But the generational transition was difficult, Lombardini explains: “My father was the manager of the company, he was in charge of the commercial job. The technical manager left and took a lot of people with him, It was a big challenge.
Lombardini said: “I have a friend at the local university who tells me we should write a book. We are a company that exists, yet should not exist. With all that happened in the end we came out of the situation stronger.”
He added that the company came to be driven by “teamwork, quality and we succeeded especially in areas where we were weaker.”
Lombardini said: “In the past it was a problem to sell the second line, today where we are succeeding is to repeat orders with our customers.”
Eraldo Greco, commercial director, pointed to successful relationships “with companies like Firestone, like Kingspan, or Recticel” where multiple machines have been sold.
Proving themselves
OMS president Andrea Mariani said the new management team had a lot to prove in 1996. “Because we were young, people had to believe in what we were doing and we have to demonstrate to everybody that the company is ready to support the customer on every main problem”, Mariani said.
This is a change of customer service philosophy from the earlier life of the company when, as Mariani explained “we would try to solve something and then try to find a commercial, financial, and general solution.” This approach had limited success for the firm and at the time OMS machinery was considered on a price basis.
The OMS approach from 1996 saw a change in commercial direction and a change in customer service.
“We go to our customer who is having trouble with our plants and we have to stay there until we solve it. We are still following this policy,” said Mariani .
This change in customer service led to a change in commercial direction. Lombardini explained: “We try to differentiate ourselves on quality and innovation.”
“If you compete on price you will always lose” against lower cost producers, he continued.
“Innovation is not easy with our size… but the firm is getting bigger and it is becoming easier. We have some good ideas which took us from the paper market” into metal laminated panels,” he added.
Lombardini said that in metal insulated panels the firm’s market share has grown from zero to 90%.
The change in approach has also fed into financial performance, Mariani said.
“Our turnover increased from Euro 13-14m to Euro 18m to Euro 34m and this year could be Euro 40m, which is growing very, very fast,” he said.
Mariani: “at the same time the order book is Euro 45m plus and a there is a potential Euro 6.5m, which means that we already have orders for [the first] six-eight months next year [2015].”
With this security OMS is planning for investment. “We are investing in information technology; we are investing in new machines to allow us to machine our parts and we have increased and we are increasing the number of people we employ, Marinari said.
OMS will go from around 90 employees two years ago to around 150 in two years’ time, said Mariani. This is a big commitment for a small firm based in a country with inflexible labour laws.
Additionally, this growth has prompted OMS to buy more land for expansion in Milan. This is next to an existing site in Verano Brianza.
The purchase was financed by the company, said Mariani. He said: “We believe that it is much better to deal with the money you have rather than asking for loans.”
Mariani added: “Even if the interest is not high now, at the end of the term you could have trouble.” With some pride he stated that OMS has been debt-free for more than five years.
It is a much stronger position to be able to go to banks and ask them what interest they are prepared to give you, said Mariani. He added “Nowadays there are many, many banks that are knocking doors..."
Two, equal shareholders
So the 50:50 ownership model works, but isn’t there deadlock from time to time?
Mariani said: “We have been cooperating since 1985 when Enrico’s father passed away and in 1997 we bought out the third shareholder, since then we are 50:50”
Lombardini agreed: “When you’re 50:50 it takes a little bit more to do things. You have to do a little bit more, but this is an advantage. The two partners work together to make better decisions” than would be the case with a sole proprietor.
The competitive landscape in the machinery market is quite challenging.
Lombardini explained: “When my father established OMS, the capital needed in Italy was 20 million lira, today you need Euro 10,000,” to form a company in Italy. This is a much smaller amount in relative terms to 1969.
“This is a big problem, people can come on the market offering anything. We have one company of one person offering continuous lines in Italy. If you go on the website it is a nice company, they have technical service, they have engineers, they have this, they have that, but I say to customers, come to Italy, visit them, and then visit us.”
Lombardini said this is important “because many companies which buy polyurethane machinery are relatively small themselves. If you are buying a Euro 20,000 machine, you can make a mistake, and it can be a very big mistake if you are a small company,” he said
Buyers want to see a plant in operation, but this is difficult because companies are becoming increasingly international “so today, you accept a visit from a company from South America or China, and tomorrow, maybe he’s here making the same product,” said Greco.
Technical
One of the examples of OMS technical innovation is its curtain laydown, which is designed to even out the flow of rigid polyurethane across the width of the laminated board.
This makes a very thin layer instead of individual streams the polyurethane is more evenly spread across the width of the board using curtain laydown. The laydown is manually adjustable. With traditional streamed delivery, when the boards are cut across, knit lines are visible. These are thin volumes of high density foam.
“The most critical part of such a development is the time to prove the idea,“said Greco. “You need a customer who will give us the time.”
OMS production site
OMS’ factory in Verano Brianza, near Milan, is split into four sites covering 18,000m2.The first factory unit was built in 1974 and is the location of production and main technical development. The company expanded into a purpose-built suite of commercial and administrative offices in 1992. By 1996 OMS had outgrown the initial factory unit and opened a new site nearby to assemble complete foaming plants. In 2012, OMS opened a dedicated facility to assemble continuous panel lines. The technical and design head office occupies a light airy series of rooms in the 2012 building (Check).
OMS was founded in 1969 in Seregno, near to its current location and this is why the OMS logo has not changed, said Greco. The company was called: Officine Meccaniche in Seregno. Between 1969 and 1972 the company was based on a small site in Seregno. In 1974 the company moved to the current location.
In 1974, the company started to make bigger machines including: slabstock, high pressure metering machines with multi heads and also spray machines. In 1975, the company employed 25 people and turnover was around $200,000.
