Tuesday, December 2, 2008
Family Business
Slow and steady growth has been the hallmark of KME’s apparatus line, which is just over two decades old and going strong.
The KME Fire Apparatus story starts in 1946 when John “Sonny” Kovatch Jr. returned from World War II and opened an auto repair shop in Nesquehoning, Pa. Over the years, Kovatch added auto franchises and eventually an International Truck dealership. In 1983 the company started fire truck production.
KME headquarters in Nesquehoning cover more than 65 acres, with 11 plants representing more than 500,000 square feet. The company has nearly 800 employees and four branches that manufacture, assemble and service equipment in Roanoke, Va.; Ontario, Calif.; Assonet, Mass.; and Guilderland Center, N.Y.
The company's current president is John Kovatch III, who was key to KME's entry into the fire apparatus manufacturing business.
How did you got started in the family business?
I grew up in the business like a lot of family-owned businesses. From the time I was a very young boy, I started sweeping the floors and going through all aspects of the business. I graduated high school in 1969. My only formal education was the General Motors Institute to become a GM dealer, which I am today, and a Buick dealer. My family has always been involved with automobiles. Going from the car dealerships, we bought a Jeep franchise and an International Truck franchise.
The International Truck franchise was a very small shop, about a four-bay shop. We contracted with the U.S. military for repair and rebuild contracts for the Army and Air Force. We started doing ¼-ton trailers that tow behind the Jeeps and progressed to Jeeps and power wagons and up to their tow trucks and off road equipment — bulldozers, pay loaders.
We went from rebuilding and building military equipment to refuelers, which is also military equipment. We had a multi-year contract and were the worldwide rebuilder for the R5 Air Force Fueling Truck, a 5,000-gallon refueling truck. From there we supplied new refuelers, which brought us into the fuel tank business. In the early '80s, we finished a contract for about 1,000 refuelers for the Air Force. We found that with military contracts we worked like crazy until that last truck, and then “Now what are we going to do?”
I had wanted to get into building fire trucks. In the early '80s, that was a pretty tight-knit club. The refuelers that we built — just over 1,000 — had M-series Hale pumps. Having purchased all pumps from Hale, we said that we wanted to build fire trucks, but we were turned down flat — “No, you can't buy a fire pump” — by all of the major manufacturers! That's pretty accurate. Hale wouldn't sell us a pump; Waterous wouldn't sell. Federal Lighting Systems said, “No, you don't belong to the club.”
So we asked, “How do we join the club?” Well, pretty much you had to buy another manufacturer, and that's really what they were talking about was gaining OEM status. There was a small regional manufacturer — Carmar up in Berwyn — almost a well-kept secret. We're still a relatively well-kept secret in the industry, and some people still refer to us as “those Carmar people.” We purchased them and got our OEM status, then we were recognized as a fire truck manufacturer.
Around 1984, Mack decided that the fire truck business really wasn't a good fit for Mack Trucks and we bought what they described as their fire truck asset, which was all of their engineering, OEM status, all their inventory, but it did not include a chassis. This was just the back end of a fire truck and having that, we were pretty much up and running.
In '84, we did something a little bit bizarre. It was the era of the program trucks; we jumped in with both feet. So we were going to buy 50 chassis and build 50 program trucks, and in trying to decide which ones to buy — International or General Motors — we decided to buy 50 of each. Fifty turned into 52, and we ended with 104 new commercial chassis sitting in our parking lot. We had the assets from Mack Truck to the Mack fire body, which at time was only built in galvanneal; even high side air pack compartments were a rare option. We built and sold 102 commercial fire trucks.
These trucks got us recognized and into some price wars with people like FMC and Grumman. I'm told a lot those manufacturers would tell dealers that we were a flash in the fire and we would be gone soon. Both of them are gone; one we bought and the other closed their doors. It makes me respect other manufacturers when I see people come into the industry today. I tell my people all the time, I don't think there is a day that I don't come to work where I don't think of where we came from. I remember going out and trying to tell people who KME was; our full name is Kovatch Mobile Equipment and we filed for a fictitious name under KME Fire Apparatus. But we would go out under Kovatch Mobile Equipment and people would ask us, “Do you make mobile homes or what?” No, we make fire trucks. We had some crazy ideas.
How many employees do you have?
I don't have an exact number, but we have to be approaching 800. Most of them are in Pennsylvania. Today, we are fortunate enough to have another military contract, and we are producing 22 aircraft refuelers a month.… If you look at the timeline, as we grew, we have done it slow and then we've done it a little bit faster and faster. Refuelers, fire trucks, and the list goes on and on.
