Beating the sluggish market

Local firms gut it out to expand and grow in these trying times

Story by Sean Fitzgerald

HARRY DENNIS LOOKS BACK on his career that spans four decades and fondly remembers his early career working for General Motors in the early 1970s. It had been a Renaissance Period of sorts for the American automotive industry up through the 1950s, 1960s and the early stages of the ensuing decade until 1973. Then hit the Great Automobile

Recession – as historians would later refer to it – and Dennis found himself out of work with a pink slip in tow.

Since that time, Dennis has held other management positions, owned a handful of businesses, and for the past 15-plus years, has owned and served as chief executive officer for TEC Midwest, a consortium of more than 650 business owners who come together to bare their souls with one another in small group settings, sharing best practices in common business operations and management issues.

In total, Dennis has endured eight recessions – those academically defined as two consecutive quarters of evaporation of gross domestic product – but doesn’t recall anything as bad as the current economic climate.

“I believe this recession is more financially significant than that one in 1973,” Dennis said, noting the 2 million jobs lost nationally during the second half of 2008 only scratch the surface of what’s to come.

If the economic climate in 2008 was any indication, business owners will continue to have to hold their own underwater for most of 2009 before coming up for a breath of fresh air. With record rates of home foreclosures, multi-billion-dollar corporate bailouts, and layoffs at neighboring employers, a business owner’s sense to shrivel back and cut expenses down to the bone is understandable.

But amidst all the depravity and despair in the economy, there are a number of bold entrepreneurs who are sifting through the carnage, spending money to grow and expand, and discovering opportunity.

Opportunities in growth
DENNIS’ ORGANIZATION is among those.

The Executive Committee – now more widely referred to as TEC – has been linking business owners together for best practice business management for the past 50 years.

Dennis said TEC has aggressive growth plans of its own. Between the TEC organizations he operates in Wisconsin and Michigan, Dennis is forecasting 5 to 6 percent revenue growth for 2009, coming as a result of an increase in membership.

And why not? It stands to reason that business owners searching for a solution to help provide some buoyancy in this economic climate would seek out a group of outside advisors to expose them to new ideas and new concepts.

“Strong companies get stronger by looking outside of themselves,” Dennis said.

Among TEC members, Dennis said he’s heard significant optimism. Just shy of 100 members in northeast Wisconsin, Dennis said about 60 percent of the region’s members are involved in the manufacturing sector. Many have yet to feel any added pressure from the economic downturn, he said.

“It’s kind of a Jekyll-and-Hyde situation – half of them are saying ‘What recession?’ and the other half are experiencing challenging times,” Dennis said. “Most of our companies have already taken steps to be durable during difficult times.”

With that durability comes a heightened sense of confidence to ride out the storm and perhaps even develop some momentum along the way.

“Mostly, (TEC member business owners) see this as a time of great opportunity to seize market share,” Dennis said, noting members have discussed tactics such as more aggressive pricing strategies, acquiring weaker competitors, stock piling materials inventory and even building capacity.

“A number of our members are projecting out into 2010 and are solidifying their contracts.”

A World Class effort
EVEN IN THE HEAVILY EMBATTLED manufacturing sector, some in the region have positioned themselves to flourish.

World Class Manufacturing Group in Weyauwega found that its careful attention to customer service, its diversity of capabilities and customer base, and ability to adjust to the market with quick turn on its orders has allowed it to continue growing. The metal fabricator of component parts for OEMs in medical, agricultural, military and compressor industries experienced a 20 percent increase in revenue during 2008.

“We just finished a record year, even during a recession,” said Darold Paisar, president of World Class Manufacturing.
During 2008, the company added World Class Industrial Supply in Menasha and opened a third facility, World Class Precision Products in Bayfield.

Operating with roughly 135 employees, the company increased its workforce by 5 percent during 2008 while still increasing its receipts by 20 percent, a testament to the efficiency of the firm. Paisar said the company placed more emphasis on its Five S process management initiatives this past year, and intends to expand the focus of its internal process training with employees in 2009.

