Art Kroetch - celebrating 50 years as a Philip businessman
Art Kroetch, the founder and former chairman of the board of Philip's largest industry, started as a businessman 50 years ago by buying a salvage yard.
This coming October 5th, Scotchman Industry is celebrating 40 years of ironworker production and Art Kroetch's 50th year in business. An open house is planned at the Scotchman offices and manufacturing plant. On that Thursday, from 9:00 to 11:00 a.m., guided tours of Scotchman Industries will be offered to the public. At 1:00 p.m. a special ceremony will include a few comments from the man of honor, Art Kroetch. Tours will then resume until 3:00 p.m.
Fifty years is a long time for a person to continue to work, and work hard. "For most of those years, Art was as poor as a church mouse," said Art's brother, Chuck Kroetch.
During his 50 years in business, the 80-year-old Kroetch has seen Scotchman grow from a two-person operation (he and his wife), when he started making cattle oilers, to a corporation that now is one of the largest producers of ironworkers in America, and one of the largest employers in Philip.
Kroetch grew up on the family farm north of Philip and admits he was a bit of a wanderer. Art and his wife, Eleanor, were married in June, 1950, and Art was drafted that summer. After leaving the military in 1952, Art supported his family with a custom haying business. In their first six years of marriage, the Kroetchs' most time spent in one place was six months.
Art said, "I went into business when Steve was ready to start school," referring to the eldest of his seven children. In 1956, the Kroetchs bought Hap Dorothy's auto salvage business.
Kroetch diversified from salvage and auto repair into manufacturing because of an investment that wasn't going anywhere.
"This fellow from Murdo came around selling cattle insecticide and an applicator," Art explained. "He convinced me to buy $500 worth of the insecticide, and I'd make 10 percent if I sold it." The insecticide was pretty good, but the applicator wasn't, according to Kroetch. "I wasn't in a position to lose $500. I took an old drive-shaft and made an applicator. I sold the chemical for $8 a gallon and the applicator for $5, and I did pretty good."
By 1958, Kroetch found himself in the WickOMatic Oiler business. "I didn't have the tools or the organization to distribute the insecticide oilers," he said. His membership in the Jaycees lead to a contact with Watkins products, which had a line of cattle feed at the time.
Starting in 1960, Watkins distributed WickOMatic oilers for 10 years. As the volume increased, the WickOMatic Oiler Company hired six employees. When it outgrew the supply of old drive shafts, it also became a metal fabricating company. An estimated 60,000 oilers were made. Kroetch still has a WickOMatic oiler kept in its original box.
The company branched out into manufacturing pick-up stock racks, portable corral panels, and gates and chutes; hiring more workers as it grew. From 1966 to 1979, the company also made picnic tables and fitted tarps for stock racks.
About the time Watkins went out of the livestock supply business, Kroetch made a deal with a Minnesota man, Joe Dvorak, to buy his patent for a hydraulic ironworker. It was the first machine of its kind in the world, using up to 35 tons of hydraulic pressure to punch, bend and shear metal.
Kroetch borrowed $150,000 through the Small Business Administration and the First National Bank in Philip. The loan included $120,000 for the patent and $50,000 for equipment. "It was meager going, but it worked."
Dvorak died about two weeks after the deal. One of his sons is now a competitor of Scotchman Industries. "I remember Joe," Eleanor said. "He came to the house. We had a bunch of little kids around the table and he didn't want us to put up our house (for the loan). I guess he didn't think we would make it."
Kroetch is proud that the company, Little Scotchman Industries, never missed a payment on the loan, but it wasn't easy. For years, it seemed that everything went back into the business. At one time, Kroetch had $80,000 in bills and $40,000 in accounts receivable. "I called my suppliers and told them I'd pay as soon as I could," he said. "And I did."
The company started manufacturing ironworkers in 1967. Developing a market wasn't easy, according to Kroetch, who quickly praises the efforts of Hank Hoag of Philip and of Jim Brasel of Pierre. "Those guys would go 18 hours a day. It was a long, hard process," Kroetch said of the men's efforts to establish factory representatives across the country. "It took four years to get it all covered and establish our place in the industry. Hoag was our sales representative for stock racks and other metal tube items. He originally thought that I was crazy to buy the ironworker idea."
"We first went to the International Machine and Tool Show at Chicago in 1970," Kroetch said. "Now in 2006, most of our sales crew will be at the show for nine days starting September 6th. The show is held every other year in the ever-expanding McCormick Building, and since 1970, we've never missed a show."
