Bailout Response

Bailout? Rescue? Investment? What we call it is not as important as how it may impact all businesses and consumers. But don’t worry; the politicians will solve all our problems …

As I write this, it is early in the morning of September 30th—the morning after the 777-point fall in the Dow. The talking heads are all buzzing—from both sides of the aisle.

I am interested in the opinions of the folks who stop by this blog. I have my thoughts that I will share with a summary in my next entry, but want to open it up for comments and insights from the readers.

1. As this is posted, the market will have reacted to yesterday. Where will the Dow end up the year?
2. Has the “credit crunch” impacted your business? If so, how? Tighter line of credits? Pullback on expansion capital? Freeze on hiring? Or none of the above?
3. As a business owner, how do you feel the presidential campaign is addressing your concerns? Do you think either candidate will help or hurt your profits?
4. What are your thoughts on the government’s plan? Should there be a cap on compensation for Wall Street executives who get “bailed out?” Should the free market reign and let those who got too highly leveraged fail? Is it too little? Too much?
5. Lastly, I would love to get predictions on the commercial glazing prospects for 2009 and beyond.

I think the glazing market will continue provide opportunity for businesses that add value and service their customers. Sure, it will get harder—fewer projects, tighter financing and more competitors. However, partners who can help their customers increase their bottom line will always find a way to survive.

Your thoughts? Post them here or email me at pchojnacki@yourfabech.com. Please let me know if you are willing to share your comments publically. I will post them here soon.

Take care and hold on tight—it will be a wild ride!

Time to Go to Vegas

Sin city. Where everything is bigger—the swimming pools, casinos, hotels, restaurants and other things we can’t mention in this forum. Oh by the way, there is a trade show too…

As a veteran of many shows in several industries, I thought I might give some thoughts on getting the most out of attending trade shows. For many years, I have been on the “other side” of the show booth. Like many marketing folks, I have done my share of show set-up and organizing. Their goal is to get qualified leads and network with other industry professionals.

Now, I am one of the target attendees. Yes, you all know who you are. You have the badges that are the right color—the one that all the exhibitors flock to for the scripted lines. However, don’t get turned off by the forum. You can get a lot out of the show if you have the right plan.

You need to do a little homework prior to getting on the plane. Look at the website or show guide to set your top 5 things you want to accomplish. This list can include things on the show floor, classes or seminars, networking dinners/drinks/lunches or a combination of the above. Many times, people come to shows with no plan and get caught up in things that are time wasters. How many times have you found that on the last day of the show you are frustrated by how busy you were but feel like you didn’t get done what you want?

However, don’t get too programmed. Don’t be one of those people who follows their checklist and plow through 3 days with every minute planned. You will see new things and meet new people. Leave time to explore and wander. Leave time to arrange an impromptu meeting or meal with a new prospect or vendor. Keep an open mind.

Finally, have fun. It is a good time to get away from the daily grind and blow off some steam. But remember, this is Vegas, so pace yourself; don’t end up like this guy …

See you on the Strip.

Busy, Busy, Busy

It is that time of year again—the summer season of short lead times. For most of North America, the hot weather turns up the temperatures and the tempers. How do you deal with it?

Every business faces cycles of busy and slow times. However, the construction business can bring those swings to extreme highs and lows. Everyone in the business is challenged with balancing the ability to serve customers with the costs of doing business. Those who succeed in the long run are willing to look at new ways to squeeze the rat through the snake.

We are in the middle of the first summer of our tenure at FabTech. We are very busy with both current work and backlog. Our customers all want product faster and faster. I noticed that Wausau featured a new program offering shorter lead times. Their announcement specifically called out the shortening build cycle. While Wausau specifically calls out their strategy, all of us are trying to squeeze timelines while still putting out quality work.

So, what can you do? Bottom line, the time to attack the busy season is during the slower times. If you talk to your people and customers about pain points ahead of time, you will have time to implement some solutions in small steps (think lean manufacturing or Kaizen).

OK we are all too busy to spend any more time now. GET BACK TO WORK – YOUR CUSTOMERS ARE WAITING!



PS – With the Olympics in the news, I have seen some of the chatter on the blog boards about China. I traveled to China last year on business. It is a fascinating place. It is a land of contrasts. I saw very modern factories with huge investments in automation and technology. Really world-class stuff. Then, across the street is an ox cart or even corn drying in the middle of a 4-lane highway.

