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January 1, 2015

Experience of a Lifetime

Don Hjortland, president of Precision Chrome Inc. and The Steel Supply Co., on change, risk and 70 years in the industry

“Give me your hand.” 

Don Hjortland holds out his arm to help me balance atop a makeshift stool so I can peer into a chrome plating immersion tank. Moments earlier, I had lamented that I couldn’t see the tank’s contents: an orange, frothing chromium solution burbling around a steel rod. Without hesitation, Hjortland—president of Precision Chrome Inc. in Fox Lake, Illinois, and The Steel Supply Co. in Rolling Meadows, Illinois—found a way to make it happen. 

Just a small example of how he responds to problems big and small: with complete confidence. He walks through his facility as though it were his house, with a familiarity and pride that come from seven decades in the business. 

“My father always used to say,
        ‘You can’t sell from an empty wagon.’
That's true today, too.”

 

 

 

 

 

Hjortland, 86, has not lost his enthusiasm. He still flies his helicopter at least once a week to Steel Supply (“It’s faster—and safer”), landing on a helipad a few feet from the back door (“We’re actually an official airport”). 

His two companies have a symbiotic relationship. Precision Chrome, a chrome-plating facility that deals primarily with hydraulic components, buys material from Steel Supply, a steel service center, and Steel Supply purchases services from Precision Chrome. 

“It’s pretty simple, really,” Hjortland explains. “If you see a need for a product you think you can sell, you go ahead and do it.” Forward met Hjortland at Precision Chrome to talk about his journey from repairing radios and chrome-plating steel in his garage to running two multimillion-dollar companies. 

Why did you start Precision Chrome in 1966?
My father owned Steel Supply Company, and we were buying chrome from other suppliers. So I thought it would be only natural if we could do some of it ourselves. We did my first job in the garage, but that was nothing. Then I rented a 2,000-square-foot building in Ingleside [Illinois], where we built our tanks and had centerless grinders. We worked there for two years, and then we took over the whole building. We eventually ran out of room, so I built this building [in Fox Lake, Illinois] in 1971. Basically we had one customer—Steel Supply Company. But we developed other customers as time went on. Allis-Chalmers [the now-defunct farm machinery manufacturer] was an early customer of ours.

If you were starting Precision Chrome today, how would the process of growing the company be different, given globalization and increased competition?
That’s hard to answer, but I think today we would have known that the market was there. We would have started out bigger and built right away.

You didn’t know the market was there when you started? 
Well, we didn’t know what the market was. We knew that Steel Supply was buying approximately $25,000 worth of chrome a month, so we had that to work with, anyway.

Could you talk a bit about Steel Supply’s history? It’s been around awhile.
The company was started in 1896 by H.H. Miner. It was incorporated in 1904 as The Steel Supply Company. Dad started with the company in 1937 as a salesman. Then H.H. Miner died, and my father borrowed money from wherever he could and bought out the company.

It was much smaller then. The business we did in a year, we do in a day here. Of course, dollars were different, too. We would maybe do $80,000 worth of business in a year. Which would have been maybe ten times that then, $800,000. Today, we do that in a day. My dad was active as president of the company until his death in 1971. He was there every day.

When did you become involved?
I started working there in 1944—that would make me 16. I was just a kid then, I didn’t know anything. I can’t remember what I got paid, but not very much. The warehouse superintendent made 95 cents an hour—it’s unbelievable today. I was out in the warehouse lifting steel bars and putting them in racks. Back then, we didn’t even have a lift. It was done by hand. If you got a big bar, you sometimes would have to get half a dozen people to lift it. We had one chain pull in the building, and that was used to load and unload trucks.

I went to college to learn to be a metallurgist, but I’ve never really worked as a metallurgist. In fact, the day I graduated I started a job as an electronics engineer because I knew that stuff too. And I worked as an electronics engineer until I decided I wanted to come work for my dad. That was where I was going to go eventually, anyway.

What’s the biggest change you’ve seen in the industry?
Material handling has been the biggest change. Our lift trucks go to 20 feet. The racks are 20 feet high. And we provide quotes online, just to make it easier for people to find out what something’s going to cost them. We’ve been doing that for 10 years at least. I also started another company called Caliber Engineering, which is a machining company—it’s since been purchased by Steel Supply.

  “[In 1944] I was out in the warehouse lifting steel bars and putting them in racks. Back then, we didn’t even have a lift. It was done by hand. If you got a big bar, you sometimes would have to get half a dozen people to lift it.”

What made you start the machining company?
Well, a lot of times somebody would buy steel from us and send it to a machine shop to get it machined. So my idea was, why not have people buy the machined product from us rather than buy the steel and send it somewhere? It’s actually becoming a substantial part of the business now. We have automatic computer-controlled lathes and computer-controlled milling machines. Things that used to take us half an hour to do, we can do in five minutes now.

What’s the most interesting project you’ve had come through the machine shop lately?
A few years ago one of my customers up in Minneapolis wanted some bars 8 inches in diameter and some 39 feet long, which was way beyond anything we could do. So, I took two lathes out in the shop and I put them end-to-end so we could put the bars on both lathes at the same time. And we were able to do those bars. That was an interesting project. And those machines are set that way today, so that we can do longer than 24 feet. I think the machine shop is probably the most interesting part of what we do right now.

The induction hardening we do at Precision Chrome is interesting, too. I made our first induction-hardened steel bars back in the shop in Schiller Park [Illinois]. Today, an induction hardening machine uses common electricity, but back then, we used acetylene torches. We’d blast a lot of acetylene gas at it, heat the outside of the steel and then quench it. At that time, induction-hardened steel was a relatively unknown product, and we didn’t even know whether we could sell it. But once we figured out that we could, we started to develop the process we have now, and it’s one of our most important services. Chrome-plated hardened steel products are used when the application requires a heavy-duty piston rod, like master cylinders where a chain could possibly slap up against the chrome surface. Non-hardened rods might bruise more easily, causing a leak in the cylinder and a subsequent oil spill.

