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Friday, May 20, 2011 / Donald M. Alanen

“Keeping American industry alive and well”

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by Carol R. Riggs

Don Alanen has a number of suggestions for reviving basic industry in the United States, or at least offshore.  He speaks from  a background of nearly four decades of engineering, design, construction and management experience – most of it in heavy-duty trucking and suspension – principally in Portland, Ore., and environs.

Among his suggestions: “Use state-of-the-art components – there’s a lot of them in this country – in whatever you’re manufacturing.  Suddenly you’re not basic industry; you’re one step below high technology.”

Alanen says further: “It’s better to use U.S. firms [to supply components] because once a section of your tooling moves, it’s very hard to get it back.  If that tooling section is offshore, it’s even harder to get it back.”

And he recommends that American manufacturers keep up with technical journals, read what’s going on in their industries, find out even such seemingly obvious things as where their nearest suppliers are located.  “Keeping informed is what’s given foreign companies the edge – not cheap labor,” he asserts.  “And, of course, very modern machinery.”

It’s important to keep American manufacturing alive and well, Alanen reminds us, because “every manufacturer fosters five to seven service industries, and if that shifts all you’ve got is service industry – minimum -wage labor.”  A nation cannot survive, let alone grow, on minimum-wage labor.

A background in logging
Don Alanen now heads his own small engineering/marketing firm in Beaverton, Ore., developing markets for specialty steel and for industrial products and designing custom vehicle systems.  His earliest experience was in the logging business.

A third-generation member of a logging family, Alanen studied engineering at Oregon State and got his first job with a Fortune 500 company that built logging transportation equipment.  He was hired for his logging background but found his situation somewhat frustrating; the big company seemed unwilling to listen to new ideas.

“This was back in the ’50s,” he recalls.  “I made suggestions based on equipment I had helped build when I was working in lumbering.  Vehicles, skidders with rubber tires to haul logs through the forest to a landing.  Rubber tires didn’t damage the terrain as much as the crawler tractors that were always being used.  The U.S. Forest Service was extremely impressed with this vehicle, and I thought the company should get into it.”

“I got laughed out of the product-development meetings,” he says with a smile, adding, “Nowadays, of course – and for a number of years – rubber-tired skidders are used in lumbering all over: Borneo, Indonesia, Arkansas, California, Oregon…”

Alanen also suggested that the company explore the feasibility of manufacturing a portable steel tower to be placed aboard the skidder and used instead of a tree to establish a “yarding” or landing point in the forest (an area wide enough to permit operation with minimum terrain damage).  “My grandfather had done that back in the early 1900s, because you don’t just go out and find the right tree at the right place,” he explains.

Impatient with glacial pace
Again, management failed to respond and Alanen eventually left, working at other large companies that built heavy-equipment suspensions and trailers, principally for ballistic missile systems.  But he grew impatient with the glacial pace at which operations moved and new ideas were adopted, and also at the way division management dealt with competition.

“When sales managers became general managers they gave the product away,” he recalls.  “If they were getting zapped in a quarter by competition from abroad, the easiest thing to do was cut the price.”  Alanen did not then and does not now subscribe to that philosophy.

In 1971 he established his own company, Fab Tek Inc., as a manufacturers’ representative for foundries that made castings and forgings, specifically components used in heavy-vehicle manufacture.

One of the first things that struck him was the manufacturers’ lack of familiarity with local foundry sources.  “And it’s still true to this day,” he laments.  “Many buyers in the U.S. don’t know that their next-door neighbor – or a firm somewhere in this country – produces the parts they can use.  They don’t seem to keep up with what’s going on.  They don’t read technical publications.”

Alanen attempts to fill that gap.  “In many cases I have helped companies around the sate that were running into fierce competition,” he continues.  “If we couldn’t find the firm within the state, then we found it out of state.”

He believes that U.S. manufacturers should rely on U.S. suppliers even if the latter are situated at some distance, because if a domestic supplier goes out of business or becomes less competitive, it can still be replaced more easily than one located offshore.

Advising manufacturers
In time Alanen also became a consultant.  Besides matching component makers with manufacturers, he began advising manufacturers on how to select components according to the process used in their production.

For example: “We’d look at the part made from a casting and suggest that it would be better as a powdered-metal part, or recommend that a part be made as an investment casting instead of a stamping.  We were helping manufacturers who are not knowledgeable about manufacturing processes,” at the same time urging them to produce a quality product.

