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Allied Systems Company nets $70 million U.S. Navy contract for up to 37 crash cranes.

TRIBUNE PHOTO: JONATHAN HOUSE  - Carissa Carambot welds the bottom fork of a log stacker at Sherwood-based Allied Systems. While many industry experts wring their hands over what they see as the decline of manufacturing in the United States, a small company in Sherwood is doing its best to prove them wrong.

For more than 30 years, Allied Systems Co. has been a champion for high-wage jobs for skilled welders, machinists and mechanical engineers who design and build a long list of heavy equipment, including hay balers, log stackers and chip dozers.

But it's the company's marine crane line that recently placed Allied Systems in the national — and global — spotlight.

This past June, the U.S. Navy chose Allied Systems to engineer, test and produce what could end up being as many as 37 crash cranes — a five-year contract expected to garner a cool $70 million for the Oregon company. Crash cranes are mobile cranes used on the decks of aircraft carriers for moving damaged aircraft.

The contract is by far the largest the company has ever received, according to Jeff Rink, Allied Systems' president.

The Wagner dozers the company produces, for example, cost about $1 million each. The largest order the company has received for that type of equipment in recent years has been for two or three units. Another order, for a Japanese company, hit the $10-million mark.

But while the Navy crane contract will be lucrative for Allied Systems, it also comes with expectations that set an equally high bar for the Sherwood company.

"(The contract) is … on the order of four, five times bigger than anything else we've ever gotten," Rink said. "(But) they have a very detailed specification that has to be met. So, we have to meet the specification but do it economically as well. That's the name of the game right there."

PHOTO COURTESY: U.S. NAVY, MASS COMMUNICATION SPECIALIST 3RD CLASS JONATHAN NELSON - U.S. Navy sailors use a crash and salvage crane to lift a non-functional McDonnell Douglas F/A-18 Hornet during flight deck drills aboard the aircraft carrier USS Ronald Reagan (CVN-76). Sherwood-based Allied Systems Co. in June was awarded a $70 million, five-year grant to provide as many as 37 new crash cranes for the U.S. Navy. The next generation of cranes will replace a model of cranes similar to the one pictured that are currently used to move damaged aircraft on the decks of carrier ships.

Job protection

With approximately 250 employees, Rink's company is a small operation when compared to heavy equipment manufacturing giants like Caterpillar and John Deere. Still, Allied Systems has managed to hold its own since it was founded in 1976.

The company's lineage actually goes back even further, to a company called Wagner Mining, which manufactured underground mining equipment in Northwest Portland into the 1970s. Rink's father worked there, as did many of Allied Systems' current employees.

"The Wagner brothers were this great story of Portland guys who were kind of these industrial entrepreneurs and geniuses," Rink said. "They worked in construction and came up with a better way of delivering cement to project sites using a tricycle-like vehicle called a Scoot-mobile."

The brothers built the vehicles for a while before branching out into mining equipment. A couple of the brothers then moved into above-ground equipment, producing log stackers and chip dozers that are among the products Allied Systems now produces.

Two employees opened Allied Systems when they left Wagner Mining, after it was bought by another company — that company eventually would sell to yet another company that eventually shut down Portland operations and moved production overseas.

In 1981, Allied Systems' owners strategically began buying up existing equipment lines. They acquired Wagner's above-ground equipment line as well as a forklift attachments company. Under the watch of Rink and his dad, who bought Allied Systems in 2002, the company also acquired a line of hay balers made by Freeman, another Oregon company that was founded in Portland in the 1880s.

"The strategy, so to speak, was to acquire these niche products that were too small for the large guys to be interested in, bring them in here and tap into some manufacturing synergies to have multiple product lines under one roof," Rink said.

Those acquisitions have allowed Allied Systems to restore local skilled-trades jobs for welders and machinists that otherwise likely would have been lost.

Hyster, for example, originally started in Northwest Portland before its production was moved to Alabama. Allied System's purchase of Hyster's line returned the products — and associated manufacturing jobs — back to Oregon.

TRIBUNE PHOTO: JONATHAN HOUSE - A  welder works on a chassis at Allied Systems in Sherwood.

Heavy lifting

Yet another Allied Systems acquisition — a truck crane line out of Bend — morphed into the company's marine crane line.

