Krebs rides mining surge

And with mining ramping up again in Arizona and across the globe, FLSmidth Krebs is on a steep growth curve.

The Marana-based company - which makes pumps, fluid-separation devices and valves for mining and other industries - recently completed a 30,000-square-foot addition that expanded its factory floor by 50 percent.

Fueled by a resurgence in mining - which made up about 70 percent of Krebs' $110 million in revenues last year - the company has a goal of increasing revenues 15 to 20 percent annually over the next four years, said FLSmidth Krebs President Pat Turner.

Founded in San Francisco in 1952 as Krebs Engineers, the company got its start serving major industrial engineering companies such as Bechtel and Fluor. Krebs was a pioneer of the hydrocyclone, a funnellike device that separates liquids from solids for applications such as separating metals in ore processing.

Seeking to be closer to its mining customers and major mining engineering schools, the company chose the Tucson area as its new home in 1996.

It was a decision that Krebs has never regretted, Turner said.

"If we hadn't made the decision to move the company from California, we wouldn't have survived," said Turner, who joined the company in 1982 after graduating with a metallurgical engineering degree from the University of Arizona.

"Tucson has been a great choice because our employees and the people we recruit from outside love Tucson."

Bought twice

Krebs added industrial pumps to its product line in 2000 by buying an Australian company. Pumps now account for about half of the company's business.

In 2006, privately held Krebs was acquired by Groupe Laperrière & Verreault Inc. (GLV), a Montreal-based maker of equipment for industrial water treatment and paper and pulp production, for $97 million.

Less than a year later, GLV sold off Krebs to Denmark-based FLSmidth & Co. as part of the sale of GLV's process division in a deal worth a reported $983 million Canadian.

In both cases, the new owners operated Krebs as a standalone company, keeping local Krebs management in place, Turner said.

"We were growing faster than our capital allowed us to grow," Turner said. "The acquisitions allowed us to grow and fund expansion."

The company's local payroll has grown from about 90 when it moved to Marana to about 230 today. That ranges from warehouse and assembly workers who make starting wages of $10-$12 an hour and engineers whose annual salaries can start at $80,000, Turner said.

It's also a global company, with another 130 employees at offices in Australia, Austria, Brazil, Chile, China, South Africa and the Philippines.

"World-Class company"

On a recent workday, Krebs' manufacturing floor in Marana was a beehive of activity.

At one end of the floor, a technician operated a huge lathe that added a precision-finished rim to a massive, cast pump housing.

Nearby, as forklifts whizzed in and out of the building with parts, a team of workers was busy preparing a pump for pressure-testing, while two workers finished assembly on a knife-gate valve.

"They're not high-tech, but these are good jobs," Turner said above the din of machinery.

Krebs' products process rock slurries on a massive scale - one of its pumps is capable of pumping 40,000 gallons per minute, enough capacity to fill a backyard swimming pool in less than a minute, Turner noted.

The head of a local company that uses Krebs components in the mineral-processing plants it designs said it's important to have such products and leading-edge expertise close at hand.

"It's good to have someone that's innovative in what they do, coming up with new products," said Dan Neff, president and CEO of Tucson-based M3 Engineering & Technology Corp. "They're a world-class company."

Krebs' proximity helps as well. "It's helpful for us, if we have an issue, we can just drive down the road," said Neff, whose office is in the Catalina foothills.

That kind of local support works both ways.

Dan Meeboer, senior vice president of Desert Metal Works in Tucson, said Krebs has kept his 26-employee metal-fabrication firm at work, making parts such as motor guards.

"It's kept us busy, it's a pretty good base for us," Meeboer said, noting that Krebs has kept humming while other customers have been hit hard by the recession.

Turner said Desert Metals is among five local companies that Krebs deals with regularly, supplying metal parts, fasteners, crating and rubber linings.

Local impact

Krebs' local business relationships are a good example of the trickle-down effect of mining on the Arizona economy.

Copper mining alone contributed an estimated $9.3 billion in total direct and indirect dollars, according to a report released last week by the Arizona Mining Association.

In addition to 9,100 direct copper-mining jobs in Arizona last year, the industry supported an estimated 7,400 "immediate indirect" jobs in manufacturing, construction and wholesale trade, said George Leaming of the Western Economic Analysis Center, author of the mining report.

While mining is resurging after a recessionary pause, Krebs keeps close tabs on the cyclical industry, Turner said.

"We have to be careful about not getting ahead with our current expenses, our current revenue," Turner said.

But weighing in Krebs' favor is its replacement-parts business, which provides about 25 percent of overall sales. As rocky slurries are pumped and separated by Krebs' hydrocylones, the abrasive action wears out parts every six months to a year, Turner said.

After mining, the oil and gas industry is Krebs' next-biggest customer industry, accounting for about 15 percent of sales, Turner said. Pulp and paper, wastewater and other industries bring in the remaining 15 percent.

New mines also hold promise of new business.

Turner said he expects an order of more than $1 million for the proposed Rosemont Mine project southeast of Tucson.

But Rosemont, which is still in the permitting phase and is staunchly opposed by environmentalists, may never be built.

And expected growth in mining may slow if copper drops from its current $3-per pound range, potentially crimping Krebs' growth plans, Turner said.

"If copper drops to $1 (a pound), all bets are off."

ABOUT THE SERIES

Made in Tucson is an occasional series about local companies that make things, how they're made and the people who make them.

If you'd like to have your company highlighted as a subject of a Made in Tucson feature, or have a suggestion on a local manufacturer you'd like to see featured, drop us a note to business@azstarnet.com and use "Made in Tucson" in the subject line. Or, call us at 573-4181 or send a fax to 573-4144.

COMPANY AT A GLANCE

FLSmidth Krebs

• Headquarters: 5505 W. Gillette Road, Marana.

• Top executive: Pat Turner, president.

• Local employees: 230.

• Products: Pumps, hydrocylones and valves for the mining, wastewater and oil and gas industries.

Contact Assistant Business Editor David Wichner at dwichner@ azstarnet.com or 573-4181.