“It’s very important to make a product well – and at the lowest possible cost – when you first come out with it,” Alanen stresses.  “Because if you don’t, you’re inviting competition.

“That’s what foreign manufacturers do, more so that U.S. manufacturers,” he notes.  “If you produce an item, there are people all over th world who will copy you.  But if those people have to say, ‘He’s doing it the best possible way.  There’s no point in my making it for only 5 percent less,’ you’re eliminating competition right up front.”

Easier said than done, perhaps, but Alanen points out: “It’s another are in which we’re falling behind foreign countries.  And by foreign I don’t mean just Japan.  I’m talking also about Europe, Taiwan, South Korea.”

Part of the edge that foreign countries have on American companies is the actual vocational training they give their engineers.  Says Alanen: “They not only teach them theory they also teach them how to build a product.  We are very lax about that in the U.S.

“The so-called ‘cow college’ that I went to taught us how to build parts,” he notes.  “Guys have come out here from colleges in the big manufacturing centers – Purdue, Ohio State, University of Iowa – and told me, ‘Boy, I wish my kids could have taken a class like that.'”  But even Oregon State doesn’t quite measure up, he thinks.  “They don’t offer courses in foundry – welding, forging and machining.”

And while computer-aided design and computer-aided manufacturing (CAD/CAM) might obviate the need for hands-on building ability, that technology is available to less than 10 percent of manufacturers in the U.S., and those are mostly major defense and automotive companies.  “It’s to costly for the small businesses that make up the bulk of the innovative design in American industry,” Alanen observes.

Specializing in air suspensions
Fab Tek devotes approximately one-third of its time to representing metals-processing firms, in essence developing new commercial markets.  The balance is spent on designing products and subcontracting them out for manufacture, primarily for the government.  “The biggest [truck] suspension we have built is under the Trident II, the D-5 motor, a big three-axle air suspension,” Alanen explains.

Government specifications being as rigid as they are, competition is not a factor in turning out a product.  In the commercial market, standards tend to be somewhat more relaxed, which may sound like a plus for a manufacturer, but Alanen believes that a small company should not use that reasoning as a justification for attempting to serve both markets.  “Your people try to do everything and your commercial business suffers.  All of a sudden you’re priced out of the market.”

The niche that Alanen has carved out for his company is in applications of air suspensions for heavy equipment.  It’s an area in which he doesn’t have too many competitors.

“One of the projects is a large air suspension under a vehicle for NASA,” he notes.  “We’ve also just developed a truck suspension system for a firm in Pennsylvania that will give their trailers more cubic-foot space, more haulage space.  You can’t make the trailer any higher, so we’ve enabled them to come down lower,” he explains.  “We made a very, very low suspension that brought the center of gravity down.  You can actually say it’s a safer system,” he concludes.

Alanen’s firm is also concentrating on development of a truck said to embody the last word in aerodynamics, a truck good enough to compete with Mack Truck and International Truck.  “It’s covered with a number of patents,” Alanen points out, and it’s in its seventh year of development.

“And we’re spending time with three other systems doing what the industry calls missionary work,” he says.  “It’s based on a gut feeling that something is good and should be out in the market. We’ve done it before.

“We’re also looking at some new engines. There’s a guy in Virginia who has a new engine – a two-cycle – that Ford, Chrysler, Nissan and Toyota are looking at quite favorably.  The engine is extremely revolutionary.  It comes in automotive sizes – 80 horse power, 150 horse power – and truck sizes – 300 and 450 horse power.

“We might try to put that truck engine in one of our vehicles; it’s lighter in weight, more efficient, gives off lower emissions. Those features are going to be increasingly important in cities that might have to shut themselves down when the particulate count gets too hight,” he notes.

Unique hydraulic crane
Alanen speaks with considerable pride of a construction crane that’s a year and a half into development.  “It’s probably the safest hydraulic crane ever designs,” he says confidently.  It is called the Suverkrane, named for its inventor, Don Suverkrop.

Says Alanen: “We hold the license to market this crane worldwide – we already have two of them sold. People all over are very interested in this crane because it’s very unusual. Easy to operate – on just one lever.

“For example, it can work in a big street without clogging up traffic because it operates on the same side of the street as the building on which it’s being used – rather than reaching across the street from the other side. We’ve got one right now that’s being used to put an air-conditioning unit on top of a seven-story building.

