Penn Refrigeration

Source: Retail Digital

Date :6/1/2007 12:57:40 PM

Walk-in refrigerator manufacturer Penn Refrigeration is the only one in its industry to provide nationwide delivery and installation by its factory mechanics

Written and Produced by James Buchanan & Michael Magno

Even during the coldest days of winter America’s restaurants, convenience stores, and supermarkets need to keep produce and desserts cold and fresh.

Replacing the ice man is an industry of refrigerator manufacturers that serve industrial needs as opposed to the home consumer. For these large scale operations, a small reach-in will not cut the bill; they need something much larger – walk-ins.

Established in 1944, Penn Refrigeration Services Corporation has managed to not only survive the past 63 years, but thrive in this competitive market with annual revenues at approximately $7 million. Among the keys to success for this Wilkes-Barre, PA based company is providing unique services to its customers and a dedication to its employees.

“We are a family owned and operated company,” says Al Finarelli III, vice president of operations and an owner, “which is pretty much unheard of in the walk-in refrigerator industry.”

Currently the company provides its products to restaurants, hotels, convenience stores, stadiums, supermarkets, environmental chambers, hospitals, and nursing homes. Further, the company has a presence in every region of the U.S. as well as in Central America, Mexico and the Caribbean.

According to Finarelli, Penn’s most distinguishing customer service feature is that it is the only manufacturer of refrigerated walk-ins to offer nationwide delivery and instillation by the company’s own factory mechanics.

The company will deliver the unit in its own trucks rather than a common carrier, which cuts down on the risk of damage during delivery. The walk-in refrigerator will then be erected by Penn mechanics, which eliminates problems that could be caused by crews that are unfamiliar with the product and its instillation.

This option is often the most economical since technical competence and experience can save valuable time and money, says Finarelli. Factory delivery also eliminates the need for expensive crating and disposal of such crating once the job is installed. The company’s mechanics will blanket wrap and pack the components on the trucks themselves to make sure everything arrives in good order.

“I’ve got six groups of two installers that can install our units anywhere in the United States,” says Finarelli. “They will have three or four jobs loaded on each truck when they leave and on the way back they will pick up raw materials from suppliers for the manufacturing process.”

Finarelli adds that his installers have an average of 12 years experience while the average in the shop is 23 years. “I’ve got some pretty loyal people that have stuck with us.”

Also, Penn’s factory mechanics, which are unionized, are able to coordinate with other trades to ensure a smooth flow from site preparation through instillation to electrical hookup and startup.

As an additional service, Penn has a wide network of refrigeration service companies they partner with to offer a complete turnkey operation, except for electrical hookup. Extended warranties are also offered on the company’s refrigeration start-up packages to provide year-round service for its products.

While the company has a national presence, it only has the one office and manufacturing plant located in Wilkes-Barre. Sales are handled by commissioned sales representatives in all of the regions of the country.

The company will do some international work, such as a large instillation in China and for the Russian Olympics in the mid 1980s, the vast majority of their work is in the U.S. Finarelli says they have worked in Honolulu Airport, the main airport in Hawaii, and the company just finished a remodeling project at Fenway Park in Boston. Other large jobs have included Coors Field in Denver, and the Newark, JFK and San Francisco airports.

Asked how Penn has managed to maintain a competitive edge within what is a fairly competitive industry, Finarelli points to the quality of the company’s product and its capacity.

For example, he says, there are approximately 100 other companies that manufacture walk-in refrigerators. However, of those, there are only about 12 that produce a 4-inch foam in place panel. What this means is that Penn’s panels have an insulating value (R value) of 32 while other manufacturers produce panels at a far lower R value.

“They may be able to offer their panels at a lower price,” says Finarelli, “but when you consider that the machinery that cools the walk-in will be running far more than for ours, you lose a lot of efficiency and have increased costs to keep the walk-in cool.”

Finarelli adds, because they have the quality and the capacity to do large projects, they are often listed in the specs by architects and food service consultants to provide the walk-in refrigerators.

Winning the business is only one half of the battle, though. Penn is always looking for ways to reduce its costs. One of the more vexing of their issues is the constantly fluctuating price of aluminum, which they purchase in large sheets.

“In the past we purchased aluminum in six month increments where we now purchase it in one month increments,” he says. “This helps us monitor cost in that we can have a better handle on where the base price for the metal is going.

“This means we are operating on a just-in-time inventory system, which means rather than by six months worth of aluminum at what may have been a high price as prices are about to go down, we can now by low for a couple of months out and try to anticipate these fluctuations.”

Automation is another area where Penn has managed to increase its efficiency and cut production costs. In the 1990s, the sheets of aluminum were cut and formed manually, which for a load of 40 sheets took about 3.5 hours. They now have a roll former machine that can do the same amount in about twenty minutes.

“We didn’t have to let go of any employees because of this either,” says Finarelli. “We just moved them to where new bottlenecks in our manufacturing process had formed due to the introduction of the roll former. We also have kept out sheet mettle department in order to handle specialized custom work.”

Beyond seeking better processes and managing inventory of raw materials, Finarelli says the company has the same issues as any where else with the rising cost of health insurance and maintaining the company’s relationship with the union that represents its employees. “We negotiate our contract every three to four years,” he says, “but we get along well with our union.”