In 1978, after several years of a working relationship, Scotchman Industries bought the Excel Manufacturing Ltd. of Winnipeg, Manitoba, Canada. Scotchman Industries could then provide the world market a line of ironworkers that ranged in sizes from 35 to 90 ton capacities.
It soon also expanded to include circular cold saws. In May of 1982, Scotchman acquired Marathon Saw Company of Michigan. Today, cold saws are very important to the company, and they are a large percentage of the company's interests.
In 2006, Scotchman is manufacturing 11 models of ironworkers, ranging from a small 45 ton machine to a dual operator machine with a 150 ton capacity.
Scotchman has weathered some rough times. Kroetch admits buy-outs in the 1980s hurt the machine tool field, but good management and good people helped Scotchman survive.
After 40 years, Scotchman Industries is an international corporation that has managed to maintain its small town roots. "It's all come gradually, like a family," Kroetch said. "And this family's home is in Philip. It has never occurred to me to leave Philip," he said. Scotchman Industries are owned by Krofam, an anachronism for Kroetch Family.
"It been quite a 50 years, really. I've been real fortunate," said Kroetch. "The first 15-20 years were the hardest for me. I did everything; salesman, purchasing agent, janitor, trucker. I've now traveled to more places than most people have, and I've done a lot of things I might not have. Eleanor has gone with me most of the time. Financially, we've had our ups and downs, but the company has managed to survive.
"The only ability the Lord gave me was to hire people who had the ability to help me," Kroetch stated. He is quick to share the credit for his success with others who are part of the past and present organization. "That's the secret to running one of these businesses, is having people who know how to run it."
Gerry Rislov, vice-president of operations and with Scotchman since 1984, said, "We are stronger today and far more efficient, due to an excellent work force, and because of the most up-to-date equipment."
"We have as good a work force as we could find anywhere," said Kroetch, who knows the value of a good day's work. He gives his employees credit for their work principals which have contributed to his success. "Good work ethics and proper machinery," he said, "have made it possible."
Kroetch continued, "I don't think any company in South Dakota has better and more up-to-date equipment than we do." Scotchman has ordered a second computer-controlled Mazak horizontal milling center, which should arrive in seven months.
"He's always had good hard working people to work for him," agreed Eleanor. The Kroetchs are definitely a team. Art admits that he spent a lot of time working while Eleanor stayed home raising their family. She has been a good sounding board during the years - she knows the business.
Kroetch's advice to new businessmen, "I'd tell them not to give up. There are thousands of manufacturers who gave up the ship. Since 50 years ago, there are things that don't make it easier - such as insurance and sales. The sales locomotive is what pulls this train."
Rislov explained the new sales requirement, "It's no longer a regional economy anymore, and that makes it different and tougher."
Kroetch said that it would be almost impossible to do today what he has done over the years. "Product liability would prevent anyone from doing this now," he said of the manufacturing business. Scotchman Industries goes to great measures to protect itself from product liability suits. Every machine is shipped with an instructional safety video. Photos are taken of the machines with all the guards in place and with the serial number of the machine. Complete records are kept on all machines to verify that they left the plant with the proper shields in place.
Though Kroetch is still the CEO of Scotchman, he still looks out for all aspects of the company. He and Eleanor spend most winters in Arizona, where he's still always looking for a bargain.
"All the machinery we started with was used," he said. "We couldn't have afforded to start with new." Eleanor admits that Art is still a salvage man at heart. For example, the original section of the current Scotchman building is air conditioned with units Art found down south, bartered for, and trucked home. "The deals are out there," he confirmed. "Don't be afraid to look. I haven't bought a new car since 1982, but I don't buy junk."
Throughout his career, Art Kroetch has served the Philip community.
He was on the Haakon School Board from 1960-70. He was a member of the Hans P. Peterson Hospital board for over 15 years, and a Haakon County commissioner for nine and a half years.
He served on the South Dakota Industry and Commerce Association's board of directors from 1986 to 1992, chairing the council from 1991-92.
He was a member of President Clinton's White House Council on Small Business.
In 1967, he was named by South Dakota Governor Nils Boe as the South Dakotan Small Business Person of the Year.
In 1981, the Small Business Administration awarded Kroetch the South Dakota Innovation Advocate of the Year recognition.
In 1989, he was chosen the U.S. Small Business Person of the Year for South Dakota.
In 1989, he was chosen as the South Dakotan of the Year by the University of South Dakota.
In 1990, he was chosen as an inductee for South Dakota Hall of Fame - Business and Trade.