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Gates Belting Out Success in Siloam Springs

5 min read

Even a successful 104-year-old global corporation can hit a speed bump or two moving from the East Coast to Arkansas.

Gates Corp., a producer of power transmission belts for the automotive and industrial sectors, didn’t move its entire operations to Siloam Springs two years ago. Gates only moved its production facility from Jefferson, North Carolina, to its 300,000-SF plant in northwest Arkansas.

Gates, a private company headquartered in Denver, moved production of its Micro-V belt and, with it, approximately 30 workers — out of 275 or so who worked in the North Carolina plant. In the months before the move, workers from Gates’ Siloam Springs plant traveled to Jefferson to learn and gain experience on the Micro-V line.

Each Micro-V line, of which the Siloam Springs plant has three, is about 150 feet long with tons of machinery that includes a crane capable of easily moving 300-pound rubber belt molds.

“It went as smoothly as any other multimillion-dollar production move,” said Cindy Christopher, the human resource manager for Gates in Siloam Springs.

Derrick Black, the Siloam Springs plant manager, joined Gates in November 2014 and moved from North Carolina. He was not, however, part of the North Carolina exodus. He came a year later from Jiang Dong North America, for which he was vice president of manufacturing operations.

“It has been great; we’ve made a lot of progress,” Black said. “There were quite a few difficulties. We have normal transition pains. There were new processes to learn.”

Production took a while to hit its efficiency stride. Black said Gates regularly runs three eight-hour shifts on its three product lines for five days, but it had to run overtime for Micro-V to keep up with consumer demand during the transition’s early days.

“We had to do heavy overtime to meet production demands,” he said.

Black said the Micro-V line represented approximately one-fifth to one-fourth of Gates’ production in Siloam Springs. Black couldn’t release exact figures but estimated it was about 5 million belts a year.

The plant’s other two lines, Bandless and Synchronous, produce about 10 million belts every year.

Black said Micro-V belts are typically used in automobiles and have a host of uses, depending on the belt’s width and length, which vary. Bandless belts are the most commonly used, he said, while the thinner Synchronous belts are found in machines such as vacuum cleaners.

“Bandless belts drive anything from a sewing machine to a combine,” Black said.

Gates has operated the Siloam Springs plant since 1977. Gates itself started in 1911 and was bought for $5.4 billion by the private equity fund manager Blackstone in 2014, and Black said the new management — Ivo Jurek was named CEO in May — was part of the adjustment during the transition as well.

“Whenever you move operations from one place to another, there’s a good opportunity to pull together some synergies and bring efficiencies together,” said Mark Tenney, Gates’ director of global brand and corporate communications. “We feel like we’ve done a pretty good job moving that capability to Siloam Springs.

“It was a strategic decision by the leadership. Fortunately, we had a great team down in Siloam to take that on. We’re busy making sure it is running as smoothly as possible.”

Gates is 144th on Forbes’ list of the largest private companies in the United States with $3.1 billion in revenue. Gates has 14,000 employees spread through 14 manufacturing facilities in the United States, three in Canada and seven in Mexico.

“It’s a good year,” Tenney said. “Gates is doing well. We’ve been around since 1911. We have been a great brand in the industry. Business this year has been good in some sectors and a little challenging in others.”

Tenney said Gates’ advantage in the market is that it produces both for original use and aftermarket use.

“The good news about Gates is we supply products to original equipment manufacturers as well as the aftermarket,” Tenney said. “When the economy is doing really well, a lot of people go out and buy cars and that’s good for Gates. When the economy is going a little bit bouncy, people are keeping their cars and replacing their timing belts, which is also good for Gates.

“It’s a good place to be. I don’t know if there is anything that is particularly sensational about the Gates business. We’re a steady player and we’re profitable and we’re looking to do better.”

Siloam Springs is also a good place to be, said the Gates executives. The plant employs about 600 people in a town of 16,000, although Christopher said Gates pulls employees from a 45-mile radius.

Tenney said that when Charlie Gates, the son of founder Charles Gates, took over in 1961, he focused on diversifying the company and establishing facilities in small towns. Gates has facilities in towns such as Siloam Springs, Columbia, Missouri, and Iola, Kansas.

“Siloam is a very important part of our power transmission business,” Tenney said. “It’s a key manufacturing facility for us. That was the decision the son of our founder made when he started to expand the business. He took that Sam Walton Wal-Mart philosophy and said, ‘We’re going to go to small, middle-American towns where people like to work.’”

The North Carolina workers who moved to Siloam Springs also found that their new home city was a place where people were welcoming. Christopher said that when the move was in transition, North Carolina workers interested in relocating to Siloam Springs were brought in for visits to get a feel for the area.

Christopher said many workers obviously elected to remain in North Carolina and find other work, but some of the 30 or so workers who relocated brought extended family with them to Arkansas.

“The community did a lot to support the effort,” Christopher said. “The chamber of commerce played a big role in that. The school board opened their doors. We did endless numbers of tours. Everybody pitched in and played a part to make sure their families became a part of the community.”

Black, 55, has been in the manufacturing business for many years and, in that time, has worked for many companies in many different places in the United States. He said he came to northwest Arkansas from Charlotte, certainly a large metropolitan area with many bells and whistles culturally, but he found some of the same amenities in northwest Arkansas.

“I found that surprisingly true,” Black said. “I’ve lived in several places, and this is one of the best.”

Tenney said the stable economy and population growth of northwest Arkansas are a great boon for a manufacturing company such as Gates.

“Siloam is a good place to do business,” Tenney said. “We’re excited about what we’re producing out of the Siloam Springs plant. Any benefit that area is enjoying because of the influx of people and growth is an added bonus for Gates.

“It’s a win-win for everybody.”

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