Swanson Adopts a Full-service Approach to Customer Service

By Steve Fiscor, Editor-in-Chief

Swanson Industries has been serving the mining industry for about 70 years. Founded in 1955, Morgantown Machine and Hydraulics of West Virginia is one of the oldest companies under the Swanson umbrella, which also includes Morgantown Machine and Hydraulics of Utah, Morgantown Technical Services, CWS (a distribution group named for the three founders), Swanson Manufacturing Co., Laser Processing Co., and Swanson Plating Corp.

Business for the conglomerate of Swanson companies continued to grow throughout the 1990s and the 2000s. They performed maintenance and provided service to coal operators, which was their mainstay, but they also branched out into other areas. The quality of their work had reached the level of original equipment manufacturers’ (OEM) specifications and they found opportunities in other areas of mining in the U.S. and abroad, as well as other industries.

As an example, Swanson served as not only a direct supplier of large hydraulic components and cylinders to Caterpillar but also operated as Cat’s main remanufacturer. Meeting Cat specifications is a tall order. “If a hydraulic cylinder failed on an excavator working in open-pit gold mine out West, the Cat dealer servicing those mines would ship it from Elko, Nevada, to Peoria, Illinois, where Cat is headquartered, and then they would ship it to Morgantown,” said Steve Sangalli, CEO, Swanson Industries. “Few knew about that multi-decade long relationship, which lasted until about five years ago, when Cat decided to realign its manufacturing strategy.”

Sangalli was one of the panelists who spoke during a discussion about the changing landscape for equipment suppliers serving underground coal (and trona) operators at the U.S. Coal Show in Pittsburgh, Pennsylvania, in May. Throughout his presentation and the ensuing Q&A segment, it became clear that Swanson was focused on service, and he was quite passionate about the U.S. coal sector.

Before taking the helm at Swanson in 2015, he was an executive with Boart Longyear, the world’s largest drilling and drilling products supplier to the hard rock mining industry. He was part of the management team that helped to grow Borat Longyear into a global brand.

Sangalli was tapped to lead Swanson in a similar fashion. At the time, the company’s investors had visions of taking Swanson in another direction. Fracking was still an experiment in the oil and gas fields. Offshore drilling was booming at the time, as it was seen as the primary growth engine for additional oil production. “These industries use processes and equipment that are familiar to Swanson, which is hydraulics in harsh environments,” Sangalli said. “That vision faded when fracking was proven out, oil prices bottomed, and that necessitated the strategy change at Swanson.”

Swanson embraced its roots and turn its attention back to U.S. coal. As a result of its previous strategy, the company also owned entities in Australia and Chile, but they found regional execution was far more important to mine operators than any kind of global presence or ownership. “We thought multinational miners that operated in the U.S. and abroad would value a familiar name and service,” Sangalli said. “In reality, however, those divisions operate autonomously. So, we sold those foreign subsidiaries.”

Today, Swanson Industries is completely focused on the U.S. coal market. Morgantown Machine and Hydraulics and Morgantown Technical Services are established service companies and that is what Swanson is today, Sangalli explained. “Swanson Industries has become what Morgantown Machine and Hydraulics was originally, but we kept the Swanson Industries name due to its broad range of capabilities,” Sangalli said.

Knowing the Business

Even though Swanson was working as a direct supplier and remanufacturer to Caterpillar on their surface mining equipment, Morgantown Machine and Hydraulics was competing with the OEMs underground, providing service to U.S. coal operators. Since the OEMs have announced their strategy to serve the longwall market in a different way, it has created an opportunity for Swanson. Today, Swanson is the only U.S.-based shield manufacturer (See Longwall Rebuilds, p. 16).

“When people ask me what we do, I tell them we’re the NAPA Auto Parts for underground coal mining — specifically for longwall mining, and they get it,” Sangalli said. “We make the parts, which are just as good, but half the price.”

Sangalli describes Swanson as a full-service vendor. “We are constantly asking our customers: What else can we do for you?” He cites the company’s experience distributing and servicing Kamat high-pressure pumps as an example. Kamat is the leading supplier for the high-pressure hydraulic pumps used in longwall mining. Kamat is based in Germany.

“For years, the underground coal industry struggled with the operation of these high-pressure pumps, which are critical for longwall mining,” Sangalli said. “They are essentially the heart of a longwall, pumping hydraulic fluid and maintaining pressure for the shields. An $80 filter that is not changed on a regular basis could bring a $300 million mechanized mining system to its knees, like a clogged artery.”

After talking to customers, Swanson determined it could change the game. They would not only sell a pump, but they would also offer a service package with it. “A coal operator buys the Kamat pumps from us and they have the opportunity to select a service package which is best for them, where Swanson technicians go underground and service the pumps on a regular basis,” Sangalli said. In a matter of years, Swanson captured 80% plus market share with Kamat pumps.

Today, Swanson provides upscale packages where they commit to being underground once a week. Their technicians walk the face, inspect it, and suggest service options. “Our philosophy is to now take that to other product lines,” Sangalli said.

More recently, Swanson purchased a 60% interest in Tiefenbach North America. “We now have a full suite of products to manufacture and service shields. It’s all under one roof,” Sangalli said. “Whether it’s the electric controls, which leads to the automation, or the hydraulics, hosing, valving, we can do it all.”

Sangalli explained why Swanson only purchased 60% of Tiefenbach North America. “We did that somewhat strategically,” Sangalli said. “There are only 36 faces operating in the U.S. Meanwhile China has 2,000 or more and Tiefenbach sells a lot of systems to China and to other countries. Given the size of our market in the U.S., we wanted to make sure the Germans still had ‘skin in the game.’ Through our partnership of Tiefenbach North America, Tiefenbach Control Systems (TCS) certainly has insight into our business.

Another area where the company excels is maintenance of hydraulic cylinders. As an example, Swanson performs specialized welding like laser cladding. The laser cladding process welds at a lower temperature. “Many rebuild companies purchase the same stainless powder that we laser, but they apply it with a submerged arc welder that runs at a higher temperature,” Sangalli said. “Laser cladding has proven to be a better process than submerged arc process in terms of superior reliability and longevity.”

Swanson Industries has lasers at its facility in Morgantown, West Virginia, and another at its shop in Helper, Utah. “This was a proprietary process that we developed working with Cat and Penn State, and it’s beyond, its patented time,” Sangalli said.

Swanson’s Morgantown Machine and Hydraulics subsidiary also has the Deron product line, which includes monorails, push pulls, winches, rock dusters, etc. “We’re willing to do just about anything that fills the gap for a customer,” Sangalli said. “We’re currently exploring pan line rebuilds with our customers. We’re actively seeking to get up further into our customers’ supply chain to not only provide them with new equipment, but rebuild their equipment and then certainly come up with service contracts to service that equipment. And that is a big initiative.”

Swanson is building a longwall services group that would mirror its pump services group. “It’s all part of our operating philosophy,” Sangalli said. “It’s a good day when our customers go underground, and Swanson personnel are riding in the mantrips with them or riding the elevator down with them. We want to go to work side-by-side with our customers and do whatever they need us to do. We will take care of the little stuff that gets in their way so they can focus on the big picture. We’re willing to step up and do that.”

While other suppliers are making decision on what’s best for their image on the world stage, the approach Swanson takes is based on what’s best for its U.S. business serving its largest customer, the U.S. coal industry.