Company Profile: Schafer Gear Works Inc.

Smart planning and major capital investments have transformed a collection of companies into a true powerhouse in the gear manufacturing industry.

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Trained as a chemical engineer —and having spent some 25 years with Uniroyal—Bipin Doshi was looking for a new challenge; namely, going into business for himself. His last assignment with his employer had led him to a town just outside of South Bend, Indiana, where the company had a plant. In charge of a graphic arts printing supply division, Doshi felt the rumblings as Uniroyal began breaking up and decided that “perhaps it was time to leave the big corporate umbrella,” he says. “I wanted to do something on my own.”

He began researching opportunities to purchase an existing business, and after nearly three years his banker steered him toward a local company that was then owned by South Bend Lathe—the Schafer Gear Works. Long story short, as Doshi likes to say, he signed on the dotted line in January of 1988. “It was just small enough that I could afford it,” he says, “and just large enough that I felt I could really make something out of it.” Four months later he was joined by Stan Blenke, a former vice president at South Bend Lathe who is now Schafer’s executive vice president.

What they found to work with was a company that had been somewhat neglected, but one with a long history of producing quality fine-pitch gearing. “Otto Schafer founded the company in 1934,” Doshi explains. “He’d worked on gears at Ford, and he was a racing enthusiast, so he started the company in the hopes of producing gearing for that application.”

At the same time Schafer realized that he would need more revenue in order to keep what was basically his hobby afloat, so he began supplying gears to Studebaker, which was based in South Bend. “And that’s what really became the company’s core business,” Doshi says.

After Schafer’s death—fittingly, of a heart attack while attending the Indy 500—his sons took over the business and ran it until 1980, when they sold it to South Bend Lathe. Eight years later, Doshi and his partner entered the picture, immediately setting to the task of evaluating the company’s strengths and weaknesses.

With 52 employees, and somewhere in the neighborhood of $3 million in annual sales, Doshi quickly realized that he first needed to streamline the company’s revenues. “I felt that if the company had good in-house technical capabilities, which it did, then we should be able to capture more business from fewer customers, so we made a concentrated effort to focus on two or three local companies—one of them being Toro, an existing customer—which worked out very well,” he says. “And that gave us a tremendous boost, allowing us to raise our revenues to $5 million within our first two years of ownership.”

The partners also began making significant capital investments during that period, buying the first of many CNC turning and gear hobbing machines, and picking up major customers including Cummins, Rockwell International, and the Dana Corporation. In 1992 they acquired a local screw machine manufacturer, and then a precision blank supplier three years later. Even after building onto the existing structure in 1995—resulting in a total of 50,000 square feet—it wasn’t long before Schafer had completely run out of room, so the decision was made to buy property and build a new structure from the ground up. The company moved into its new 107,000 square-foot building in 2000, and with 15 acres of property, there’s plenty of room for continued physical growth.

It wasn’t done growing in terms of its capabilities, however, and it took advantage of the opportunity to purchase a company called Patterson Gear in order to bring gear grinding into the mix. Soon afterward, with so much business beginning to go overseas to LCCs, or “low-cost countries,” Doshi and Blenke decided they wanted to strengthen their domestic portfolio, which they did by acquiring yet another company—the Chicago Gear Works—which was absorbed into Schafer’s primary plant. With this move the company solidified its current physical footprint, with headquarters in South Bend, another Indiana facility in Fort Wayne, and a third plant in Rockford, Illinois. The company now employees some 135 individuals and owns more than 165,000 total square feet of manufacturing space. Revenues have risen to more than $20 million annually.

As for its customers, the industrial market is by far the largest segment, with additional sales in the aerospace, automotive, mining, construction, and off-road industries. Asked about gears for racing Doshi laughs, saying “oh no, we’re totally out of that now.”

Of the Schafer Gear Works’ many strengths, Doshi is quick to point to the engineering services it provides to its customers. “Whether we begin working with them during the design or the manufacturing phase, our engineers often suggest changes that reduce costs without affecting the quality of the finished product,” he says. “We’re also a very market-oriented company. If a customer needs something that we don’t have, we’re willing to invest in the equipment and technology to make the part—as long as the business is there—or we’ll do whatever legwork is necessary to find a supplier and handle negotiating a good price ourselves.

“It’s all about proactively seeking solutions to the challenges your customer faces,” Doshi says. “Find out what they need, make it happen, and you’ve launched a relationship from which both parties will benefit for years to come.”

For More Information:
To contact the Schafer Gear Works call (574) 234-4116 or go online to [www.schafergear.com].