It seems like it would be a natural progression to go from tankers and refuelers into fire trucks.
It's a great breeding ground and we've done this a number of times in our history. We build fire trucks and then we get a military contract and we have this growth. We grow our infrastructure, we grow our manufacturing equipment, and we hire employees. I think it's pretty fair to say we've never had a layoff.
As the military contract has faded out, we have groomed a bunch of really nice employees. Even as it's going on, because of military contracts, the work has to be excellent. You'll see people that excel, but that type of work is repetitive. You teach someone how to wire that truck and they'll wire those trucks the same all the time.
With fire trucks, every truck is different. You'll see people grow and better at their job and excel at their job and even during the term of a multi-year contract, you'll say that person is exceeding the requirements of that job and we can move them into the fire truck end. It's a fantastic training ground for people.
But then as the refueler contract ends, we'll have another surge in our growth in the fire truck market. Now actually, this year as we speak, we are experiencing a lot of growth with our refuelers; we are seeing a lot of growth in the fire truck end, too. It's a good year for fire truck purchases.
Why is that do you think?
Probably ran its cycle. I think that the funding is good. The industry has had a couple of down years.
There are some changes with competitors, also.
Yes, there are some changes. Other equipment is becoming logically obsolete. I think that a lot of fire departments are realizing that they have to go to new equipment because repairing the old equipment just won't make it anymore. We see a lot of grants out. I think our sales force does an excellent job of helping people write specifications for their grants. Sometimes you're always in the right spot at the right time.
We have a couple large, multiple contracts that we haven't had for the past several years. It's nice to have some multiples coming back in. We're truly a custom manufacturer. I think that might be our niche in the market because we build one truck at time; we can customize a truck more. The number of cab and body configurations that we have is absolutely staggering. We've been slowly approaching new markets, like airport vehicles, slowly and cautiously. We have a lot of excellent opportunities for those types of products knocking on our door.
Were you a firefighter?
I was a volunteer firefighter when I was younger although not today. My son is. He's in his second year of college and belongs to a couple different fire departments.
What do you feel are the strengths of KME?
One strength I really enjoy is that we are privately owned. If we decide that we want to go after something today, we can go after it by the seat of our pants. I don't need to go to a board of directors; I don't need to a corporate resolution to try something.
I think it's our experience in the automotive field and 20-some years in fire trucks, and I think it's our dedication and hard work. My father's entrepreneurship and dedication to never quitting — you have to do it. He was 80 years old in July and he's still very active in the business. He works every day. His health is excellent. He yells like crazy and he always has.
I'm the only boy. All the children are involved in the business. Hopefully, all the grandchildren will be involved in the business. I know my son for one, is very interested in it. Somewhat like myself, he grew up in the car dealerships and he worked in the car dealerships over the last three years during summer breaks. This year he is splitting his time between working in the car dealerships and spec writing. He likes fire trucks and he's a little bit of a motor head.
Our strengths, first of all is our ability to do what we want to do, how we want to do it, when we want to do it. The fact that we are sole-source. We manufacturer our own cab. We really control our own destiny. We're at the mercy of the engine, transmission, axle, and pump manufacturers, but beyond that we pretty much control our own destiny. We are totally integrated, I do believe the most integrated manufacturer in the fire truck industry today. We are a true manufacturer and not just an assembler.
A lot of manufacturers are coming out with a lower end or lower line, like a program truck. Do you envision going there?
At another manufacturer, if you buy a low-end chassis and put an end on it, I think customers are more apt to accept some state of less than 100% finished and detailed. If you look at our trucks, even our most basic custom, everything matches from the body to the chassis, from the cab to the body, all the same lines, all the same trim, all the same detail. We certainly don't enjoy the economies of bringing a stripped-down chassis.
The way we work with our customers from spec writing to preconstruction meetings, it's a common occurrence for customers to visit and they can visit at any time unannounced and view how their truck is being built. Some customers literally videotape the complete construction of their truck.
What are some of the goals that you have for KME?
Continued and steady growth. You'll see new products in the fire truck market. Our aerial line has grown nicely as expected. Our rescue line has grown nicely as expected. The aerial line is the most diverse in the industry today.
I mentioned earlier, if you look at our timeline, you'd see repetitiveness. I believe the time was around 1987, we wanted to start building aerials. We had a nice product line that lacked aerials. We purchased from LTI their 55-foot FireStix and we grew off that. We had the 55-foot Fire Stix and took that to the 75-foot FireStix.
