebuild. If an engine is having head-gasket failure, it may be the surface finish on the block that's causing the problem, or it may be that the torque is too tight or too loose. From experience in rebuilding, those problems can be solved.'

The quality of remanufactured engines is becoming more and more apparent to customers, Soltz says. "If you're dealing with fleets, like Consolidated Freightways or UPS or Frito-Lay, they're constantly using rebuilt engines. They either rebuild them themselves or they buy from Franklin Power Products or a similar company. They know the reliability and know that they're like new for two-thirds or even half the cost."

In some ways, remanufacturing is a more labor-intensive process than original-equipment manufacturing, since the inspection and diagnostic work cannot be automated. That's why it's so important to have a good work force, Jarvis says, and why he's determined to keep Franklin Power Products operating like a small company, even as it grows.
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Title Annotation:Ventures
Author:Kaelble, Steve
Publication:Indiana Business Magazine
Article Type:company profile
Date:Sep 1, 1990
Previous Article:Company profile: Nucor Steel.
Next Article:Robert D. Miller.

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