DAWN BENKO / DAILY RECORD Jerry Domski grinds welded components at EVS Metal in Riverdale. The company, which also has operations in Texas, makes sheet metal enclosures to precise enough dimensions to house electronic components. What company does: Precision sheet metal fabrication, where metal is bent and has holes drilled or cut into it to create boxes to house electronic equipment. Uses include telecommunications, computers, medical devices and home theaters. Bottom line: Revenues of $21 million a year; $13.5 million comes from the Riverdale facility and $7.5 million from Texas. Net income not disclosed. Co-owned by president Scott Berkowitz and vice president Joseph Amico. Locations: Riverdale and Pflugerville, Texas, a suburb of Austin. Staff: About 200 people, including 130 in Riverdale and 70 in Texas. History: Started in February 1994, when Berkowitz, who then had his own company, and Amico, who worked at another company, purchased a company called Vertex for $21,200 plus assuming substantial debts. Moved to current location in 1998. In 2000, took on outside investors to consolidate sheet metal fabricators in the area near Austin. EVS has purchased three other companies, the most recent earlier this year. Last year, EVS bought out investors. Purchased Barre Co., another sheet metal maker in Mountainside, in 2003. Expanded Riverside facility this year. Since 2001, has pushed to diversify its customer base after once drawing a large amount of sales from telecommunications companies, then suffering during the industry downturn. Web site: http://www.evsmetal.com/ Advertisement

Riverdale manufacturer increases customer base, delivers on smaller jobs

BY TIM O'REILEY
DAILY RECORD

RIVERDALE -- As the sales outlook grew steadily gloomier five years ago, the co-owners of EVS Metal decided to put all their chips on red, in the words of president Scott Berkowitz.

The company, which makes sheet metal enclosures to precise-enough dimensions to house electronic components, had soared as a supplier to the telecommunications industry during the booming 1990s.

But when the tide abruptly reversed in early 2001, EVS was among the dozens of companies in this area that found itself struggling to avoid drowning in the undertow.

Lucent Technologies was one of those that went from a prime EVS customer to nothing.

The sharp slump in spending on heavy equipment that followed the Sept. 11, 2001, terrorist attacks compounded the problems, steeling Berkowitz and his partner Joseph Amico to take drastic steps.

"We took a very big risk to hire salespeople when we didn't have the money to hire salespeople," Berkowitz said. "But we had been hit hard. They were scary times."

The gamble paid off because EVS not only survived the telecom bust when many did not but it has boosted its sales past the peak of six years ago with the help of several acquisitions.

The share of its sales coming from telecom companies, once as high as one-third, dropped to 10 percent to 15 percent as EVS found new customers, ranging from home theater builders to medical instrument makers to producers of GPS receivers mounted on golf carts.

No single customer accounts for as much as 10 percent of sales.

"We try our best to spread out the customer base as much as possible," said Amico, EVS vice president.

Revenues have jumped more than 50 percent since 2004 to a projected $21 million this year.

That includes $13.5 million originating in the New Jersey division and $7.5 million in Texas.

Net income is not disclosed.

EVS is finishing an expansion into a building across the back driveway from its main plant and office. It will boost its square footage in Riverdale from 31,000 to 51,000.

Still, shifts in the industry do not allow the co-owners to declare mission accomplished.

Foreign competition has pretty much ended the days when a company will sign a contract for a mass-scale production run of tens of thousands of boxes.

EVS is left to scour for many smaller deals of hundreds or a few thousand pieces.

Typically, that will include EVS taking a hand in the engineering to help work out the kinks rather than just stamping out someone else's blueprints, a strategy that other sheet metal shops say they follow, Berkowitz said.

About 80 percent of the customers at the Riverdale plant are within a two-hour drive and want boxes in a hurry. So EVS will deliver rather than rely on an outside shipper.

"We're pretty much resigned to the fact that as soon as a product becomes cost-effective, it will most likely be moved overseas" to factories in countries, such as China or India, with substantially lower production costs, Berkowitz said.

Because the cabinets have no function except to hold components in place and may never be seen by the user, it can be an uphill battle to obtain the premium prices and profit margins that usually come with at least partly customized products.

"Unfortunately, there is a commodity element at work here," said Walter Hajduk, vice president and general manager of H&H Industrial in Pennsauken. "But there are more people now than, say, in the '90s that have an appreciation for what the cabinet provides. And if you don't do it right the first time, it can cost you a lot more if you have to redo it."

Hajduk said the shakeout that swept away dozens of sheet metal fabricators, the large majority of them privately owned small- to mid-sized companies, during the telecom and Internet bust may continue.

"I think there is still a future, but it's hard to say what it will be," he said. "If you are in the second generation (of family ownership), you might make it to the third. But the fourth will be a big issue."

Making purchases

Berkowitz and Amico have treated industry turmoil and faltering competitors as a buying opportunity, starting with the acquisition of the company a dozen years ago and accelerating with the purchases of four other companies since 2000, including one earlier this year.

The entry into Texas six years ago, to try to tap into the large base of semiconductor makers, and three subsequent acquisitions were financed by outside investors who saw profit potential in consolidating struggling companies into a larger one.

Berkowitz and Amico bought out the Texas investors last year and plan to formally merge the Texas and New Jersey divisions soon.

Berkowitz said he continues to look for other takeover targets.

To some extent, the changes in the industry are a rerun for Berkowitz and Amico.

Berkowitz owned a company in the 1980s that built extra-sturdy computer chassis -- ruggedized, in the industry parlance -- for commercial customers. He saw the business eroding in the face of overseas competition.

At that time, Amico worked at another company that supplied Berkowitz with sheet metal.

To upgrade his production capabilities after landing a contract to build cabinets for point-of-sale systems, the checkout scanners used by retailers, Berkowitz brought in Amico as his half partner. They bought a sheet metal shop in Pompton Plains called Vertex in 1994 for $21,200.

For that amount, they covered several liens on the real estate and equipment and took control of machinery more than three decades old and a book of business highlighted by anemic sales and ongoing losses.

Backed by the contract Berkowitz held, plus signing other customers, EVS production had ramped to the point that the company moved to the much larger building in Riverdale in 1998. The company's name is the initials of another Berkowitz entity that did not go into operation.

Given the ability of customers to shift allegiances, EVS made the move to Riverdale during Thanksgiving weekend without alerting them to avoid raising concerns about delayed deliveries.

EVS reopened the Monday after the holiday without missing any deadlines, he said

To a degree, EVS has repeated that process in its acquisitions of faltering operations from owners ready to call it a career after having built their lives around their companies.

"You can love a business to death, but you have to realize it never loves you back," Berkowitz said.

Besides acquisitions, EVS tries to watch costs closely through measures, such as maintaining what Amico concedes is a relatively close-packed production floor. That helps minimize real estate costs in high-priced Morris County.

At its core, the business is simple.

"We take pieces of sheet metal and punch holes in them, sand them, bend them and maybe put a coating on them," Berkowitz said.