We wanted to acquire a good aerial line and negotiated with Grumman once they announced they were going to exit the fire truck business. Through some perseverance they finally said OK.… My father; myself; Jack Salszak; and Jack Terefinko, our chief engineer, went. I got the phone call from one of the officers at Grumman and they said it was time. They picked us up in their jet and we went through the Roanoke plant, looked at the product, negotiated the deal. We still have some of the same engineers that Grumman had working for them today. The facility in Roanoke is still open; we still build our ladder sections in Roanoke.
With your experience, what are some of the pressing issues facing the fire service right now? What are some of the obstacles?
Definitely funding. I think maybe in past years they thought they could get a one truck for everything. I think they are realizing the need for specialized equipment, safety, and training. For volunteers, it's volunteers. For paid departments, the last couple of years have been pretty difficult for funding and cities have closed fire stations.
I think at KME we are doing a pretty good job of bringing safety to the fire departments. We have our protection for all occupants, we have the air bags, we have the roll-over [protection]. For a small, $100 million company — we are the biggest privately held, but we are small compared to a couple of the big guys out there — we have gone to great lengths and expense to do roll-over and crash testing, air bags for occupants protection, an enormous amount of safety-related items in our aerials, all kinds of electronic programs and automatic features. I think we're really holding up our end of all that.
If we talk about TOPS, total occupant protection system, I'm disappointed that we are not seeing more demand for it than we are. Almost anybody that had a truck that had an accident, especially where there were injuries involved, buys that system. If the fire department really hasn't experienced an accident with injuries, I don't see them jumping through hoops to buy it. We also participate in industrywide safety-related items. Firefighting is a very dangerous job, there is no doubt about it.
The future of fire trucks — where is it headed?
Big trucks, small trucks, whatever vehicle does the best job. In some cases, they should be small, in some cases they should be big. Definitely safer.
About a dozen years ago, we played with the idea of a hybrid fire truck, something that could leave the fire station very quick on electric-drive motors, get out of the station and start the primary power plant as they are going down the road. A long time ago, we were part of a group of people that were looking at a hybrid truck for the postal service. We looked at bringing some of that technology to a fire truck. It made sense and it still makes sense. I think that the componentry needs to be proven and come of age, but we were looking at a fire truck that could pull out of a station almost like a city bus does today, that is electric and doesn't run on a cable attached to the car. We are going to see it. We're seeing it in cars, in pickup trucks and in city buses.
Where do you expect KME to be in five years?
I think in five years you will see us more well-known in the airport vehicles. I know in five years we'll still be doing military contracts because our contracts now run past five years. Nice, steady, continued growth: growth of our company and growth of the product line.
If there was one message that you wanted to get across to chiefs and officers, what would it be?
Other people are delivering the message a lot better than I can about promoting safety. If it were related to our business, I'd say take a look at us, take a look at our competition. Nobody bad is left out there today. The poor manufacturers have either gone away or will go away shortly. Take a look, we have a lot to offer. We don't build a truck that fits everybody's needs. Our niche is a lot value for the dollar and a lot of customization to do what you want to do with it. Sole-source responsibility. We're not going to say we couldn't get the cab from so and so, or somebody else did that work. As far as the truck goes, we are pretty fully integrated except for the major drivetrain. So take a look at us. We are a well-kept secret.
Everything comes around. We start it and we grow it a little bit. We don't do insane things that are going to jeopardize the company. Even like the crash trucks and the ARFF trucks, we have done them very slow. I have potential customers that get upset because they think we should be more aggressive at this market today, and it's not our time to be aggressive in this market. When we are 100% confident, then it will be our time.
It's like our aerial products. We started with a 55-foot FireStix; we had a lot to learn about aerials and we still learn a lot everyday about aerials. The people here, like Peter Hoherchak, my aerial manager, he came to us out of tech school and worked putting doors on fire bodies and he grew with us. So many of our finest employees grew with us. Bruce Nalesnik just left us: He bought his family business and runs it downtown; he's a phone call away. He grew with us. Mark was my neighbor and his father helped us get into military contracts.
So often you see these sales reps, and you ask who they are working for today. You don't see that too much with KME. Someone comes here it's like a life sentence. Maybe because it's a family business. We truly respect our employees, we respect their knowledge and their skills. I grew up with a lot of them. We have had lots of opportunities to train them.
blog comments powered by Disqus
Most Recent Story
Want to use this article? Click here for options!
© 2008 Penton Media Inc.
advertisement
Most Popular Articles
Fire Chief TV
View latest
video from Rolltek
Click here to view more videos