The company's marine cranes already can be found around the world. The National Oceanic and Atmospheric Administration is using an Allied Systems crane in Yaquina Bay. Scripps Institute also uses a crane the company manufactured. The company even recently filled an order for several bright orange marine cranes for a Chinese research vessel.

The cranes the company will engineer, test and produce for the Navy are a completely different product, however. Crash cranes are used to remove damaged or inoperable fighters from the flight decks of aircraft carrier ships as well as landing helicopter assault and dock vessels.

The cranes are so critical to military operations that no flight operations are allowed to take place without a working crane onboard. However, a new fleet of Lockheed Martin F-35 Lightning II stealth fighters the military will begin using are heavier than existing aircraft, and the cranes currently being used aren't set up to handle the extra weight.

"It isn't just the overall weight the crane can handle," Rink said, adding that the company's engineers will need to determine exact weight loads for each point of the crane that will come in contact with the surface of the deck.

Creating a crane that will be able to bear the increased load is the challenge that Allied Systems' engineers will tackle during the first year of the contract. While most of that work will be done in-house, Allied Systems is considering subcontracting some of the lower-level design work to a Wilsonville company that Rink said he couldn't yet name.

Once the company's engineers come up with a design, the company will the produce two test models that will be sent off on a year-long testing circuit.

There's a whole … list of tests they're going to perform," Rink said.

At some point in the test cycle, the Navy will order two more units, after which full orders for cranes will be issued.

"The ramp up really won't hit us until about the fourth year (of the contract)," Rink said. "At that point they have the ability to order up to 16 units in a year. We would have to ramp up pretty big for that."

Rink estimates building a single crane will require Allied Systems to add about 4,000 labor hours to the 17,000 hours per month the company usually runs in its shops. A full order of cranes, he said, will require the addition of 25% more direct labor hours.

In order to reach that level of productivity, the company will need to hire more skilled workers. However, like most companies in manufacturing in Oregon — and across the country — Allied Systems already has challenges finding enough skilled workers for some positions, Rink said.

Many of the mechanics and welders the company hires are younger people. Manual machinists tend to be older. Filling those positions in the future, as the older workers retire, is likely to become even more of difficult than it already is, Rink said. "Most people who present themselves as machinists are really just operators. They're really just somebody who can change parts out but they can't set the machine up or do some of the more high-skilled things. That's really the challenge."

TRIBUNE PHOTO: JONATHAN HOUSE - Jeff Rink, president of Allied Systems, and his father have owned the Sherwood company since 2002.

Worker ready

While finding employees can be tough, keeping them has been easy for Allied Systems, allowing the company to build a rich reservoir of expertise than can be passed on to newer employees, according to Rink. On a walk through the company's shops, for example, he pointed to Rick Nelson, busy touching up yellow paint on a 40,000 pull-line winch, as one of those employees who brings years of experience to his job.

"By the time I'm done, it'll shine like glass," Nelson said as he stepped back to examine his work with a grin and a satisfied nod.

Allied Systems uses a range of approaches to attract potential employees, including increasingly turning to online job postings and social media. But the main source for finding employees is still a tried-and-true method.

"Almost everybody we bring in, we bring in via a temp firm," Rink said. "Then we get them off the temp firm within 30 days, 60 days — as quickly as possible. But we also try to tap into every source."

Rink gives nods to Chemeketa Community College in Salem and Clackamas Community College in Oregon City for offering good training programs for machinists and operators of computer numerically controlled systems.

"Machinists now, it's not like in the old days where a guy got oil all over himself," Rink said. "You're wearing a lab coat. You're a technician. It's a highly skilled job. There's a lot of math involved in it."

He's also visited Sherwood High School to give presentations to students about careers in manufacturing.

Allied Systems recently hired two women as welders, one from a nearby company that just went out of business and another from the Chemeketa Community College program. Still, less than 5% of the skilled workers in Allied Systems' shops are women, and Rink said he would happily hire more if he could find them.

"Not a lot of women are in these trades," he said. "I don't care who I hire. As long as you can do the job, that's all I care about."TRIBUNE PHOTO: JONATHAN HOUSE - Allied Systems campus in Sherwood includes several very large production facilities where different lines of equipment are manufactured.


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