Big growth started in the 1980s. “We broke through the Chinese market, and started supplying complete turnkey plants for the refrigerator industry. We also supplied China with automotive seating plants, dashboard plants and a bicycle saddle carousel.”
The start of the 90s saw the company grow from 50 to 80 employees. In 1992 the headquarters and administration and commercial offices were opened.
“The 1990s was the decade of pentane conversion. First refrigerators went to pentane and slowly, slowly the panel market was obliged to convert existing plant from 141b to pentane. In 1995 turnover was $17-18m. The company was making turn-key equipment for refrigeration,” said Greco.
OMS moved in to the US market in 2000. “We managed to sell the first high-speed laminator line at Firestone,” said Eraldo Greco, commercial director.
This was the start of OMS’ growth in this area. Greco explains:”this kind of business was in the hands our main competitor. Thanks to Firestone, they put a lot of trust in us when they came to see us,” said Greco.
Working with large-scale multinational firms has also been a benefit to OMS, said Greco. “There has been a change in mentality, because when you work with a big group like that, you learn a lot. It has been a really good challenge for us.
“It is from there that we started selling other high speed lamination lines, not only in the US, but also in Europe. Customers like Kingspan, Recticel or Knauf and others, they really give us the opportunity to show that we were capable of supplying, what we called, the wet parts of the line.” Today OMS supplies the whole line as a turnkey operation.
OMS has been able to retain skilled staff for many years. “We are really proud that we have employees who have been with us since the beginning. The turnover of employees is very low.
Additionally OMS has invested in technology. OMS invested in a CNC milling machine to make the most critical part of the laminator: the metal slats.
It is fully automatic, it works 24 hours/day, six days/week. The robotised machine is a key investment which gave OMS direct control over the quality of these parts, said Greco. It gives OMS control over delivery time and a much greater control of the price of these components.
Not only has OMS gained greater production and pricing control, it has also become easier for its components to be granted CE marks. Manufacturers which buy CE certificated components from multiple suppliers have to provide their own proof that all the components meet the CE standard. If manufacturers make all the components then they have to provide the certification.
In 2009, OMS Automation was launched. This brand allows OMS to supply turnkey plants. OMS Automation designs and makes components. Although it was originally conceived as a way the firm could supply equipment for flexible foam, OMS also wanted to increase its presence in metal-faced panel machinery.
By 2011, staff had grown to 120 people. The year was one to “put in our memory. Bayer MaterialScience chose us for their own lab lamination line. That is not a laboratory toy. It is a proper production line and more sophisticated than many others. It is over 70m long and is fully equipped with cooling, automatic stacking and packaging. The chemical part is very, very sophisticated. The Bayer specification was very high,” Greco said.
In October 2011, OMS launched First a joint venture with CBM a roll-forming machine to be able to "supply turnkey equipment with a very, very strong roll forming partner," said Greco.
In 2011, OMS employed 120 people and generated turnover of Euro26m, in 2013 employment grew to 140. “Today we have over 150 people and we are still looking to increase in project management, software engineering and technical service staff. With this configuration we supply turnkey equipment and so need the right staff. We deliver and install three or four lines sometimes simultaneously,” said Greco. .
US presence
In the US, OMS’s first partner was Hi Tech Engineering. This came about because “One Firestone’s main concerns was ‘what happens if…. Something goes wrong with our laminator. Do you have some presence locally?’,” said Greco. “This was a good first attempt to say we were in the US,” he added. After a couple of years the firms split and OMS started a commercial relationship with Edge Sweets Company. Now OMS has a relationship with Polyurethane Process Industries (PPL) in the US as the firm’s agent.
PPL, Greensburg, Pennsylvania, “has a good technical understanding of the business. So we decided to go with PPI not because we have an imposing building but because we trust the man. Mark Clark, has over 30 years in polyurethane with a reputation and a track record,” said Greco.
There is a staff of two sales people both of whom have US polyurethane machinery backgrounds; three technicians and two mechanical people. Clark has kept his own business of repair and spare parts and at the same time he has developed and supported sales of standard machinery and is a big support on continuous panel lines,” said Greco.
OMS keeps machinery, and spare parts in stock so that PPI can demonstrate OMS machinery and the company gives us “huge” support on continuous panel lines, said Greco.
“Like the big order we took for Gaf, Dometic or the other orders we have taken for refrigeration. It is much better to find a local supplier for tanks for example than to ship from Italy,” Greco added.
At the same time PPI also sells standard low and high pressure 2 or 3 component metering machine. We have a “steady business in high pressure in the US. Now we have a nice share of our turnover in the US,” said Greco.
CHINA
China is an important market for insulated panels and therefore for OMS. OMS has an office in China run by Mr Ji. “At this stage we have our chief representative, a good commercial person and a secretary and three technicians,” said Mariani. All are on the OMS payroll, he added.
However, 2013 saw the company’s sales into China fall. Normally this market accounts for 15-20% of OMS’ turnover, said Greco.
The fall in sales “is due to new rules about isolation in China,” said Lombardini, “These are not yet clear.”
Another issue is that local competitors are getting stronger and the quality is getting a little bit better. There is competition from Turkey and Korea as well as Chinese machinery makers operating in the market,” said Lombardini.
He added that the Chinese market is strongly influenced by purchase price and not the overall cost of ownership, which includes the purchase price but also the cost of maintenance, repair and lost production.
Lombardini said: “Some of our competitors buy some parts of the line from China, we made choice not to go to China [for parts]. Some of our competitors did, and I’m not sure how happy they are about the choice.”