“It can be used anyplace,” he continues enthusiastically. “Marine handling – containers loaded on and off ships.  Military use, commercial use.  It can be made to carry a load in the neighborhood of 275 tons.  However, the ones we’ll be manufacturing will probably be in the 25-ton to 100-ton range, on rubber tires and stationary.”

But development funding is hard to come by because the crane is lacking in glamour.  The hard fact is: High technology gets the big investment, basic industry doesn’t, although Alanen claims he sees some signs of change.

“Basic industry, smokestack industry, is starting to look more attractive after what happened in Wall Street,” he observes.  “All of a sudden people are not out there wanting to make their 30 percent, 40 percent return on investment; they’re satisfied with 10 percent and 15 percent.  Foreign people are a little more conservative,” he remarks.  “European, Japanese people, some in Hong Kong and Singapore. The English look at a project for 10 years out, even 20 years out.”

No grants for development
Alanen thinks there’s a major flaw in our national manufacturing policy, something – to paraphrase an 18th century statesman – along the lines of: “Millions for research, not one cent for development.”  As he wrote in a letter to Business Marketing last year: “We should change the term research and development to just plain R – research.

“When the federal government offers grants in R&D, the development phase is not included,” Alanen complains.  “If you have a product through the research phase and apply for development funds, grants or any other method of getting monies into production, you are told that the funds are available for basic research only.  We end up with all these ideas, but nothing goes into prototyping and production.”

To make things worse, says Alanen, “They eliminated the limited partnership in the recent tax-reform law.  We’ve talked to people in Washington who’ve told us, ‘We’re in agreement with you; limited partnerships are a good way of developing products, and some of them are going to have to get back into the system.'”  But Alanen isn’t holding his breath.

State funding of development
If anybody’s listening, Alanen has a modest proposal for funding product development through the states.  He explains: “The State of Oregon has a pension fund amounting to – I’m not sure of the exact figures – something between $8 billion and $12 billion.

“Now, what is the state’s primary objective in a fund like this? To return investment or create jobs for the economy?

“Creating jobs for the economy is intangible,” Alanen insists.  “You can’t say ‘I’m going to put 50 guys to work.’  You can’t tab it as a real return on investment.

“So maybe if Oregon, if other states, earmarked, say, 5 percent of those pension funds and used it as seed money, as investment in actual development of products, that would be a start.

“And then, perhaps, if the media used some of their power – I’m talking publications, radio, television – took some of their time to promote the idea of fostering development here at home, it would be helpful,” he suggests.

“You could get a consortium of people from different industries discussing the subject – a public-service type of discussion on radio or TV,” he suggests.  Who knows?  In an election year anything is possible.

The liability specter
Lack of product-development funds isn’t the only problem confronting manufacturers.  Equally burdensome is the matter of product-liability insurance.  Alanen says it’s one of the chief reasons why so many small companies send their products overseas for development.

“But that’s not the answer,” he insists.  Let’s face it, there comes a day of reckoning.  Manufacturing creates the service industry – just as farming does.  And when the manufacturer goes offshore or shuts down, the service business [that was dependent on it] shuts down.  And maybe goes into a franchise business of some kind, maybe opens another tanning salon in a mall.  I’m not knocking tanning salons,” he says hastily, “but isn’t the market saturated?”

Getting back to liability insurance, Alanen illustrates the twofold problem he and other small basic-industry manufacturers must face.  “The crane manufacturer carries insurance to cover their operation.  If they goof up somehow, build it of the wrong metal, machine something off and something falls apart – their product liability insurance takes the responsibility.

“However,” he continues, “the design is from a consulting engineering firm in California, and it cannot insure the design.  The firm is too small to pay this extremely large insurance premium.”

What’s the solution?  Alanen theorizes he might be able to find another, larger consulting engineering firm that would agree to analyze the drawings, check the figures rigorously and then have the design insured by its insurance company.  So far he hasn’t located such a design company, and he continues to be baffled by insurance companies’ claims that they can’t assume such risks.

This article was published in the March/April 1988 issue of D&B Reports.

Friday, May 20, 2011 / Donald M. Alanen

“Beaverton writer compiles a logging encyclopedia”

A piece was written in The Oregonian on Saturday, October 11, 2008 which profiled Don Alanen’s new book, The Logger’s Encyclopedia.  Click here to read the article.

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