Tony Mazzella looks to turn Mazzella Cos.’ size into an asset

Mazzella Cos. has grown significantly under second-generation leader Tony Mazzella, from 42 employees and two locations in 1988 when he took over the business to more than 800 employees and 30 locations today.

He not only grew the original lifting and rigging business that his father, Mazzella Cos. founder James Mazzella Sr., started, but also branched out, adding an architectural metals business in 2004 that provides painted metal. And in 2015, he grew that to include portable roll forming equipment for architectural metal. But while bigger has its benefits, activating those benefits takes strategic effort.

“You’re able to operate a business using the methods, the processes, the quality people, all that stuff,” says Tony Mazzella, CEO of Mazzella Cos. “And then as you grow, you hit a wall and you need to rethink how you’re going to run your business. And in 2018-2019, we had hit that wall.”

The company had, over many years, grown significantly through acquisitions. While that gave Mazzella more muscle in the market, the segmented structure of the lifting businesses meant that one hand didn’t necessarily know what the other was doing.

Recognizing this, the company undertook a major organizational effort to reinvent how the business was run. And 2020 was circled as the year much of that plan would coalesce.

One plan, one team, one goal

Its acquisition of FHS Inc. in 2017 tipped the scales for Mazzella Cos. The move was expected to bolster its ability to be a single-source provider of material handling equipment — overhead cranes and crane services, warehouse solutions and more. At the time, Mazzella opted to leave the newly acquired company alone, largely because he wasn’t sure how he was going to approach integration. But it soon became clear that the company wasn’t going to get the benefits of size or synergy until all aspects of it merged.

“We really had to change how we thought about the business,” Mazzella says. “We did things well, but none of what we were doing was really scalable.”

There are three primary areas in Mazzella’s lifting business: rigging, crane building and crane service. His company is one of the few in the country that does all three.

“One of our strategies is to sell it all, meaning instead of running each one independently, we have a ‘sell it all’ strategy,” he says. “It was about bringing these businesses together to be able to sell every one of our groups.”

To do that, the three departments had to be more interconnected, sharing knowledge and information, because they’re all essentially calling on and servicing the same customers. That would enable Mazzella Cos.’ salespeople to pitch everything in one customer call, and do so with confidence.

“If I’m selling service and I don’t know anything about rigging or cranes, I’m not going to act very confidently to the customer about those other two pieces of the business,” Mazzella says. “Bringing everybody together, now they walk in as a unified front, they talk with confidence. I think it’s going to be huge.”

Information had been siloed in different enterprise resource planning systems that the company accumulated over time. So, a big part of improving the communication between the three segments was getting them all on the same ERP. The complexity of the undertaking wasn’t obvious at the outset, and getting everyone on the same system would be a three-year undertaking. But Mazzella has been through organizational change before and has adopted a stair-step approach — gradually progressing through change — to get his organization to adapt to new systems or processes.

Also helping to solidify the new organizational unity is the introduction of a director of lifelong learning who will work to have all the new initiatives realized in all of the company’s actions, essentially systematizing the aspects of the business that will drive its culture, which is operating by the credo one plan, one team, one goal.

Offense and defense

Headed into 2020, and with the sense that the company’s unification was well under way, Mazzella expected growth. But when COVID-19 hit, customers struggled and Mazzella’s business dropped. Fortunately, he had seen similar circumstances before; leading through the Great Recession encouraged him to react quickly.

“We had a new plan in place pretty much within two weeks or less. That’s one of the lessons that we had was, the sooner you act, the less painful it will be,” he says. “I don’t think we would have reacted as quickly had we not gone through what we did in 2008-2009.”

The company implemented its COVID-19 strategy and paused its organizational structure change for a little more than a month. But Mazzella pushed the company to go ahead with its integration plan because he didn’t want to lose the momentum on that goal.

The remainder of the strategy was balanced between offense and defense. The offensive strategy had, at its core, gaining market share with fewer people, while the defensive aspect meant the company had to do some things that were unpopular among its employees.

“That was when we created our thematic goal,” Mazzella says. “It was about retrenching, but let’s play offense, too. Let’s continue to try to capture customers.”

Opportunity calls

Mazzella says there’s more opportunity now than there was going in to 2020. Some business owners in the industry are closing their doors, calling Mazzella Cos. and asking if the company would buy their equipment.

He expects some of the smaller players will be forced to close for financial reasons, or their owners will decide that they don’t want to fight anymore — they’re nearing retirement age and would rather cash out than try to build back up again. Mazzella says the number of serious calls he’s received from potential sellers has doubled since the pandemic began.

“Some people that we had talked to maybe a year or so ago who had said, ‘Yeah, we just don’t think it’s the right time, right price,’ we had a few of those actually call us back and say, ‘We’re interested now,’” he says.

While he’s talked to a lot of people regarding potential acquisitions, he says he’s slowed down the discussion process, in part because of where sellers’ minds seem to be at the moment.

“They’re sitting there going, ‘Pre-March, I could have sold my business for X. Maybe I hang on a little longer.’ So, everybody is sort of slow playing it. They’re slow playing it on their end because they think there’s going to be too much of a loss. We’re slow playing it because of the risk.”

Still, there’s a good chance owners come around to selling sooner than later because it may strike them that, rather than the market improving and valuations rising, it could get worse. But availability isn’t a significant reason for Mazzella Cos. to make an acquisition. The people aspect is an important factor.

People portion

Culture, Mazzella says, is key when his company considers an acquisition.

“One of the important pieces of the acquisition puzzle is to figure out if you think you have the right kind of people,” he says. “You’re buying assets, but you’re buying the people, and we’ve made some good decisions and we’ve made some poor ones.”

Mazzella says that when acquiring a company, it’s important to be incredibly clear on the cultural expectations. And if the leaders in the business seem resistant to the new culture, a leadership change is necessary.

Among the few hundred rigging and crane companies in the U.S., most are very small. Many are family or lifestyle businesses that are generally happy maintaining the status quo. As sellers, they’re often looking for a buyer who is going to take care of their people the way they had. That’s helped Mazzella execute successful acquisitions.

“If somebody really is concerned about their people, we often are their choice,” he says.

Size matters

Mazzella says that in every major challenge, there’s opportunity. Today, he’s excited about what’s ahead for the company.

“I see everything coming together, and a lot of our people are that way,” he says. “They know that there’s some drudgery right now with a new system, but I think there’s a level of excitement about where we can take this take thing.”

During the Great Recession, Mazzella Cos. had about 150 employees. It now has more than 800, so weathering a market disruption, however significant, feels different.

“The old joke, size matters, it does,” Mazzella says. “It brings different challenges, but you can take a couple really hard punches being bigger. When you’re smaller, it would be one that would knock you out. It gives you the feeling that if you do things reasonably well, you’re still going to be OK when you come out the other end. I’m not saying it’s not challenging, but it’s a little less scary being a little bit bigger.”

TAKEAWAYS

  • Adding lots of new pieces? Make sure they work together.
  • Information sharing is key to organizational unity.
  • There are both challenges and opportunities in a crisis. Have a plan to deal with each.