September/October 1998
From designing patented new products to shipping out loaner magnets, meeting the specialized needs of its customers is what energizes Delta Star Electric Inc.
By Robert L. Reid
Robert L. Reid is managing editor of Scrap.
Remember the old advertising campaign for Avis, the car rental company, that proudly claimed its second-place status made it “try harder”?
A similar determination drives Delta Star Electric Inc. (South Bend, Ind.), which is second in lifting magnet repairs nationwide and fourth in new magnet sales, company officials say. But with a heavy emphasis on innovative products and services, Delta Star hopes to rise higher.
Many of these innovations are designed with scrap processors in mind, notes Lance Long, vice president, and range from a patented line of magnets with a combined aluminum/copper coil to a magnet loaner program, trade-in policy, and commitment to maintain a healthy inventory of complete products.
Moreover, Delta Star sees the scrap industry as a tremendous growth market, especially as consolidation forces customers to focus on issues such as magnet performance, return on investment, and the overall efficiency of “lifting systems.”
“Old ways are changing,” Long says. “People want [technical] drawings, they want to know how many amp turns a magnet has, they want guarantees of how much it will lift—and we just shine when we get into a situation like that.”
Learning Through Repairs
If, as Long says, magnet customers are becoming more technically oriented, then Delta Star has a rich history of technology from which to draw—much of it learned from other magnet producers.
Originally called Dave’s Electric, the company was formed in the early 1950s by Dave Berebitsky as an electrical contracting firm.
Around 1970, as its business grew to include electrical motor repair and other services, it was renamed Delta Star—a reference to a connection used in transformers and motor windings. When in the 1970s the firm began repairing magnets, it gained a look inside the very magnets it would eventually compete against.
“We’ve repaired everybody else’s magnets,” notes Jack Long, Lance’s father and Delta Star’s president. “We’ve seen all the problems—the good, the bad—and out of all that we were able to hit on something that we believe improves the lift of magnets.”
Jack Long, who also owns a local machine shop and foundry that makes certain parts for Delta Star, although not magnet cases, along with two other investors—George Wiegand and Ralph Hohl—purchased Delta Star in 1987. Wiegand is Delta Star’s secretary/treasurer and fills a similar role in the machine shop and foundry, while Hohl isn’t directly involved in running either company.
The key to how much a magnet will lift is based on the amp turns, explains Thomas Morris, the firm’s magnet supervisor. Amp turns refers to the direct-current amperage used to energize the magnet multiplied by the number of turns in the magnet’s coil, which is generally made from a conductor such as aluminum or copper with insulating material in between. “If you take four magnets that are all the same diameter, the one with the most amp turns will lift better than those with fewer amp turns, so long as the case is thick enough to carry the flux,” explains Morris.
In the 1940s and 1950s, when most magnets were attached to cable cranes, the weight of the magnet didn’t really matter, Morris says. But in the past 15 years or so, as the scrap industry in particular has turned to hydraulic excavators, magnets have had to shed weight to work with the new equipment. That, in turn, required smaller and smaller coil cavities and a greater reliance on aluminum, which while not as good a conductor as copper, is lighter and less expensive.
“When you start making the coil cavities smaller, you automatically decrease the amp turns,” Morris notes. “So, we had to come up with some way of getting more turns into the magnets.” Simply increasing amperage wasn’t the answer, he explains, because that would heat up the magnet, reduce its efficiency, and thermal- age the insulation.
Although Delta Star initially began making its own line of “standard” magnets—that is, ones with a traditional design and, for scrap customers, usually an aluminum coil—the company kept experimenting with new designs. It built and tested different prototypes over the years, with varying degrees of success, until roughly five years ago when it finally hit on the right approach, Lance Long says.
In a nutshell—or more appropriately, in a cast alloy steel case—the patented MP series combines an outer coil of aluminum with an inner coil of copper, all insulated and wrapped around an engineered core. The MP’s core provides extra room for more turns and, when combined with a larger center pole, has the ability to lift more material—as much as 25 or 30 percent more with certain types of scrap, the company says.
The difference is as plain as the scrap hanging from the magnet, Morris says. When conventional magnets pick up material the load hangs down in a point, he notes. But the MP fills in the gaps around the point, lifting a more ball-shaped load.
Magnet-Back Guarantees
In the United States and around the world, magnets are increasingly being treated as a commodity, with price becoming the key factor in comparing similar models, Lance Long says. Delta Star bucks that trend, he asserts, by conceding that its MP magnets cost about 10 percent more than comparably sized units and focusing instead on performance.