Steel Supply does a substantial amount of exporting—up to 30% of your business. What are the challenges of doing so much business overseas?
We export to 21 different countries. We ship some to Europe. But Costa Rico and Mexico are very good markets and account for the largest portion of our foreign sales.

The biggest challenge is making sure you get paid! [Laughs] If it’s a new customer, we make sure we get our money in advance until they’ve established good credit with us. But it can be tricky getting paid anywhere when you open an account with a new customer.

When we’re doing business with China, there’s the language barrier to deal with—none of us speaks Chinese. When we work with Costa Rica and Mexico, we have native Spanish speakers here who can communicate with our customers there. But at the end of the day, it’s basically the same process: They tell us what they want and we do it. There are, of course, a lot of regulations and forms that we have to fill out for every single overseas shipment. It’s a pain.

How does a relatively small regional player start doing business outside of the U.S.?
We don’t have salesmen outside of the country, but we have had inquiries dating back awhile. The process in the early days was limited to a foreign company using a Google search. That evolved as we found the strength of our exports to be in Central and South America. As a result, we developed websites with domains in Mexico, Colombia and Brazil. All of these were in the countries’ respective languages and we had the requests forwarded to our home office where we did the language conversion and made contact with the customer in their native language. Some of these websites have been dropped as our main website now has a button for more than 60 languages and a complete list of search words in Spanish as well as English.

Are you looking at doing more business offshore?
We really do seek out offshore business. The strategy is to grow this business by using advertising in local directories and perhaps even the addition of a manufacturer in the region who wants to become a stocking distributor—a sub-distributor, in reality. This is still in the discussion stage, however.

Most of our international business is for the hydraulic industry—precision ground shafting that’s chrome-plated. That’s the principal product—induction-hardened and chrome-plated, or chrome-plated without the hardening.

You’ve said part of your success secret is excellent inventory controls. How did you develop them?
It’s all computer-controlled. From 1975 until about 2000, I wrote all the inventory control programs that Steel Supply used. The programs would look at lead times for certain items and look at how much we’ve sold over a period of time, so the computer would have some idea of when we needed to reorder and how much to reorder. We essentially have the same type of programs today.

In 1975, I went to California and took a three-day course, then came back and started writing code. But really, I learned it on the job—you write something that doesn’t work, and then you do it again and again until it does. Every time you write a series of code you learn something. It probably took a couple years before we fully implemented the program I wrote. And later on, someone on the staff would say, “Well, it’d be nice if we could do this.” So I could just write the new code we needed.

I just wanted to learn how to do it. It was a challenge, something I wanted to do as a personal objective. I had hired someone previously to write code for me and didn’t like way they did it, so I thought, “I’ll just do it myself, and do it better.”

About 2000, I decided I didn’t want to be a programmer forever, so I bought a commercial program. That’s what we’re using today. When you’re in the inventory business, if you don’t have it on the shelf, you can’t sell it!

I’ve had other people tell me it’s a risk to keep a big inventory, because if the market tanks, you’re in trouble.
I don’t believe that. The market goes up and down. If you’ve got a big inventory, you’ve got your money invested in that—it’s still going to sell, it’s just not going to sell as fast or at the rate you’d like it to. My father always used to say, “You can’t sell from an empty wagon.” That’s true today, too.

Have you always been an entrepreneurial person?
Oh, yes. Definitely. When I was 15 years old, I had two guys working for me. True. I had a radio repair shop. I had one guy who would go through and check all the tubes, and the other guy would pick up the radios and deliver them for me.

So, to be as entrepreneurial as you are, you must feel fairly comfortable taking risks. How do you assess which business moves are worth making?
You need to think it’s manageable. For both Caliber Engineering and Precision Chrome, I could see that we had a market for our product through Steel Supply. We could have failed, but I didn’t see how.

What is the biggest risk you’ve taken?
Well, I don’t think it was a big risk, but when we first started our machine shop, I had a partner who knew more about machines than I did. And I wanted an automatic control lathe, and he thought that was a big waste of money. So I had to actually go over his head and just spend the money for that—which we didn’t have at that time. But we purchased it. It worked out fine. That was a little scary but not too bad.

How do you ensure quality service and on-time delivery?
As orders come in, we know when the customer wants it. If we can’t do it, then we tell them right away. But we’re flexible. I remember one time a salesman got a call from one of his customers who needed some induction-hardened 1-inch bars right away, which would normally take two, three weeks with delivery. I said, “OK, c’mon, Jim. Take that bar out of the rack, put it in the tank and plate it and put it in a tube and you can take it with you.” And he did.

Being a smaller company helps us be more flexible. I don’t have bureaucracies to go through. When I want something done, I can tell people to do it, and they do it.

What’s your favorite part of what you do now?
Besides getting paid? [Laughs] I enjoy it, actually. I’m semi-retired now. I work when I have to. Dave [Sheer, vice president of Steel Supply] actually takes care of most of the day-to-day stuff for me. So I go there maybe once a week and see how things are going. And if there’s a problem I spend time on it. But Dave has been doing a heck of a good job for me for 45 years. It seems like just the other day I hired him.

The most important thing I can do is get good people to work for me. Once a month we have a big shindig here where we cook up a lot of food. It’s nice. I think it’s good for employee appreciation. We try to let them know where our products go and what they’re helping accomplish, rather than just doing the job. They’re a big, important part of the company and when we’re successful, I’d like them to know about it. I don’t think there’s any reason to be secretive about that.


Kelly Caldwell, a Chicago-based writer and editor, is managing editor of Forward.