Case Study: Circle Gear and Machine Company and Pequea Machine Inc.

September 18, 2015

Two companies work together to bring the manufacturing process of gears and gear components back to the U.S. from overseas.


In a joint effort to bring manufacturing back to the U.S., also known as reshoring, a relationship was formed between gear manufacturer Circle Gear and Machine Company and agricultural machinery manufacturer Pequea Machine Inc. Today, both companies are reaping the rewards: Circle Gear has increased its capabilities and capacity, and Pequea is proud to market its products as 100-percent made in America and reports a 30-percent increase in sales for its rotary tedders, machines used to accelerate the dry-down of hay.

While marketing its products as American-made to its customers was Pequea's ultimate goal, the company also needed to repair its reputation with its customers for producing equipment that faced constant problems including product failures, quality issues, and updates. The company set out to regain its confidence in its machines and to solve the issues with its overseas gearbox suppliers, which meant changing the manufacturing process to bring control of the production closer to home.

Pequea was dealing with an American-based company that was operating in China, so all of its production was done overseas. With the Chinese-supplied parts, raw materials became Pequea’s biggest problem.

“With our Chinese supplier, we had absolutely no traceability on raw materials,” said Jim Westlake, engineering manager of Pequea. “We had raw material variations from batch to batch, which messes up the heat-treating process considerably, so then we also had heat-treating issues. Most likely, they were switching the suppliers; depending on which company they bought from, we were getting different materials. When you do low- to mid-volume, you don’t get a lot of priority or consistency out of a Chinese supplier.”

Westlake and his team at Pequea were spending so much time and energy double-checking and triple-checking all of the parts to make sure they would pass production standards, it only made sense to find a way to give Pequea more control of the manufacturing, the quality, and the process.

Initially, Westlake planned to buy gear machines and find a consultant to teach his team how to make bevel gears. He met a gear consultant who recommended four to five companies to him, mainly in the Midwest, and Circle Gear was one of them.

“We tried some local gear shops, and most of them were tied to military or aerospace, and the prices of getting them to make a gear or just cutting teeth was astronomically high,” said Westlake. “Because we are in the agricultural industry, we are not working in the high-end gear class, so we were looking for someone who could do only tooth-cutting at a reasonable price so that we could actually compete with some of our Asian and European competitors.”

EXCHANGING IDEAS
In Pequea’s search for a bevel gear manufacturer, he contacted Circle Gear and Mike McKernin, president of Circle Gear.

“Jim called us one day and said, ‘I’m looking for a gear shop to work with. I have a project overseas that I’d like to bring back. I have some ideas. Are you interested?’

“And I thought to myself, well, this man is crazy but I’m crazy enough to jump in there with him,” said McKernin.

Over lunch in Chicago, McKernin immediately knew that this was a great project worthy of an investment from Circle Gear.

“I really believed in what he was trying to do,” said McKernin. “Westlake showed us his ideas, and we collectively made it happen. I wanted to help, and I wanted Circle Gear to get involved and be a part of this project. Win or lose, I think it was worth a shot.” 

Figure 1

Working alongside McKernin and Westlake was Circle Gear’s chief engineer, Ed Kaske, who showed Westlake the process of testing gears, and he helped Pequea develop a process for inspecting gears before assembly.

“They had no experience with gears and needed us to do the reverse engineering,” said Kaske. “They had never put gearboxes together, and we showed them what needed to be controlled closely and how to minimize assembly errors.”

However, it was Westlake’s idea that set the project on course for bringing the manufacturing back to the U.S. He decided that if he found a casting that was close in near net shape, it would minimize the machining. After the part was machined and the teeth were cut, it could go right to heat treat, and Pequea would have a finished component.

“Working with the machine shop, with the heat treater, and everyone else, we were able to put together a part that was designed to be produced economically and efficiently, so that Jim could reshore it and bring it back in from overseas and create a product line that was exclusively made in this country,” said McKernin. “And working together, we did it.”

According to Kaske, the gears that Circle Gear made for Pequea were an upgrade as far as accuracy and bearing location.

“We ran sample gears in our testers, and they were very noisy and had a very poor bearing pattern,” said Kaske.

Kaske worked with Westlake to determine the machined dimensions, so when the gears were heat treated, they were properly adjusted for growth and distortion. This allowed them to reduce finishing operations or eliminate them completely.

“Our job was to produce the part as efficiently as possible,” said McKernin. “It was putting together the right tooling so that we were holding it properly and running it as efficiently as possible on our existing equipment. We ran through several samples of the parts to be sure we had allowed for anticipated growth before the parts went off to be heat treated.”

NEW MATERIAL, LOCAL SUPPLY
Westlake also knew what type of material he wanted to introduce in the new process. Originally, the parts were steel, but Westlake decided to go with ductile-iron castings due to local supply. It was difficult for Westlake to find low quantities (below a thousand) of cost-efficient steel parts. He began working with a heat treater, Applied Process, that regularly handles conversions from steel to ductile-iron parts. The austempered ductile-iron (ADI) casting material is easy to machine and cut teeth, and an ADI casting is stable without much variation in growth on large-diameter gears. With ADI parts, Pequea was able to use a casting that provided the necessary properties, increased wear, and abrasion resistance compared to steel forgings and that has no after-heat-treat process. By reshoring these parts, Pequea had the process close-by and manageable in case there were quality problems or if the company wanted to make design changes.   

 “With the materials coming locally through the foundry, we know where the material comes from,” said Westlake. “We can get certificates on the material. We can trace it back to the supplier, and they can trace to the original mill. We have full confidence and total control of raw material quality. For every batch, we get samples of the chemistry and the physical properties of the castings so there is no question about the source, the quality of the source, and the consistency of the castings we’re using.”