“We talk about production,” Long explains. “We talk about what the magnet will do, how much it will lift.”
Delta Star also offers a two-year warranty on MP magnets compared with the industry-standard one-year for its DS line, he notes. Moreover, the company guarantees MP performance and even lets customers try out the product before buying it.
That’s what happened with Great Western Recycling Industries Inc. (St. Paul, Minn.). At first, Long recalls, Great Western was skeptical about Delta Star’s claims for the MP magnet. “So, we told them it would do a minimum 15 percent more than their current magnet or we’d take it back.”
Within two weeks, Great Western called back with reams of data showing even better results—as much as 25 percent better performance on some grades of scrap—and ultimately purchased two more MPs, Long says. Jim Janovec, Great Western’s facilities manager, even let Delta Star use his photo in an advertisement for the 67-inch MP.
The experience of another scrap customer, AMG Resources Corp. (Pittsburgh), highlights Delta Star’s strong emphasis on customization. AMG had just acquired a rubber-tired scrap handler from Atlas ERS Inc. (West Seneca, N.Y.) and wanted a magnet specially designed for the new machine, says John Siak, AMG’s corporate director of purchasing. Atlas ERS recommended Delta Star because “their magnets show our machines well,” says Richard E. Centner, the company’s vice president and general manager.
And while AMG initially expected that weight restrictions would limit this magnet to a 54-inch diameter, Delta Star designed and built a 67-inch MP that weighed only 5,300 pounds and provided the desired productivity increase. “The magnet has behaved beautifully,” Siak says, adding that “a lot of people wouldn’t even have tried to make a custom magnet for us, let alone given us 60 days to decide whether to keep it.”
Tom Skodack, marketing manager of Hamm Compactors Inc. (Irving, Texas), North American distributor for the Fuchs line of scrap handling equipment, says Delta Star also developed specialty magnets—a 3,500-pound, 58-inch unit and a 5,500-pound, 67-inch unit—for two Fuchs models. Skodack specifically likes the fact that Delta Star’s “high-amp windings” draw fewer kilowatts, which fits in well with Fuchs’s emphasis on “total machine efficiency.”
Putting Their Magnets Where Their Mouth Is
When Delta Star guarantees its magnets’ performance, there’s more than just faith backing up the promise. The company has extensively tested its products against competing magnets, first at its own plant—using material from a local scrap processor and under the supervision of a professor of electrical engineering from nearby Notre Dame University—and then again at a scrap plant belonging to OmniSource Corp. (Fort Wayne, Ind.).
Those tests pitted various models of Delta Star’s MP and more “standard” DS magnets against products of roughly the same size manufactured by two key competitors. OmniSource personnel conducted the actual work, using the same crane, operator, and scrap—such as flashings and No. 2 shredded—for each magnet, Long says. In each case, the MP magnets lifted more—at least 15 percent more on average, he boasts. (The DS models usually outlifted one of the competitors, but not always both—a fact that Delta Star included in its published comparison charts.)
Having seen what the MP magnets could do, OmniSource ultimately bought a half-dozen units, Long notes. In addition, Dave Kaminski, OmniSource’s plant manager, notes that “I don’t believe we’ve sent any of the magnets in for repair yet—that’s pretty good because we run them pretty hard here.”
Successful as the OmniSource tests were, Delta Star had actually wanted an even more public arena for these comparisons. With a plucky spirit that’s part entrepreneur, part showman, Delta Star originally issued repeated challenges to its better-known competitors to conduct a “lift off” in which each company would publicly demonstrate how much scrap its magnets could lift. No one accepted the challenge—Long admits he never expected them to—but Delta Star will probably keep trying.
Loaning Out and Trading In
Delta Star’s overall revenue of roughly $7 million a year includes magnet sales and repairs as well as work by its motor and electrical services divisions, both of which help scrap customers by repairing parts for crushers, shredders, and other equipment. About 80 employees work at the company’s 72,000-square-foot facility in South Bend, with 25 of them cross-trained to handle magnet and motor jobs. The magnet/motor employees all belong to the International Brotherhood of Electrical Workers union and must complete a four-year apprenticeship that combines on-the-job training with classroom work in math and engineering, Long notes.
The company also has a sales force spread around the country whose members all have some scrap-related experience, whether it’s working with shears or shredders or even as the former scrap foreman for a minimill. At present, repairs account for about 60 percent of Delta Star’s magnet division sales volume, with new sales making up the rest. But Long expects that ratio to gradually shift heavily toward sales as the popularity of the MP magnet spreads. Already, the patented series accounts for 70 percent of the company’s new magnet sales—a figure that’s expected to increase as Delta Star develops an even more efficient version designed specifically for hydraulic scrap handling machines, he predicts.
