KSB Incorporated is a market leader around the globe providing ultra-modern pump and valve technology supported with comprehensive customer service. Applications range from building services to industrial processes, water engineering, and mining and energy technology. The Richmond plant is one of four North American facilities employing 67 workers. Since 1988, this facility has been the American import and export arm of their German parent company. The main product for this facility is large pumps designed for the energy and water/wastewater markets for American companies and U.S. subsidiaries of foreign owned companies. Pumps are imported from foreign sources and modified for American customers. They in turn sell and service the product after sales.

Situation
KSB over the last 16 years has maintained steady employment and revenue growth. Plans of doubling operations in size were a major goal. In order to do this they must increase sales, and add factory and office floor space. At the same time their commitment to customer satisfaction and quality remained a priority. KSB was finding that customers were beginning to require ISO 9000 certification of their Quality Management System. Although quality functions were already part of their business processes, they lacked a standard ISO based Quality Management System. VPMEP was contacted to assist in the development and implementation of a Quality Management System preparing them for ISO 9001:2000 certification. Dr. Victor Gray, from VPMEP, was the project manager assigned to the project.

Response
During the beginning phase of this project, KSB’s German parent company announced the possibility of relocating the Richmond plant out of state. With this new concern, Dr. Gray suggested seeking the services of the Virginia Department of Business Assistance (VDBA). He thought they might provide resources and information for building a case to justify retaining and expanding the current facility. With management’s approval, Dr. Gray brought in Brett Vassey, Business Services Manager of VDBA, into the loop. Vassey was able to influence the German parent company to stay and expand in Virginia. He was able to convince the company that Virginia’s business assistance resources provided significant on-going cost-avoidance benefits and the business climate was superior to competing states – all without a cash incentive. Important factors in this business climate comparison were Virginia’s right to work laws, low unemployment insurance rates, low worker’s compensation costs, low corporate income taxes, low tax on industrial utility bills, and the willingness of Henrico County to expedite all necessary permits to accommodate the company’s expansion timeline. KSB’s parent company agreed that Virginia was clearly the most profitable expansion location.

Dr. Gray was then able to complete the development and implementation of a QMS for KSB. This was accomplished through management awareness training, a gap analysis assessment with report, and an implementation plan for the project. Dr. Gray worked with the management team of KSB to develop and implement an ISO 9001:2000 QMS over the next several months.

Results
In preparation for ISO 9001:2000 certification, KSB can expect:
• an increase of about $17 million in sales
• savings of $100,000 in inventory
• savings of $50,000 in materials
• $10,000 savings in labor costs
• significant decrease in warranty costs

By expanding in Virginia, KSB:
• retained 54 jobs, added 13 more
• projects the addition of 20 new employees over the next two years

In fact, due to the unique skills required by this company, the payroll for its new engineers, machinists and mechanics could exceed $230,000 annually. KSB also had to physically expand their Henrico County facility to accommodate these new employees and production operations, which required a $4 million capital investment in the facility. Virginia is fortunate to add KSB to its portfolio of expanding manufacturing businesses.

Testimonial
"VPMEP provided vital assistance to KSB at a critical point in our business development. We had a very real need to strengthen and certify our quality system to ISO 9000 with insufficient resources available to accomplish the tasks in our compressed timeframe. VPMEP filled that gap for us by assigning Dr. Gray to work with us. He assisted our people by analyzing our existing processes and controls, recommending changes and guiding our implementation. Clearly, VPMEP provided us cost effective assistance in the precise timeframe we required. Service just does not get any better than that."
– Ken Hill, President

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