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Electric Research and Manufacturing Cooperative - Striking a New Balance - CoBank Site
Striking a New Balance
After more than 50 years in business, Electric Research and Manufacturing Cooperative was faced with a challenge, which ultimately led the cooperative to embark on a large expansion project, ensuring its utility-owners were set for additional success.
Headquartered in Dyersburg, Tennessee, ERMCO is one of the largest producers of oil-filled distribution transformers in the United States. Transformers are imperative to electricity distribution, transferring electrical energy from one circuit to another. The company is exclusively owned by Arkansas Electric Cooperatives, Inc. and is a critical supplier of these transformers for rural America.
We are thankful that CoBank understands our business so our customers can continue to rely on ERMCO.
With the supply chain challenges spurred by the global pandemic, combined with unprecedented natural disasters, ERMCO was working to keep pace with customer demand and needed a solution to enable a larger production footprint.
“The supply and demand were out of balance and we knew we had to evolve our model, but it was a delicate balancing act. We were locked into contracts with long-time customers that we were challenged to fulfill with our existing capacity,” said Tim Mills, president and CEO of ERMCO.
ERMCO made the difficult decision to adjust orders and contract renewals to obtain a long-term solution—and in 2022, it acquired Spire Power Solutions, beginning an expansion that added production capacity in Canada, Mexico, Georgia and Tennessee.
The expansion required a strategic loan to finance the acquisition. CoBank, along with Farm Credit System and other financial institutions, provided $500 million for the expansion project—and within a year, ERMCO realized an 85,000-unit growth in production.
“Securing funding for this was an initial challenge—most commercial banks don’t know how to assess our needs,” said CFO Adam Kruzich. “We wanted to add CoBank into the mix because as a co-op, they understand our business model. But it goes beyond that—they were willing to fund more than other larger banks.”
In the coming years, ERMCO is committed to providing transformer technology for America and is embracing opportunities to responsibly address environmental changes. It is also reinvesting back into the community, and is involved with local schools, specifically funding STEM programs.
ERMCO is continuously striving to improve its processes for the betterment of its utility-owners, employees and community members. And the future is bright—in 2023, it hit a milestone, building its 8 millionth transformer with plans to finish its 9 millionth unit in 2024.
“A successful future doesn’t happen by chance—it’s largely due to wise and well-placed investments. We are thankful that CoBank understands our business so our customers can continue to rely on ERMCO,” Mills said.
