“That’s why when we buy a small company, if the owner is going to stay on or the people under him, we try to get them in a shareholder position,” Kiefer says. “It sure makes your life a lot easier.”
For instance, when Stucki bought Precision Roller Bearing, there were three owners. Kiefer says one was a silent owner, another was near retirement age, but the third was a younger sales guy who rolled a large portion of his proceeds into Stucki stock so he maintained an ownership position.
By keeping the entrepreneurial spirit strong, Stucki can compete with companies that are 10 and 15 times larger with better pricing power — through passion, better service and letting customers know they are all owners.
“I was out at the Union Pacific Railroad, the biggest railroad in the world, and I sat with the vice president of sourcing, and I said ‘You don’t need me to come out here — the few people you’ve been talking to are all owners. They make decisions based on their ownership,’” he says.
But as Stucki has grown, Kiefer says they did have to come up with another rule. Managers or employees were sometimes hesitant to take action because they didn’t want to step on someone’s toes.
“So, we came up with our second rule, and that is: We don’t hire people with toes,” he says. “We don’t worry about upsetting the other guy.”
It shouldn’t become personal because everyone has the same goal — generate wealth for the shareholders, and do that by providing the best service that you possibly can, Kiefer says.
When acquiring companies, the first hurdle is to gain the confidence of the people you just bought, Kiefer says. That can be a cultural issue, which may or may not fit well with your current company.
However, their strategy of providing ownership stock has helped form connections. Stucki also is very well known in the rail industry, so its strong market presence allows small family companies to see tremendous growth.
“We try not to ruin the culture. We just try to instill some of Stucki’s culture,” he says.
The harder task has been integrating accounting and administrative systems.
Stucki’s companies sell to each other — a lot. These inner company sales are accounted for differently than if the business sold to an outside source. And with 14 different companies operating on 14 different accounting software systems, 14 different general ledgers and 14 different customer bases, the discrepancies become problematic.
“When you’re on an acquisition binge, like we were in order to grow, you don’t always have the administrative staff internally to go out and flip a company that’s eight states away onto your own accounting software,” Kiefer says.
In 2014, Stucki didn’t buy any new companies, even though it still experienced 25 percent growth. That breather allowed it to begin installing the same software in every location.
Kiefer says he’s put nine different people in charge of the implementation, which is multinational. Afterwards, the family of companies will all be the same system for engineering, finance, accounting, sourcing, purchasing, etc.
It’s very complicated and time consuming but it couldn’t be put off any more.
“We started talking about doing this three or four years ago,” he says. “It’s just one of those things. It’s like going to the dentist. There’s just really never a great time to go to the dentist.”
Fit management to the customer
To better manage its family of companies as they grow organically, Stucki also has restructured some operations.
In the rail industry, the Association of American Railroads, an industry trade group that represents the major freight railroads in North America, dictates and approves everything that goes on a railcar.
“It’s not like dishwashing soap where everybody buys it,” Kiefer says. “There are a couple hundred companies that buy rail products — that are certified by the Association of American Railroads — to work on rail cars, to buy or service rail cars.”
Therefore, Stucki is set up to facilitate a strong relationship with the Association of American Railroads, and it uses a direct sales staff to service those customers. The industrial side of the business needs a different approach.