By Kenneth Rapoza, CPA Industry Analyst
New York-based manufacturing firm Optimation is an example of the unsung, anonymous tooling companies in the middle of the American supply chain that are needed to make everything from peanut butter factory equipment, to giant concrete bases for windmills. Without them, it would make more sense to build elsewhere instead of here.
Bill Pollock lives in an underground house on a dirt road three miles from pavement in Allegany County, New York. It’s more like half an underground house because a chunk of it is above ground like the rest of us in The Shire. He’s “only part Hobbit”, he says of the Middle Earth characters from the Lord of the Rings novels. Pollock likes building unique things as much as he is into living in one. He founded Optimation in 1985 after 11 years toiling as a control systems engineer at Kodak in upstate New York. If you need to make a machine that manufactures the cement base for massive offshore windmills, Pollock can do it. If you need a machine to scale up your organic nut butter operation, he’s got your back.
“Manufacturers like Kodak used to have their own engineering departments…but I could see all that changing and decided to enter that market,” Pollock says about the early days of outsourcing manufacturing. He got the timing right and built a growing business, the kind that hires engineers and blue-collar laborers who aren’t stuck in service sector jobs.
We are not reliving the 1970s manufacturing heyday, but manufacturing has been a turnaround story since 2010. Optimation is part of that story.
“We hired four apprentices last week,” he says – two electricians, a welder and a pipefitter. They also hired a journeyman field machinist and a general service mechanic full time. They’re looking for a journeyman sheet metal worker. “We just hired two mechanical engineers and a control systems engineer and are looking for a project manager and another control systems engineer. We were about 30-35 people in the early 2000s and now are about 200 people and growing. It’s going to be a good year.”
The company has a relatively young history, less than 40 years old. But like most of the manufacturing sectors that have been expanding over the last 10 years, Optimation is part of a group of unsung heroes sitting along the American manufacturing supply chain. They’re not publicly traded (though Optimation merged with a Nasdaq listed firm called Nematon in 2000, then broke up). They don’t have a core product line. They don’t have any patents or intellectual property. But without companies like this, engineers would not be able to make finished products, or bring their prototypes to scale.
Machinery is the backbone of American industry. Everything from airplanes to cars to coffee grinding machines rely on machine shops and other supply chain businesses to press, stamp, mold, cast, cut, polish, and assemble the parts and pieces that make up the modern economy. They are the anonymous, essential bedrock of US industry.
We began losing machinery business to Japan back in the 1970s. It would be better for upstate New York and central Kansas, among others, if we had hundreds of Optimations.
From Fruits to Nuts…and Jet Fuel in Japan
“Most of the products we are making are one of a kind,” Pollock says. “We are making custom machines to make new products.”
Once Again Nut Butter is a client. Two guys came up with this idea to build out their organic nut butter business. “The company was a success and as demand grew they needed increased capacity. We designed and built an expanded peanut butter plant and now they are selling a lot more organic nut butter,” Pollock says. Here they are: https://onceagainnutbutter.com/
Apeel Sciences is another one. “They coat a fruit and vegetable with this secret coating that seals the fruit from oxygen so you can store it for longer without spoiling,” he says. Apeel got some money to develop this from the Gates Foundation. “We scaled up their lab so they could coat thousands of avocados a day to cut down the spoilage rate,” he says. “We designed the machines, and that has made their product commercially viable.”
GE Renewables Additive Manufacturing is making skyscraper sized windmills. They hired Optimation to create a 3-D printed concrete base with them. Optimation makes the tools that support a Dutch-made 3-D printer that churns out these massive concrete blocks. It’s designed to be mobile. The technology can print concrete bases up to 65 feet tall, designed to have screwed into them a 400-foot-tall steel tower that holds to the turbine and wind blades.
GE called Optimation a “strategic partner” in their renewable energy division, saying they know how to solve “complex equipment and process challenges.”
“We were also actively engaged in these biomass projects to make ethanol or other fuels from a variety of waste products and one of them was to make jet fuel from farm waste in Japan,” he says. “Their goal was to fly a plane over the 2020 Olympic stadium powered by this stuff. We successfully built the distillation system for it. But, unfortunately, the Olympics never happened and that was that.”
The pandemic took that one away. But it gave Optimation two new projects. They built 10 machines to deliver COVID vaccines in vials. “This year we will do as many as 15 machines that will be part of a manufacturing complex to make syringes,” he says.
From the 80s to Today
Pollock needed a full time job in order to make ends meet when Optimation was in its infancy. He was a tenure track professor at Alfred State College, part of the SUNY network. He thought engineering there for four years and was given coveted tenure in 1989. By then, Optimation was taking off. “I resigned to go full time at Optimation shortly after receiving tenure,” he says.
He brought other SUNY Alfred alumni with him: Keith Stadtmiller ’89 is director of IT. Dan Hayden ’88 is a senior controls engineer. Jeff Scott ’90 is a systems engineer.
After the Nematron merger and eventual split, they grew through acquiring 8 companies over a six year period. A 2006 acquisition of Kodak’s construction and engineering division doubled their size. Their revenue went from $6 million to $60 million in 10 years. And by 2012, they were acquired by an Austin-based private equity firm called Owner Resource Group, or ORG as they are better known.
“I am personally no longer a part owner, except in spirit,” Pollock says. “We expect to be divested in a year or two. The future will depend on the groups that own us and what direction they believe is best for us.”
And What About ‘Build Back Better’?
Pollock was born in Sudan. He attended boarding school in Alexandria, Egypt. He has daughters and grandchildren who are part Brazilian, Korean, Greek.
Optimation does work overseas, most of it through American firms and their subsidiaries. They’ve done work for Halliburton in Singapore and have ongoing projects for Kodak in China and Japan. “We fabricate many pieces of equipment in Rochester that are shipped to Asia,” he says.
His STEM field is most often affiliated with hiring people the world over. Does the US have the engineering talent to fill Optimation’s ever-expanding roster?
“We do. The H1-B visa program is not a necessary path for us to get great engineering talent,” he says. They also recruit the blue collar trades heavily through their apprenticeship program. These are not future engineers, per se (unless they got their degrees), but instead are machinists and electricians who support the engineers by fabricating the designs they made on paper, or in prototypes.
They have 21 apprentices at the moment.
What about the new Biden administration and his promises to rebuild US manufacturing, shrunken by nearly half since its peak back in the Disco era.
“We have already seen large changes in policy in his first few weeks, with the Keystone pipeline expansion being shut down, and fracking bans in place,” Pollock says. “The Biden climate agenda will add regulations and put new costs and burdens on many of our clients. It will mean many planned projects will no longer have an ROI to go forward. It’s a wait and see situation. We will look at each scenario as it comes to plot a path forward and make business decisions,” he says.
Competition from China is top of mind for Biden, but Optimation is taking it in stride. Their core market is domestic.
“Manufacturing used to go to China to reduce labor costs, but automation means labor is a smaller part of the equation,” he says about the reasons for offshoring manufacturing. “Energy and materials tend to be flat globally. Transportation distances works against Chinese manufacturers. To us, the biggest advantage is China’s government subsidies and a weaker currency,” he says. They can use that to dump items into the US market, and eventually put competitors out of business.
“At Optimation, our passion is manufacturing in the United States. We are all about Made in America. I and everyone on the Optimation team believe this and do everything we can to promote it,” Pollock says from his underground home. “There are often headwinds, but we do our best to stay diversified and watch for the new manufacturing opportunities that come along as economic situations and government policies change. We believe in American made and with support of others in the Coalition for a Prosperous America we can keep the dream alive.”