The Great Recession lives in the memories of all CEOs whose businesses survived it. Though it technically lasted two years, from 2007 to 2009, its impacts are still vivid, even if only seen when company leaders look in their rearview mirrors.
Cornwell Quality Tools President and CEO Bob Studenic says the recession had a profound effect on the tool maker. Purchasing all but froze as consumers stopped buying cars and automotive dealerships contracted, leading to the jettisoning of automotive technicians — Cornwell Tools’ main end users.
The company went from record sales in 2006 of around $83 million to a low of $68 million in just a few years. Its number of franchisees — the independent dealers who sell Cornwell tools to automotive technicians from Cornwell-branded trucks — dropped from 600 to around 519, and Cornwell’s W-2 workforce decreased from 225 to 150.
“That was a very painful period,” says Studenic, who had a front-row seat to the balance sheet as the company’s treasurer at the time.
The cuts reached across the entire organization — its headquarters in Wadsworth, its manufacturing site in Mogadore, its Western Distribution Center in Utah, its small forging operation in Western Pennsylvania and across its field salesforce.
As endless as the gray cloud of the recession seemed, there was, however, a silver lining.
Opportunity and necessity
With new automobile purchasing paused, commuters were left with aging vehicles that they were eager to repair and preserve. That brought the average age of an on-the-road vehicle to 10 or more years.
“That’s good for us from a business standpoint,” Studenic says. “People are keeping their cars. They’re repairing them. That means technicians and repair facilities and body shops and all that have got a pretty good business going. Those businesses require tools. We have franchisees who drive around with trucks that are able to provide those tools to them.”
Around 2010, business picked up. The company’s revenue climbed to $100 million in the three years that followed, building back what was lost and then some. The growth of its workforce, however, didn’t follow the same rapid pace. Cornwell called back some of the people it had laid off, then moved forward judiciously in where, how and when to add more.
A few years later, with its financial footing underneath it and Studenic fully transitioned up through a succession plan into the lead role at the (mostly) family-owned company, Cornwell began to feel confident enough as an organization and took advantage of its strong position when opportunity and necessity intersected.