In addition, Paisar credits the company’s ability to quickly adjust to the markets and be flexible on its order sizes – even orders of one or two for prototypes its customers are developing – have contributed to the success of World Class Manufacturing.

Also this coming year, World Class Manufacturing is planning a large capital investment in robotics for its Weyauwega facility, a move that should bring greater efficiency and standardization to its spot-welding processes.

Growing retail locations
IN THE FICKLE WORLD of fast food, Cousins Subs has been attempting to push out in front of its competitors to develop a greater presence in Wisconsin and beyond. The Menomonee Falls-based franchisor of sub sandwiches ended 2008 with about 150 stores. It plans to open 20 more stores in 2009, and has a strategic growth plan of 200 total stores by 2010.

Phil Hudson, who owns the Cousins store at the intersection of South Main Street and Pioneer Road on Fond du Lac’s south side, attributes the solid, consistent ringing of cash registers to a quality meal at an affordable price, just the kind of value he feels consumers are seeking in uncertain economic times.

Hudson has also been tapped by the Cousins Subs head office to be the area developer for an 11-county region of eastern Wisconsin. Last month, Hudson helped open another store in Ashwaubenon. Later this spring, he’ll be helping another franchisee in Fond du Lac open a store on the city’s blossoming eastern corridor near the Johnson Street interchange with U.S. Highway 151. After opening his own store in 2007, Hudson has worked with a variety of fellow franchisees to open new stores in Oshkosh, Sheboygan County and the Green Bay area. The most significant challenge he and his colleagues have endured is finding the capital they need to launch a new store.

“No matter how good a person’s credit is, one of the biggest challenges I’m finding is the banks don’t want to loan any money to anyone,” Hudson said.

Still, it’s been full speed ahead for the franchisees who have been able to put together enough financing to start up a new store, which Hudson said can cost in the range of $190,000 to $330,00, depending upon the build-out options a franchisee elects to include in their store. Unfortunately, Cousins and Hudson have been more careful than ever with new store site selection, yielding to the fact that real estate opportunities for leasing space aren’t what they were just a year or two ago.

“We’re seeing the development of strip malls has really slowed down as well,” said Hudson, noting Cousins does have a handful of freestanding stores, but that it’s far more common to place a store in a modern, multi-tenant retail center near a high volume of traffic.

One economic sour spot benefiting Cousins and other businesses looking to grow is that widespread layoffs have substantially opened the labor pool. While the layoffs are unfortunate, Hudson said finding “good, qualified employees is very easy right now.”

Sound advice in troubling times
OSHKOSH-BASED BLENDED WAXES CEO and owner Bob Coglianese is among the growing list of business leaders who has found even more stability as a TEC member.

A member of TEC for the past three years, Coglianese previously was a partner in a certified public accounting firm before purchasing the manufacturer and blender of commercial and industrial-use waxes. Like Dennis, he’s also lived through several recessions and has seen more than his share of business owners making rash decisions in a desperate attempt to stay in business.

“Don’t get overly excited,” Coglianese advises. “It’s generally not as bad as it’s portrayed, and it’s generally not as good as it’s portrayed.”

Pessimistic economic news has a way of seeping its way through an organization, even if actual conditions are rosy. Business has been steady for Blended Waxes, Coglianese noted, though employees watching and reading national economic news stories regularly ask if layoffs are pending or if the business will shutter its doors. “No,” Coglianese reassures those employees, though Blended Waxes did face its own challenges this past year in the commodities market since the company’s principle raw materials are related to crude oil.

Coglianese’s cohort group of 12 other TEC members offered him helpful input during that time, as many of them also faced increases in metals, fuel and transportation costs. He compares his TEC group to an outside board of directors, a collection of confidants who connect personally and know some of the most naked details of his and each other’s business.

“We don’t have a fulltime strategic planner. We don’t have a fulltime ISO auditor,” Coglianese said of Blended Waxes. His TEC group helps to provide that advisory role.

It’s with such sentiment that Dennis believes other business owners will look to organizations like TEC to become more durable, survive and to grow during this current recession.

“People see that this is a great opportunity to get help when they’re not sure where to go otherwise,” Dennis said. “They want best practices, they want information, and they want confidentiality for themselves.”