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MacGyver of metalworking: Agritek Inc.

MacGyver of metalworking: Agritek Inc.

Koiker“What’s great about being in second stage is that you’re not scrambling to find your next meal, so you can take a longer-term approach to growth and build more protection into your company,” says Larry Kooiker, founder of Agritek Inc. in Holland, Michigan.

Although it competes in a crowded industry, Agritek has grown to $20 million in annual revenue and 120 employees without investing in marketing, advertising or trade shows. Instead, having forged a reputation for ingenuity, this diversified designer and manufacturer of metal components attracts new business from word-of-mouth and referrals.

Agritek’s roots go back to 1987 when Kooiker was a production manager at an automotive wire harness manufacturer. The company had fallen into financial constraints, and Kooiker was among those receiving pink slips. Although he circulated some resumes, the time seemed right to scratch his entrepreneurial itch. Since childhood, Kooiker had a flair for inventing and repurposing, such as transforming chicken coops into rabbit hutches. “I liked figuring out ways to make things that someone else was willing to buy,” he says.

Kooiker already had one innovation in hand, a tractor-mounted forklift, which became Agritek’s first product, followed by other material-handling equipment for the agricultural industry. The forklift won accolades from an industry magazine, and by the early 1990s Agritek was selling its equipment across the United States, as well as Canada, Mexico, Guatemala, Honduras and South America.

Over the years Agritek expanded into metal fabricating, specialty machining and metal stamping, which has enabled it to attract a more diverse clientele. Today the lion’s share of business (about 55 percent) stems from automotive customers. Other clients come from the military, trucking and office furniture industries, with agricultural offerings representing less than 5 percent of Agritek’s total revenue. Products include everything from two-wheeled cart axles to auditorium seating components.

Creative core competency

Agritek adds value for its customers by creating unique designs and production processes that increase quality while reducing costs. A few of its innovations include:

  • Axles for garbage dumpsters that are less expensive and easier to handle, but virtually as strong as traditional components. Agritek also uses a proprietary coating to prevent the axles from rusting.
  • Special hooks for landscapers that better grip large sheets of stone.
  • Landing gear components for semitrucks that are as just as strong but 20 percent cheaper. “Instead of our customer sourcing this part overseas, the work is now done here in Michigan,” Kooiker says.

Such products have required time, money and skill to develop, Kooiker admits. “But now that the infrastructure is in place, it’s hard for someone else to knock us off.” In fact, three customers have obtained patents to protect the intellectual property that Agritek helped them secure, he adds.

In addition to inventiveness, Agritek’s culture is also defined by a strong work ethic. “If we can’t outsmart the competition, we’ll outwork them,” Kooiker says. “We passionately love what we do, and it’s not just me. We find the people who find their calling here.”

Cultivating an ownership mentality

In recent years Kooiker has added three specialty divisions that complement Agritek’s capabilities:

  • ArmorGalv Division provides an environmentally-friendly thermal diffusion galvanizing technology that resists corrosion and abrasion on a wide variety of surfaces and components. Agritek licensed this technology from an Israeli company in 2006, becoming the first to do so in the United States.
  • Lake Michigan Wire, acquired in 2009, manufactures wire products.
  • Machine Shop Services, acquired in 2014, does close tolerance component machining of new and specialty machine parts.

Although part of the Agritek family, these divisions operate as separate business units and are managed by seven employees who hold equity positions. Having equity partners run these divisions frees Kooiker to work on strategic planning, find ways to make Agritek even more efficient and create new synergies between the divisions.

Before pursuing this business model, Kooiker had considered an employee stock ownership plan (ESOP), but didn’t think it would create the kind of ownership mentality he wanted to cultivate. “I think employees view ESOPs as more of a retirement fund or something that has been cast upon them,” he says. “I wanted to give people a chance to run divisions autonomously.”

“It’s working really well,” he adds. “Agritek generates about 75 percent of our total revenue, but when it comes to return on sales or return on assets, the three divisions outperform Agritek on every metric. I’m better off owning less of those divisions and getting them run more efficiently than owning 100 percent and letting them run less efficiently.”

What’s more, the divisions have lower turnover. “This has helped us win more lucrative work because we’re seen as a less risky company to work with,” Kooiker observes.

Strengthening the bottom line

As it has grown, Agritek has received local and national recognition. In 2005 it was named a Michigan 50 Companies to Watch honoree. In 2007 Kooiker was named Small Business Person of the Year by the Holland Chamber of Commerce, and Agritek was named to the Inc. 5000 list of fastest-growing companies.

During the past three years Kooiker has intentionally put the brakes on revenue growth to focus instead on Agritek’s bottom line. “Revenue has hovered around $20 million, but we’ve seen a steady growth in profits,” he says. “And that’s saying a lot when you operate in an industry where razor-thin margins are the norm.”

Perhaps more important, the profit increases have come from new ideas and key automation investments rather than increased prices, Kooiker adds: “We find ways to reduce our costs, so we’re able to offer customers some of the lowest cost value-added on the purchased components.”

Preparing for future growth, Kooiker has expanded his headquarters in Holland from 70,000 to 100,000 square feet. The extra elbowroom has enabled him to bring Machine Shop Services, previously located 10 miles away, under the same roof. Kooiker also has an eye on future acquisitions. “Right now we have no debt, and we’ve done major expansions to our plant and equipment, so we will use our new addition efficiently to prepare for the next big thing.”

Copyright © 2016 by Edward Lowe Foundation