Through adversity and perseverance, Scranton Manufacturing has expanded its business and learned from the ground up.
By Zachary Geroux
If you would have told a recent college graduate from Iowa State University who got his degree in Agricultural Broadcasting that he would end up running a company that manufactures and sells garbage trucks around the world, he probably would have laughed. But this is exactly what happened with John McLaughlin. John was a pure, home grown Iowa farm boy who did 4H and FFA growing up and knew he wanted a career in the farming industry.
After college, he worked in TV and radio putting his new degree to good use before moving back to Iowa and opening up Scranton Manufacturing in 1971. Partnering up with his brother and their friend, they started repairing farm equipment for the local community of 500 people. Shortly after that, they started manufacturing their own line of livestock handling, feeding equipment and the nation’s first mechanical hybrid seed corn tassel puller. They capitalized on the 1972 Soviet Union multi-year contract for U.S. wheat and feed grain, which saw wheat prices double and corn prices triple in the span of two years. As a result, John’s business continued to grow and they saw their manufacturing company grow to 100 employees. The Federal Reserve tightened its monetary policy and the prime lending rate rose to an all-time high of 21.5 percent by the end of the decade. Most farmers borrowed money to pay for land, equipment and supplies to help meet the high demand of their product and in 1980 when President Jimmy Carter cut off the grain shipments to the Soviet Union in a response to their invasion of Afghanistan, the Agricultural industry collapsed almost overnight. This not only affected the multiple farmers who defaulted on their loans, but also every industry that supported them—including Scranton Manufacturing.
Diversification and New Way
John saw his employee workforce evaporate to only 10 workers, many of them not getting or drawing a salary. In an attempt to survive, he was forced to diversify and create new products outside of the industry he grew up in. Some of these products included a tag axle for a pickup camper, year-round snowmobiles and a motorcycle car. None of these products really took off and it was not until 1984 when destiny set John on his current path. “We saw an ad in the Wall Street Journal for a garbage truck company for sale in Des Moines called New Way,” John recalls. “We called the owner, Norman Melos, and learned that he had designed and built a couple small trucks since around 1967. He had no money, marketing experience or know-how and the Small Business Association was after him. We didn’t have much money so we proposed a royalty deal—if we do good, you get paid more. He agreed to our proposal and moved to our location and taught us how to make garbage trucks, since we knew nothing about them.”
This purchase launched Scranton Manufacturing into the waste industry; however, it was a long a grueling road. “The business was slow going since no one had heard of New Way and were reluctant to try our trucks and we jokingly referred to our company as the ‘No Name Garbage Company,’ John recollects. Eventually, they redesigned their rear load models in order to start competing with the bigger players, but realized they needed to broaden their product line. They contacted another small builder and bought the rights to their front load design and quickly modified it to make it their own.
Keeping It in The Family
As the business started to grow, John asked his youngest son, Michael to come back and help expand the business. “We were building 50 trucks a year, about $3 million in sales,” Michael said in an interview, “My dad said I needed to learn the business from the ground up. I got thrown into the back where I welded, tarred the roof etc. I came to him and said, ‘I’m part of the company now, I came back to grow this thing, so I need to start selling trucks.’ I sat down with him and the CFO and we talked about it for a couple of hours and the CFO finally said, ‘Yea, go ahead. You’ll be lucky to sell one truck the first year.’ I’m a pretty driven guy and four hours later I came back with a purchase order for two trucks! I asked my dad, ‘I get the year off, don’t I?’”
As the years continued, New Way expanded their line by building an automated side loader after licensing an arm from the inventor. They also acquired the K-PAC line of compaction unit in 2008 and recently brought an auger style automated side loader to the U.S. after licensing the ROTO PAC from the Canadian company Ginove.
Today, Scranton Manufacturing has brought their New Way brand nationwide and even international with sales to the country of Dubai, Puerto Rico, Mexico and South America. John attributes this in no small way to the Christian principles he applies to business. He calls his business philosophy the 5 “P’s”: People, Product, Principals, Persistence and Prayer. The company originally manufactured farm products because that is where his roots were, but after the farm depression John said, “Only God could have led us to the little company New Way. That adversity along with persistence and prayer led us to what we do today.”
Zachary Geroux is a videographer, photographer, historian and owner of Refuse Truck Media and Consulting, which focuses on media and marketing for the Waste Industry. He lives in Western Washington with his wife and young son who will soon fall in love with garbage trucks. He has been driving garbage trucks off and on for the past 10 years and considers it the best job he has ever had. He can be reached at (541) 301-1507, via e-mail at Zachary@refusetruckphotography.com or visit www.refusetruckphotography.com.