San Antonio Business Journal: "Company for all seasons" strategy continues to pay off for Seguin-based Alamo Group

By Sergio Chapa  – Reporter, San Antonio Business Journal
Jul 12, 2018, 7:18am

A "company for all seasons" strategy continues to pay off for Alamo Group Inc., a Seguin-based outdoor equipment manufacturer. 

Founded by entrepreneur Donald Douglas in 1969, Alamo Group's (NYSE: ALG) Seguin plant started out making mowers that were towed by tractors or trucks. Over the past 49 years, the company has followed a diversification strategy of developing more products and buying smaller niche companies that make a range of products including street sweepers, snow removal equipment, excavators and vacuum trucks. Alamo Group — which employs nearly 3,400 people at 26 plants across the United States, Canada, England, France, Australia and Brazil — has completed 24 acquisitions in five countries since 2000, creating an industrial and agricultural equipment company for all seasons.

"That strategy is not going to change," Alamo Group Executive Vice President Jeff Leonard told the Business Journal. "It's always going to be the same. Invest in our facilities. Invest in our acquisitions. Invest in expansion."

Its strategy has proven to be profitable. Alamo Group reported making a $14.6 million profit on $238.1 million in revenue during the first quarter. The figures mark a 19 percent increase over the $12.2 million profit on $215.4 million in revenue during first quarter 2017 and more than double the $7.2 million in net income on $171 million in revenue during first quarter 2014.

Wall Street has noticed the Seguin company's steady growth and profits. Alamo Group's stock recently took a dip but has otherwise traded at historic highs for the past year, setting a company record when it went for $120.58 per share in January.

The Business Journal got a firsthand look at Alamo Group's investments at its corporate offices and 210,000-square-foot manufacturing plant off State Highway 123 in Seguin, where employees design and make mowers and other equipment that are mounted to tractors made by John Deere, Kubota and other well-known brands. For the past 10 years, Alamo Group's Seguin plant has been using the Japanese "lean manufacturing" philosophy — keeping clutter-free work areas, eliminating waste and making products to order.

With limited space, the Seguin plant receives two shipments of steel plates and tubes per day with employees using a batch manufacturing approach. Employees use those raw materials to make components to stock workstations at different production stations. When a part has been depleted in another part of the plant, a barcode is scanned signaling that workers at the front need to make more.

"We're vertically integrated," Leonard said. "We try to make as much as we can here. We buy the nuts and bolts and the tractors, but we try to make everything else."

With some manufacturing in Canada and sales in Mexico, executives with Alamo Group are keeping tabs on negotiations to alter the North American Free Trade Agreement. One month into steel tariffs imposed by President Donald Trump's administration, there have not been any problems or supply disruptions as the Seguin plant buys its steel from Kloeckner Metals in Houston, Alamo Group President Ian Burden told the Business Journal.

Instead of politics, the company prefers to focus on its people, training, safety and product quality. The Seguin plant has gone more than 10 years without losing time due to an accident.

"We wanted to create a culture of safety, not just to enforce it," Burden said.

Although some employees left for opportunities in the Eagle Ford Shale boom, many have returned. About 25 percent of the company's Seguin workers have been there for more than 20 years.

"If you treat people with respect and dignity, they'll stay," Burden said.

To view the San Antonio Business Journal article, please click here.