Over the last four decades, Minnesota-based Delkor Systems, Inc. has built a thriving manufacturing business by helping consumer product companies automate the packaging of their products. Listening closely to customer needs and investing heavily in research and development Delkor has introduced a steady stream of inventive machinery – and novel packaging designs – that are making brand owners more productive and profitable.
In a time when many manufacturing companies were cutting back on R&D and marketing, Delkor President and CEO Dale Andersen expanded the engineering staff and committed the company to expanding its product line to satisfy the wider packaging market. Delkor specializes in machinery that forms, loads and closes secondary packaging, which includes the cases, cartons, trays and shrink-bundled packages. These are used to transport products throughout the supply chain, from manufacturing to retail shelves.
Andersen acquired Delkor in the late 1990s. Prior to that, the company founder had divested some of its technology and business to other packaging companies. Andersen took over the Delkor name and the core of the company’s business, which primarily served the packaging needs of the dairy industry. By expanding the number and types of machines available, Delkor is now serving more packaging segments among Fortune 500 companies. As a result, over the last decade the company has experienced average organic growth of 12 percent annually, with revenues growing from $20 million in 2004 to $65 million today.
Delkor recently consolidated its operations in a new 114,000 sq. ft. facility in St. Paul, MN. Andersen says Delkor takes pride in producing high-tech equipment here in the U.S. that can compete globally. He says the company’s location in Minnesota is a strength since the area is a strong packaging center and it provides a highly skilled talen pool.
At Delkor, the entire team of 170 employees is encouraged to find new ways to automate packaging. All sales staff are Delkor employees and have a strong engineering background that helps them understand and visualize customer requirements. They are backed by a team of 23 engineers who translate these needs into efficient machines that meet or exceed customers’ requirements. Delkor’s manufacturing staff all have received technical training. Many also double as service technicians, using their extensive experience in building the machines to ensure the equipment is properly installed and is optimized for maximum productivity.
Packaging is a product used daily by virtually all consumers. Changing consumer requirements are driving packaging changes, such as sustainable design, single-servings, flexible pouches, zippered enclosures, microwaveability and other convenience features. These modifications have prompted further developments in secondary packaging. Delkor has anticipated many of these changes and adapted the design of their equipment to take advantage of these transformations.
Mass merchandisers are playing an increasingly important role in the types of packaging used in different retail channels. These range from convenience stores to wholesale club stores, and each has its own shipping, display and size requirements.
For a brand owner or a co-packer, this means their machinery must have the flexibility to handle a range of packaging. Until very recently, many packaging lines were dedicated to producing a single type of product. Now, machines must changeover between packaging formats more frequently, and packagers are seeking to minimize the downtime during each change.
An engineering executive at a leading U.S. food company recently said that the old mantra for packaging operations was “Bigger, faster , better.” Now that company’s expectations have changed. They are seeking packaging equipment that is “Adapatable, flexible and efficient.” Delkor has been ahead of the curve in adapting its business model to this new mantra. Examples of its success include designing machines that can changeover in less than three minutes, which prevents lost production time. In addition, Delkor has added “intelligence” to much of its packaging equipment that can significantly increase production efficiency. Inspection devices allow the machines to detect and self-correct many packaging faults without stopping and requiring aid in removing defects from the machine.
Another factor that separates Delkor from many equipment manufacturers is that it often either designs or helps design new packaging – not just the machines themselves. Packaging must protect and sell the product, but sometimes these goals clash. By working with its customers, Delkor has helped develop packaging that effectively achieves shelf impact while delivering efficient manufacturing. An example is the patent-pending Delkor Cabrio Case™, which is a shipping case that easily converts to an attractive shelf-ready tray ready for store display.
An Entrepreneurial Culture
While engineers are developing new machinery to better accommodate packaging goals, Delkor provides an inclusive, entrepreneurial culture that allows each member of the team to contribute creatively and technologically. According to Andersen, “One of the things I am most proud of is that we’ve been able to develop an innovative culture, and it’s not easy to do that. It means that we have to have a culture in which you hire the right type of person. Innovation presents a lot of challenges. As soon as you accomplish one challenge, you’re on to the next. You have to be creative, willing to accept failure and use that failure to move on to success. It takes a special culture to really reach a higher level of innovation. Management has to be attentive, and you have to have the right team. I think that we’ve been doing that over the last few years, and we need to make sure that we’re bringing the right people on board that fit that role.”
Delkor also employs a product-strategy team, representing eight departments, that decides the development projects that the company will undertake. Among the departments represented are sales, marketing, engineering, operations, product-line developers, as well as the CEO, to ensure Delkor determines the best approach to fulfilling customer needs and requests.
Employee satisfaction and work-life balance also are primary goals for Delkor. The company aims to minimize staff turnover and create career opportunities for employees to pursue within the company to provide a higher quality of life. Delkor is one of the few companies that provide daily fitness classes, including yoga, in which around 70 employees participate. These classes, held in an on-site fitness center, provide employees the opportunity to meet new people from other departments as Delkor rapidly expands its workforce. The fitness classes also work as a way to promote a healthy, active lifestyle to improve heart health, among various health benefits.
A majority of Delkor’s business is concentrated in the food and beverage industries, where it serves numerous multinational companies. In planning for the future, Delkor continues to expand its product lines to meet the needs of a growing customer base, primarily based in North America, but expanding into other areas outside the U.S.