Industrial evolution Featured

8:00pm EDT September 25, 2008

As chairman and CEO of Allied Mineral Products Inc., Jon K. Tabor has watched sales expand tenfold in two decades.

But that growth didn’t come overnight, and it didn’t come easily. In that time, he’s had to learn the value of getting the right people around him, trusting those people and preparing them for change.

His favorite example might be from when he bought Allied in 1980. Tabor had moved from sales manager all the way up to chairman throughout a decade with the company, and a slim window to buy the producer of monolithic refractories came up.

“It was a trying time — it happened right before the Christmas holidays, and we didn’t have a lot of time to do it,” Tabor says. “As I recall, there was a tax law change at the time, and the owner wanted to take advantage of tax savings. We had about a month to call the banks and to buy them out.”

To manage the critical opportunity, Tabor leaned on one of his rules — getting the right help.

“I got an adviser who had worked for a bank in a high position and who owned his own business,” he recalls “He knew how banks worked — when you need something from them, they’re very tough to deal with, and when you don’t need something from them, they’re very easy to deal with.”

The adviser, who now sits on the company’s board of directors, knew exactly what the banks would end up demanding and giving in on. The resulting 10-year agreement was paid off in five years, proof positive that good advisers are key.

“I’d never dealt with a bank like that before — I probably would have agreed to more of what the bank wanted in the end than what I had to give them,” he says. “As I look back on it, I don’t know what I would have done without (that adviser).”

Today, Tabor is constantly thinking about how to keep instilling the principles that got him through the buyout to everyone at the $109 million company. To fully explain how he got the company there, he wouldn’t mind taking you through the last few decades at Allied to show you how to try new things and how to get the right people around you and involved in your evolution.

Get the pieces in place for change

In 1980, Allied’s business was at a domestic dead end. The industry was shrinking, and heavy manufacturing in general was getting the cold shoulder from state and federal governments.

“In order to grow and prosper, we had to look beyond our border and into new markets,” Tabor says. “In business, you can’t stand still. If you stand still, you go backward. What really helped us was that the electric induction furnace, which was becoming the major melting method for iron, copper and steel. That was where our products were being used.

“It helped us to grow even though the market was shrinking on us — we hit it just right.”

Confronted with less than dazzling numbers, Tabor knew something had to give — over time, if not right away — so he led a change in focus.

“We knew we wanted to grow the domestic business, not only in foundry but also into big steel, big aluminum and also the industrial markets,” he says. “Another thing we wanted to do was go international in the same areas. We wanted to begin making refractory shapes and wanted to add those to our product line. The other thing, we wanted to hire the right people to support those efforts. We did not have the people at the time to do the things we needed to do in order to grow the business.”

So to grow domestic business, Tabor hired people familiar with big steel, big aluminum and also industrial, which includes cement, power and wood-burning markets. Basically, he hired people who already understood where he was taking the company. Buying out several companies gave Allied a different line of products for foundries as well as a line of products specifically for aluminum, and an expansion at the Columbus plant gave them product flexibility.

With an eye on going international, Allied brought on board a specialist to concentrate on markets they’d never been in before. An extravagance? No, an investment.

“In China — where do we put the plant? He did the market research work, and we ended up in Tianjin,” Tabor says. “We’ve never looked back, and we’re on the third expansion of the new plant.”

After anticipating its foreign growth capabilities, the company kept an open enough mind to put in a plant in China that handles Asian customers, one in Holland that handles Europe, one in Brownsville that handles Mexico and South America, and one in South Africa that handles Africa.

The resulting worldwide wingspan brought customers from 85 countries around the globe.

Tabor says the importance of infusing new blood can’t be overlooked.

“You hire people; you try to locate them through contacts in the industry,” he says. “You get to realize there are people out there we could hire, many who had great talents and were not being adequately used at the company they were with. We were able to hire the right people to get us into those businesses.”

Having a team on hand to take regular, planned, deliberate looks at the company’s future path also has become an essential part of Allied’s business plan. In order to fully anticipate Allied’s foreign growth, Tabor had to have people who were specifically meant to look beyond the company’s comfortable borders.

“There’s the problem of recognizing opportunities, so we have an opportunity group,” he says. “We have a group of people who meet and talk about various opportunities that present themselves to the company and whether we have the wherewithal or the talent — the people — to go after it. If we do, we usually go after it.”

The opportunity group includes the vice president of sales and marketing, the vice president of corporate development, the vice president of research and development, the manager of research, the vice president of new business groups, and a few others.

They meet about every six weeks for a morning, and the length of the meeting depends on how much they have to discuss and if anything new has come up.

“We’ve become a very opportunistic company” Tabor says. “We have all these salesmen out in the field who see opportunities. Maybe we should look at this — or not. If you take off the blinders, there are more opportunities than you realize over a period of years. We’ve gone from status quo to a growth orientation.”

Find and keep good people

When the company made the decision to go into China, the move took foresight, but it also met with some initial resistance.

“Early on, there was some resistance to change, there was a fear of losing jobs if we started a manufacturing plant outside of Columbus, there was a fear of the risk of going into China,” Tabor says. “We explained why we were doing it. Nobody stood up and said hooray. We had the non-believers, the believers and the fence-sitters. There were a lot of good reasons not to go to China at that time. But if you looked at China, with their 1.3 billion people and everyone who wants cars and homes and microwaves, there was going to be a market there someday, and that proved true.”

Once the China expansion was successful, with no effect on jobs at the Columbus operation, all former resistance dissipated.

“It was like smoke; it just went away. Success relieves fear, no question about it,” Tabor says, noting that international affiliates contribute half of the company’s profits now.

Beyond success, fending off employee resistance to a change also can come through showing the value people have by letting them have their own slice of pie. Allied has had an ESOP, an employee stock ownership plan, since the successful expansion. He recommends the move for companies looking for commitment and quality from its workers.

There’s a 12.5 percent contribution, based on the employee’s pay, that’s paid by the company.

“Being an owner certainly affects the attitude and work ethic in a positive way,” Tabor says. “When you have a program like this, where everyone shares in the fruits of the corporation, how can you go wrong? As long as you’re making the right moves as the president, and the stock doesn’t go down, you get 100 percent backing by the employees.”

Tabor’s business model calls for a lot of personal contact.

“We do a lot of traveling, visiting our manufacturing plants overseas and our customers,” he says. “We do interviews with all our employees every six months. We have an open-door policy, and we interview everyone twice a year from janitors to vice presidents. We talk about their goals, what they’ve accomplished, problems, complaints — just having a conversation is about 50 percent of it, so you get to know people who are here at the company.”

That Allied continues to grow is a result of Tabor’s resolution to keep to his leadership principles and make sure he has the right people in the right markets. While growth to $109 million is impressive in any business, it’s particularly noteworthy in Tabor’s business, where the number of foundries has dropped from 6,500 to 2,000 since 1980. As a result, he is more interested than ever in rewarding his people for their efforts.

“Our company has had amazing growth in sales and profits, and we continue to have excellent growth opportunities,” he says. “Whoever said you win with people was right on. The only thing I can add to that is that people around the world want the same thing. They want to improve their lot in life — these are the people you want working for you at your company anywhere in the world.”

HOW TO REACH: Allied Mineral Products Inc., (614) 876-0244 or www.alliedmin.com