I saw raw sewage in the gutters of Guangzhou. This is a city of 9 million plus. Massive advances and wealth alongside ancient sites and immense poverty. Contrast, contrast, contrast.

My take is that the central government of China is still very controlling and doesn’t care about the health and safety of workers. Also, the wealth being created by the West’s appetite for cheap goods is not being used to improve infrastructure beyond the large cities.

That being said, they will host a hell of an Olympic games. When "the man” controls everything, the big things will run smoothly. Just don’t look behind the scenes—the backstage is very messy.

Time to Reflect

As Charles Dickens said, “Reflect upon your present blessings, of which every man has plenty; not on your past misfortunes of which all men have some.”

Or maybe Freddie Mercury of Queen said it better …

“Is this the real life? Is this just fantasy?
Caught in a landslide, No escape from reality.
Open your eyes, Look up to the skies and see,
I'm just a poor boy, I need no sympathy,
Because I'm easy come, easy go, Little high, little low,
Any way the wind blows doesn't really matter to me, to me…”

Whether it comes from Merry Old England or the rock and roll of my youth, I have a lot going through my head these days. As I get ready for a little vacation, it is time for me to look back over the last year and take a breath.

A little less than a year ago, I was getting back from the beach and looking for a business to buy. Then, along came the poker game. That started the adventure that is FabTech.

I have learned a lot about the business, the people here, the culture, the products and myself. I know some of you are now groaning about another top 10 list, but here it goes.

The top 7 things I have learned in my first 7 months at FabTech:

7. Customer interaction is the most important thing you can do with your time. Customers are not a “hassle” and they don’t “interrupt your day.” They are the ones who pay the bills.

6. Financial statements can be fun. Well, maybe not fun, but getting a real handle on how your business is doing can be very clear when you look at the numbers. The exercise of looking at the numbers weekly and monthly gives me a chance to be sure we are doing the right things.

5. Take time for yourself and your family. It is very easy as a business owner to get wrapped up in the issues 24x7. I am still learning how to balance the work and family time. This is not just about the time spent in the office and on the phone, but the mental break away from thinking about it. It is tough but necessary.

4. Cleveland sports teams make me crazy. Ok, not about the entrepreneur, but I am sick and tired of my favorite teams watching others have parades. The Tribe and Cavs both showed promise going into their seasons, but both disappointed. Maybe it is the year of the Browns??? Only my days living near Wrigley Field make me feel that someone knows our pain.

3. The commercial glazing market is all about managing chaos. No project seems to go as planned. Speed and flexibility is the key for everyone throughout the channel—from the architect to the glazing contractor. Sometimes the projects can feel like a big game.

2. We live in the greatest nation in the world. Whether McCain or Obama win, consider yourself blessed. It just takes a quick look at the situation in Zimbabwe to see how bad it can be for others. My father lives outside the United States and recently told me that he has grown in his appreciation for the USA from afar. In fact, he is now looking to move back to the U.S. Sometimes the grass is not greener.

Although sometimes you just have to laugh at what other voters do.

1. Customer is king. Right or wrong, the customer is always right. Whatever you do for a living, this is always number one.

Enjoy the summer and thanks for reading. Now, where did I put my flip flops?

Culture 101

The heartbeat of any organization is the mythical culture. It is stronger than the rumor mill. It is what new associates feel most when they come on board. It is critical.

Then why do most managers and owners ignore it?

I have been guilty of ignoring culture on various occasions in the past. Sometimes it doesn’t matter in the short run. Sales targets can continue to be met. Customers can be serviced and products can be put out on time and with good quality. But, beware. Culture, specifically corporate/company culture, WILL impact every organization. It may take a while, but it will not be ignored.

As we started to get a rhythm at FabTech, I found myself detecting the underlying culture. It was not said out loud. It was not put up on signs or posters. It was not talked about at the lunchroom table. But make no mistake, it was there.

I would summarize FabTech’s culture as very customer focused, but scattered. In other words, the overall goal of doing right by customers was very evident, but not intentional.

Sixty days after our ownership change I made a very conscious choice to define and actively manage the culture at FabTech. We would make a choice to develop our culture and grow as individuals. To start with, we would present a theme of the month at each meeting. Themes such as Character, Intention, Teamwork, Honesty, Respect, Love and Trust would be part of every day.

Yes, you read it right. We talk about respect, trust and love. Now, you can imagine the looks on the faces of our associates. They thought this was more executive BS. They were resistant. However, they saw the possibilities. They saw owners who were willing to share profits and financial data in open meetings. Privately, they talked to each other that it just might work.

