Diversification helps JGB Enterprises withstand the recession, thrive
Frank Ordoñez / The Post-Standard
David Smith gathers a PVC suction hose produced at JGB Enterprises Inc. The company has diversified its business, expanding from a specialization in manufacturing hoses to supplying all sorts of material to the military.
Salina, NY -- For more than three decades, JGB Enterprises Inc. has sold all kinds of hoses — gasoline hoses, snowmaking hoses, even steel-coated, PTFE-lined hoses made for transporting corrosive chemicals. They range in size from less than one-quarter inch to a foot in diameter.
But the company, in Salina, has evolved since it was founded in 1977, and it now blends commercial hose sales with a lucrative military supply business. The result is a company that is well-armed against recession.
JGB Enterprises had sales of $70 million last year, more than double its revenues from a decade ago, and the company expects to continue its slow but steady growth despite the foundering economy, said Dana Thurston, material manager.
That’s because JGB has become adept at procuring supplies for the U.S. military, and not just hoses. The company has become a busy middleman, supplying soldiers with all sorts of stuff, as diverse as welding rod sand cappuccino makers.
“We have a lot of suppliers that we deal directly with,” Thurston said.“It’s limitless, it really is.”
JGB has established relationships over the years with hundreds of manufacturers that make parts bought by the military — hose makers at first, but then manufacturers of automotive parts, electronics, hardware, appliances and many other items. JGB’s long list of vendors enables it to find parts quickly and cheaply in response to military inquiries.
The company uses computer software to sort through the 1,000 to 4,000 requests issued each day by the military, narrowing the list to as many as 100 that the company might bid on, Thurston said. Then managers look through the list and pick the contracts to go after.
JGB wins roughly 5,000 military contracts a year, according to its web site.
“It’s the purchasing expertise that we have,” Thurston said. “Our ability to locate product timely and price-competitively gives us a good edge on the competition.”
For an example of the variety, consider a few of the military contracts JGB won last month:
- Jan 4, a $64,221 contract to supply hydraulic accumulator cylinders.
- Jan 6, a $36,885 contract to supply engine coolant radiators.
- Jan. 7, a $108,972 contract for brakes, steering wheel and axle components.
- Jan. 13, a $25,581 contract for ball valves.
- Jan. 18, a $100,000 contract for centrifugal pump units.
- Jan 19, a $34,270 contract for ammunition trays and boxes.
On the production floor at JGB’s facility, at 115 Metropolitan Drive, workers assemble fittings on all sorts of hoses, many of which will be distributed to commercial and industrial clients in the Northeast.
But commercial hose sales represent just one-third of the business. The rest is military sales, Thurston said.
JGB hit the jackpot Jan. 29 with a $10.4 million contract to sell the Air Force a water distribution system that can supply an entire 1,100-person military base. The so-called Basic Expeditionary Airfield Resources (BEAR) system can draw water from virtually any source, purify it for drinking, pump it throughout the base and treat sewage.
JGB procured all the parts for the system, built it, tested it and is preparing the foot-thick assembly manual, Thurston said.
The four-year BEAR contract is expected eventually to bring in $40 million in revenue, company officials said. JGB won a similar four-year deal in 2005 to supply BEAR systems.
JGB has 195 employees, down from about 225 at the peak of the previous BEAR contract but up from about 130 a decade ago. Thurston said the company will probably hire more warehouse workers later this year as work on the BEAR system proceeds.
Wartime orders boost revenues, Thurston said, but business tends to be good for military suppliers even during times of peace.
“You have to appreciate that after a war, the product comes back to the United States — the jeeps, the guns, whatever it is,” Thurston said. “To bring those things back to new, so that they can be used again, that’s a parts supply stream that we supply.”