After Pequea buys the castings, it outsources some of the machining to a local machine shop, and then ships the parts out to Circle Gear to do all of the gear cutting and roll testing.

“Because of the new materials, the austempered ductile-iron being different than the original gears, we went through various calculations to check the ratings to make sure the new materials would be satisfactory for the application,” said Kaske. “The castings minimize the machining necessary to create the blanks. Now, we have the adaptability to change the ratios and manufacture different gears to fit in the same housing for Pequea’s new machinery that requires greater capacity.”

Figure 2

After the gear cutting, Pequea ships the parts to the heat treater. Circle Gear collaborates with them to anticipate the growth of the parts during heat treat and makes adjustments in the gear cutting.

“That’s part of the expertise that we provided at Circle Gear. We were able to make the proper adjustments to the design of the part where we could be able to actually cut the gearing in a way that allowed for distortion. This eliminated the need for post-heat-treat processing, such as lapping or grinding process, which saved a considerable amount of costs,” said McKernin.

AN IMPROVED GEARBOX DESIGN
Originally, Circle Gear was looking for a direct replacement of the gears. During that process, Westlake and Kaske decided to change the gearbox design to fit the product better.

“With the new design, we decided to go with straight bevel gears with Coniflex tooth form so that we had more flexibility and room for error during the assembly process,” said Westlake. “We tried to make them so you can assemble the gearbox without having to check the backlash and the fit of each one of them. We wanted a gear design that was durable and strong but also left room for manufacturer variances.”

Again, Westlake looked to Circle Gear for its gear-cutting expertise.

“Kaske was able to work with us to give us the ins and outs of assembly, what to look for, and what was acceptable or not,” said Westlake. “Instead of training our people and becoming gear designers and gear manufacturers, we decided to hitch a ride with someone who already had the experience, knowledge, and machinery, which would allow us to outsource tooth cutting only.”

Pequea gave Circle Gear samples and specs of comparable design, and Circle Gear then designed a gear set that would be the most economical to manufacture and meet or exceed Pequea’s requirements for the gearbox performance.

“This project from Pequea made sense for us because there was a lot of reverse engineering needed,” said Kaske. “And that’s always been one of our strong points. Everything Circle Gear does is custom, manufactured directly to the customers’ specifications, requirements, or samples.”

The gearbox was designed around the parameters determined by Circle Gear, and Pequea had the gearbox housings made — a collaborative design process beneficial for both Circle Gear and Pequea.

“It was the best for both of us,” said Westlake. “An ideal gearbox design for us, with the gear ratio and physical size of the gears to use available machinery and common tooling, not specialized parts that are difficult to come by. This provided an efficient cost to produce the gears and the design features we wanted for the gearbox housing. And it was done by giving a wish list to Circle Gear and let them go wild with whatever specs they wanted to put into it. They found the happy medium.”

CHALLENGES ON BOTH SIDES
For Pequea, the biggest challenge has been collaborating and coordinating with all four vendors to get the parts made: purchasing the castings from the foundry, working with their lead times, coordinating those lead times with the outside machine shop to turn the blanks, and Circle Gear to cut the teeth. Then the heat treaters are ready to go a week or two after cutting is done.

“One-stop shops could do it all, but the cost is higher,” said Westlake. “The only way to make it viable for us to bring it in-house where we could compete with the cost of China was to handle each of those processes ourselves.”

Figure 3

For Circle Gear, the biggest challenge in the process was keeping the costs down by making the proper tooling, controlling the manufacturing processes, and cutting the gears to ensure consistent results, as well as working with Pequea on the assembly.

RESULTS
When Pequea was supplying customers with the imported gearboxes, it had some major failures from 2007 to 2009, and it was seeing sales trending down in that product line. However, after going through the inventory and ending its relationship with its Chinese supplier in 2011, Pequea has been in full production of American-made gearboxes since 2012 and producing products that are performing well.

“We’ve had no failures with the gears,” said Westlake. “And sales have been growing 30 percent every year since then, and that’s due to the performance of the machines — the gears and gearboxes are the heart of any machine like this in the farm business.”

Presently, the total cost to produce the product line is about 5 percent higher than importing, but the benefits to Pequea are worth it in order to control the production and quality.

“We can put a guarantee on our products and not worry about it,” said Westlake. “We have confidence in our suppliers too. And made in America, especially in the farm business, really matters to the customer. Five percent is a small price to pay to give customers a good feeling about buying local.”

Aside from improved quality and American-made benefits, the reshoring of parts led to a reduction in lead time by about half. Pequea was operating on a six- to eight-month lead time and now running on about a two- to four-month lead time depending on the vendors. And the company has spent time improving its supply chain, and responding to new volume has been successful.

“In our sector, there is a lot of growth for us because we are a small player in the global scene,” said Westlake. “Our volume has grown fast. Circle Gear has bought machines and ramped up production capacity to handle that volume.”

According to McKernin, the timing of this proposition worked out well for Circle Gear, as the company was increasing its capacity at the same time.

“Circle Gear expanded into a second building last year,” said McKernin. “Just after we had the bevel department reorganized and additional equipment acquired, Pequea increased its production. We were seeing hundreds of components come through, and the timing was perfect. It was just good luck. And we were excited at the opportunity to be able to work on a project where we were reshoring a component and to provide the gear cutting in Chicago. It was great to be part of this entire process.” 

About The Author

Molly J. Rogers

is the editor for Gear Solutions. She can be reached at 800-366-2185 ext. 205.