When Ted Zampetis took over Shiloh Industries in 2002, the manufacturer was in dire straights.
The company had used up almost all of its $290 million line of credit to fund growth and acquisitions in the 1990s, and was in default. Profitability was suffering, and the company, with annual revenue of $600 million, was burning cash at an alarming rate.
The banks wouldn’t extend any more credit, and the independent auditors couldn’t give the company the unqualified opinion it needed without an additional banking agreement. SEC filings were due, and the closing of the 2001 fiscal year had been delayed to buy more time.
But there was no time left.
“We didn’t have years, we had days, to be honest with you,” says Ted Zampetis, president and CEO.
Zampetis started the transformation by immediately setting the tone with employees.
One of the first things he did after taking over was to rehire a receptionist. While it might sound like a pointless move with the company teetering on the edge of ruin, it set a tone with the employees. The receptionist was brought back and, at the same time, 11 vice presidents were let go.
“It was unbelievable to see the structure of this company during that time,” Zampetis says. “We basically had fired the receptionist to save money. So if you wanted to call Shiloh, you were going around in circles until finally you’d get frustrated and say the heck with it. Firing the receptionist saved some money, but at the same time, they had 11 vice presidents they were paying a high amount of money to.”
Bringing back the receptionist sent a message that the company had a new focus on customer service. The 11 empty offices sent a message that Zampetis meant business.
Now that he had everyone’s attention, the sales process began to get employees and customers to believe in him.
“I had to stand up in front of everyone internally and externally and explain to them what was happening in the company,” Zampetis says. “I had to explain why the company was in the shape it was in and, more importantly, how we were going to get the company out of that boobytrap. I had to explain what was my role and the role of everyone else to make these things happen. That’s the start of a culture.”
He met with employees in small groups, sometimes holding as many as 10 meetings a day.
“For union, nonunion, hourly or salary, there is one story,” he says, wagging one finger in the air for emphasis, “not two different stories. The first thing is, there is one message that is common and consistent. You reinforce and support it and you say it to everybody. You tell them the truth. My objective was to create clarity in the minds of everybody. Once you create clarity, you create unity. Then if you create unity, then the action plans you put in place will be executed with intensity.”
Zampetis put in place plans to decrease waste and increase productivity. Goals were established and people were held accountable to them. He set high expectations for quality and didn’t accept excuses.
Defects dropped into the single digits per million parts shipped, and for some major customers, it dropped to zero.
“Customers are telling me that they view Shiloh as the benchmark for irreversible improvement,” Zampetis says.
He also worked to form the blanking, laser welding and stamping components of the company into an integrated whole.
“There are hundreds of stampers. There are a handful of laser welders. Only Shiloh has all these capabilities and can bring them together,” he says.
Once the core capabilities of the company are integrated, there won’t be much competition to worry about. The company created operating strategies to allow this integration to happen.
“It has to be continuously supported by communication internally so everyone knows why we are doing it … and what their role is in the company,” Zampetis says. “We have to explain the strategy so it is not misunderstood.
“The result of this enormous effort is an operational excellence that is creating cash flow that finances productivity and that creates customer loyalty. When a customer looks at Shiloh, we are not one of 500 companies, we are the benchmark.”
HOW TO REACH: Shiloh Industries, www.shiloh.com
