Gauging the future

It may not be a formal motto for the company, but the small plaque on the desk of Radix Wire Co. President Chuck VerMerris speaks volumes about his approach to business: “He who adjusts survives.”

Radix Wire adjusts, survives and thrives by practicing planned obsolescence. But that wasn’t always the way. As recently as five years ago, the company, which makes wires for a variety of small and large appliances, was facing a death spiral. In an industry in which competitors were quickly consolidating, the fiercely independent Radix faced some difficult decisions.

“Radix was an old, tired rust belt, unimaginative, unprofitable company that was destined for failure in 1995, even at the age of 50 years old,” explains VerMerris. “We were not differentiated successfully. We had a reputation for being the nicest people with the highest quality products in the market. The fact is, we were losing our shirt. Our operations were weak.”

It was the fault of management, he says, raising his own hand and readily admitting his responsibility in the near-demise of Radix Wire, based in Euclid. Things were so bad that VerMerris considered calling in a turnaround team and giving it the reins.

Instead, in March 1995, he created his own Strategic Planing Team and gave it a single mission: “Turn this company around.” Every aspect of the operation was open for review. VerMerris regularly attended the team’s meetings, and as a practical matter, had veto power over its decisions. But he never used it.

The committee made, and VerMerris implemented, a series of recommendations. By the end of 1996, he knew the company would survive.

Among the most radical changes was the company’s decision to make its own products obsolete. Every three years or so, every item the company produces is phased out and replaced with a more advanced product.

“If we’re now doing it, it must be ready for a change,” VerMerris says. “We have a culture here that values change. We are recognized as the most innovative and the technology leader in this part of the wire business. It’s an expensive way of doing business, but probably not as expensive as having our competition lead the innovation for us to play catch up.”

With new and better products constantly available, it is other wire companies that are forced to play catch up.

“We drive our competition nuts,” VerMerris says.

And, by the time they’ve copied and brought their own version to market, Radix is bringing out another new product.

“I think this is job security.”

To ensure it’s on the cutting edge, Radix works closely with its customers to track their needs. With one customer, Radix created a new type of silicon wire that reduces customer costs and creates a better-looking product.

“If we hadn’t brought it up, they wouldn’t have asked for it,” VerMerris says.

A new product must meet three criteria to reach the production floor: It has to work better for the customer, it has to reduce their costs; and it must increase efficiencies. Working so closely with customers keeps Radix aware of their needs.

But making its own products obsolete wasn’t the only change for Radix. VerMerris hired a controller to ensure the company was getting good and timely information on which to base its decisions. Through the controller and the planning team, VerMerris learned where the company was wasting materials and where it was overbuilding products — in essence, where it was throwing money away.

Three years ago, for every dollar in sales, 62 cents was spent on materials, VerMerris says. Today, that figure has dropped to 47 cents.

The team also recommended additional training for every employee. Along with training came a team approach. Even today, when the company hires, a personality profile is done. Radix doesn’t need any “stand-out stars,” it needs people who flourish with group work, VerMerris says.

The policy has worked.

“Our employees are responsible for 85 percent of the new ideas implemented. It’s an echo to total employee involvement. It’s the outcome,” he says.

Radix’s successful turnaround culminated last year when VerMerris was recognized as one of Ernst & Young’s Entrepreneur Of The Year winners. He has received numerous overtures from larger organizations looking to roll his company into their own, but he steadfastly refuses.

His reason: “I believe this can only be done in an independently owned, entrepreneurial company.”

How to reach: Radix Wire (216) 731-9191

Daniel G. Jacobs ([email protected]) is senior editor at SBN.

Down time?

Computer-aided design and computer-aided manufacturing tools have reduced the amount of time it takes for manufacturers to bring new products to market. According to the Ninth Annual Grant Thornton Survey of American Manufacturers Report, here’s how long it takes a mid-sized manufacturer to bring a product from the drawing board to the market.

Less than six months: 39 percent

Six to 12 months: 42 percent

More than 12 months: 14 percent

No answer: 5 percent