Sure, the fact that we instituted profit sharing and pay quarterly checks makes everyone more willing. But, isn’t that the point of profit sharing—to make everyone think like an owner and welcome change? Like Bambi on the ice, our cultural momentum can stumble. However, now FabTech has a defined and intentional path to improve customer service, product quality and profits. Most importantly, it is not by management decree, but by consensus.

Day One

So we all breathed a long sigh of relief. The deal had closed. The due diligence process had not been too bad. We had a great seller in Rick who had poured his heart and soul into the business.

Then came Day One. We had a meeting on Monday morning where Rick announced the deal and introduced the new owners. I felt like the new kid in school moving into town. Rick had done a good job of keeping his intention to sell quiet.

The announcement meeting went pretty well. Rick said his piece and I introduced myself and the other owners. We each had experience with these types of announcements in different contexts (mergers, acquisitions, plant shutdowns, etc). The stress on the face of the plant floor associates is always the same. The first thing anyone worries about is their job: “Will I have one?” “Do the new guys know what they are doing?”

One thing that helped with establishing our culture of open communication is that we handed out a FAQ document that told everyone that no job cuts were planned, there were no changes to pay rates, healthcare, 401(k) etc. Bottom line, it was a strong business that had an owner that wanted to move onto other things and a new ownership group that knew that the associates of the business were the only assets that really mattered.

If you ever have a situation like Adobe’s (see example by Adobe) that will result in job cuts, I highly encourage you to be up front with the FAQ and tell everyone how and when it will be done. You will never get over the loss of credibility if you get up on Day One and tell everyone “everyone’s job is safe” then lay people off. Don’t do it despite how tempting it might be.

I spent the first day getting to know the guys in a very casual way and answering all kinds of questions one-on-one. An end of the day follow-up meeting showed the deeply rooted feelings that people at FabTech had for the business, the quality of work and the strong relationships with our customers. The strong vibe was that the associates didn’t want us to “screw it up.”

I was very conscious of listening extra hard on Day One. I wanted the associates to know that we valued their contribution to the past success of FabTech and needed their expertise and enthusiasm to reach our goals for the new FabTech.

Next week, the outline for our new culture.

On the lighter side, as I watched the NFL draft last weekend, I couldn’t help but think about how much these kids are making and how much training they do to impress scouts. My favorite coach has made a draft training video, check it out here.

The Deal

So, I went to a poker fundraiser tournament. While there, I met a friend of a friend. It turned out that he ran an interior contracting business and had done the finish work on the office of GED. Mike Ritenour, owner of Lou Ritenour Decorators and Landmark Stone, sat at my table and we chatted a little about commercial construction and the trends in green building for interiors and exteriors. No, I didn’t win the tournament, but did make the final table and had a good time.

About two months later, I got an email from Mike and his partners wanting to discuss a business they were looking to purchase. Mike Ritenour had partnered with Mike Orazen, former owner of EPG gaskets and Mike Boehringer, owner of several businesses in the document management and software industries. The three “Mikes” has pooled together some capital to form a boutique private equity fund specifically focused on the building products industry.

The e-mail mentioned a value-added fabricator of architectural door, storefront and curtainwall systems. Long story short, we hooked up and partnered to purchase FabTech in November 2007.

FabTech Inc. was founded 13 years ago by Rick Herrilko and a team of his fellow fabricators from the old PPG/Pittco operation in Cleveland. Rick had built an excellent customer-focused company that thrived on quality, speed and flexibility.

We had found a gem of a company in a market that was strong and growing stronger. We did our financial, legal, environmental and cultural due diligence.

So, I quit my job and became part owner and president of FabTech LLC. I am blessed with a great team of partners. Each of the “Mikes” brings a wealth of experience in management, business ownership, mergers and acquisitions, and product development. We each have our strengths and weaknesses and complement each other with support and challenge each other to be better every day.

We inherited a strong team of nine fabricators and an excellent estimator. Rick has stayed on as a consultant. There is a cumulative 150+ years experience in fabrication and customer service. We had an excellent team and a very strongly embedded culture. However, while the customer came first, we had some improvements to make in the culture and teamwork at FabTech. We did not get into a cultural mess, but wanted to redefine the approach to business and expectations of success and long term growth.

Next week stay tuned for the challenges of getting to know the business on paper versus what happens post closing in the real world. Also, how youth sports coaching and mentoring can help your business.