From Deep "Dookie" to Sustainable Growth

Last year the cabinet shop member in Group 6 was in deep dookie with a big project that he bid way too low on labor hours and his shop was under performing on. It was a 6-9 month long project and there was no end in sight. It looked as if he would lose about $300K in 2011 and more to start off the New Year. We had a SWAT meeting at his home one Saturday on an emergency basis and some members of the group advised him to take some drastic measures, including taking over the shop for a short period to bring it back into control, removing his Controller, and getting a handle on costs. He ended up making his foreman a machine operator, cut his Controller to ½ time (he gets more out of him at ½ than he ever did as a full time Controller).

This member was in long term fatigue from losing year after year. His wife was a wreck with worry and unhappy. The member was not taking a salary and the burdens of debt, cash flow and losses was very heavy. He had “leaned down” his staff and had no sales department, no estimator, and now he would have no shop foreman or full time controller. He was definitely going to have to work long hours for the season to pull the company out of the fire.

What he immediately realized was the shop under his leadership used far less labor than it had been using in recent years. His dashboard was showing the improvement and he added a line for labor performance as a % of bid labor hours. He started closing jobs at 80%. (If you think about hit, he was not hitting labor hours in the past, so he improved it about 25-35% over all. It was a wonder he won any bids at all, but they had a reputation for great quality). I advised him to put some of that gain into price improvement on new projects. He needed work and it appeared if he could lower his pricing 5%, he might gain more contracts.

He managed to lose only $100K for 2011 and began the New Year breaking even. Sue enough, things started to improve, but as soon as he got up a head of steam in 2012, his biggest customer decided to pull out. Thank God he had sharpened his pencil, because new work came in and his backlog showed he was not going to suffer lower sales despite the bad news. It turns out that the largest customer came back to him with some big orders and it has been a bonus on top of his hard work.

By July, he was making significant profit and he could afford to do some hiring. It was time to install a new production manager, and Amtec found him a great bilingual candidate with cabinet shop experience, a degree in engineering from a university in Peru, and great experience with Lean Manufacturing and office/factory interface systems. This was a gift from God. He also found a college grad to do estimating who was the son of a competitor who was shutting down his cabinet business. This member can now go back to selling and increasing the business. He has plenty of unused capacity to fill yet.

On a call I made to him to check in progress of his new Production Manager, he told me that he continued to win large new orders and build backlog and his new Production Manager was taking the bull by the horns. I asked him how many months in a row he earned good profit and then advised him to begin taking a salary again and begin getting the salary loan repaid. I told him it would be a great gift for his wife, a show of confidence that “Honey, we are back!” He did so right away which really pleased his wife. He also announced to his group in November that he was taking a vacation with his wife, the first one in 4 years. He turned to me and said, “She likes you more and more”

Once again, it is great to be a Convene Chair. I think of all of the areas of life impacted by this turn around and know what I want to do for a living.