To better serve its scrap customers, Delta Star keeps at least one version of each magnet it makes in inventory at all times, along with plenty of spare parts and a storage room filled with aluminum and copper conducting material. At one point this past July, for instance, the company also had nearly 40 new, empty magnet cases on hand. (Delta Star also uses fabricated cases when customers request them, but only on special orders.)
Maintaining a healthy inventory is essential for two reasons, Morris says. First, foundries can take as much as 23 weeks or longer to make a new magnet case. And second, scrap processors rarely own spare magnets—when the magnet is down, they’re temporarily out of business. “And one thing we found is that if you don’t have the magnet in stock, scrap people aren’t brand-conscious,” he says. Adds Long, “Everything’s a rush for scrap companies. So, when they call we try to put our best foot forward and get everything out to them as quickly as possible.”
Keeping ready-to-ship magnets around also drives Delta Star’s loaner program. When a customer sends in a magnet to be repaired—something that can take anywhere from several days to several weeks—or when a customer’s new magnet is in the process of being built, Delta Star will provide the company another magnet to use in the meantime. “We try to keep a couple of big magnets in stock that we can send out that way,” Long says, estimating that one particular 84-inch magnet is probably out on loan 10 months a year. These loaner magnets are offered at no charge, he adds, “as long as they buy a new magnet or let us do the repair—if they need the loaner, they can have it.”
What’s more, Delta Star will deliver the loaner magnet right to the customer’s door. Over the years, Long explains, the company has built up a fleet of more than 50 trucks—including two over-the-road heavy haulers, a third slightly smaller vehicle, and plenty of service vans—to accommodate customer needs. So, when Delta Star sends out one of its big trucks to collect a heavy magnet that needs repair, the vehicle might also carry along a loaner magnet to leave with the customer while the work is being done.
That truck might also deliver a brand new magnet and return with the customer’s old magnet as a trade-in, which can knock anywhere from a couple hundred dollars to several thousand dollars off the purchase price of the new magnet, depending on the trade-in’s size and condition, Long notes.
Trade-ins are then repaired and resold to “a certain part of the market that won’t buy a new magnet, no matter what,” Morris says. Like customization, he adds, the trade-in policy is a Delta Star niche that’s helping the company grow.
An Attractive Future
Another growth area involves a new patent that Delta Star’s owners recently received for a magnetized grapple. (Unlike the MP patent, this one is held by the individuals who developed the product and not Delta Star itself, Long notes. He does, however, hope the patent will eventually be used to manufacture a new line of Delta Star products.)
The magnetized grapple isn’t simply another version of the traditional magnet-grapple combination, but rather a single tool in which the tines of the grapple are energized like a magnet, Long explains.
“Scrap processors are always switching from magnet to grapple, grapple to magnet—it’s time-consuming and they don’t like to do it,” he notes. “But there’s a gray area where the two tools overlap, and that’s where the magnetized grapple could really shine. You can unload a railway car with it, you can even lift steel plate. And then you can clean up after yourself—it can pull material from corners, it can sweep the area.”
Currently being prototyped, the magnetized grapple is another sign of the innovation guiding Delta Star and could potentially “make this company three times the size it is now,” Long says.
He also sees opportunities for growth in the ongoing changes within the scrap industry itself. As a result of scrap company mergers, for instance, Delta Star is dealing less and less with company owners and more and more with purchasing agents, controllers, and executive vice presidents in charge of manufacturing, he notes.
Increasingly expensive hydraulic excavators combined with greater pressures to increase the productivity of material handling “systems” make these executives demand more and more information before they buy a new magnet. In such cases, Delta Star is prepared to rework magnets on its computer-aided design system (which was used to redesign one customer’s magnet, saving the company about a half-million dollars a year), send out technical drawings and provide comparative lifting data, customize products for specific machines, and guarantee performance and then stick by the numbers promised.
Sometimes, though, the only issue is money—which magnet has the lowest price tag. Delta Star’s MP magnets cost more, so a sale is easily lost if a committee has to sign off on the purchase or a lower-level executive is wary of making a potentially controversial decision, Long concedes. But he firmly believes that when Delta Star can talk to an individual who has actual purchasing authority, who is interested in performance, “who is oriented toward data and technology—we’ll sell him every time.” •
From designing patented new products to shipping out loaner magnets, meeting the specialized needs of its customers is what energizes Delta Star Electric Inc.