Manufacturing
Start-up survival
How John Matig grew Frontier Steel Co. by knowing when to walk away from business
By Brian Horn
Smart Business Pittsburgh | December 2006
After starting Frontier Steel Co. in 1999, John Matig watched a lot of similar companies go bankrupt in the following years due to a slowing in the industry.
“There was no demand, so you begged for orders,” says Matig, president and CEO of Frontier. “Once you got the order, you didn’t make any money. You are working on low margins, and then you sat and prayed you got paid, because people weren’t.”
With a little help from customers paying up front, shifting some of the company’s focus and taking on additional work, Frontier Steel survived.
With 60 employees, the company has had a 25 percent annual growth rate, with 2005 revenue of $33 million.
Smart Business spoke with Matig about how he faces challenges and deals with employees, and about what not to do in business.
Q: What should CEOs be watchful of in business?
The biggest thing is the appetite. Make sure you are not eating more than you can digest. When you are growing, you have to be able to say, ‘No.’
We walked away from a lot of business in 2006 from big companies. We could take their work, but there was probably a pretty good chance somebody was going to pull the ace on the river, and we would lose because we couldn’t get it done.
As much as you want to grow and take on the work, sometimes it’s better to say, ‘I’m going to make sure I keep the people I brought to the dance happy.’
We would rather be honest with them up front and say, ‘We would rather pass on this, give us six months; we’re working on some things. Invariably, six months later, the phone rings and they say, ‘Are you guys ready for us?’
Q: How do you face challenges?
Immediately start the dialogue and attack the challenge versus waiting until tomorrow. Obviously, you want to think and pray about it, but at the same time, don’t procrastinate, no matter what it is.
Face the reality that you have an issue and you need to correct it.
Q: How do you handle failure?
You learn. We react very quickly. ... We develop an action plan, and then we give them back our action plan. Then we, more importantly, not just react to it but implement what we need to do to make it better.
Everything is an education. Sometimes it’s painful, and hopefully it’s never so painful you alienate somebody. We don’t bury our heads in the sand. We take our lumps and are honest.
Q: What does a CEO need to bring to the table to succeed?
My job went from bringing in business to keeping people happy. If you can keep people happy and give them a sense of worth, the rest of it is easy.
They do the lion’s share of the work. All you do is massage the egos, keep everybody happy and make sure everybody is working together. If I have to sit there, bring in the business and worry about the operations, the finance, the administration and everything else, then we have some issues.
I give everyone a long leash and trust in their abilities and let them do their job, at which point they usually perform or hang themselves.
The key is making sure we have the folks in the right slots. I don’t know squat about equipment, so we have a very good operations equipment guy. If they are in the wrong seat on the bus, we either move them to a different seat or get them off the bus.
Q: What are the keys to retaining employees?
You try to remember what it was like when you were on the other side of the fence.
We try to make sure their quality of life is not only continuing to improve from a financial paycheck standpoint but also they like to come to work and like to have the opportunity to succeed.
We promote from within. People say, ‘If I do a good job, I will get noticed,’ and they will. We have had lots of positions we could have gone outside and hired.
The guy that runs our plant is a perfect example. He started as a burner, and now he is head of our whole operation. He had the aptitude, and no one ever gave him a chance.
Before we go out and hire somebody for 20 or 40 percent more than what that guy is making, we give them the opportunity to make that money and put him in that slot. Sometimes we make a mistake, but, as a whole, these guys know more of what needs to be done than we do sitting on the other side of the fence.
HOW TO REACH: Frontier Steel Co., www.frontiersteel.com or (888) 275-3305
