Ray Marano

Monday, 22 July 2002 09:42

Coupling to compete

They’re not quite mergers, but they can put your business in a close working relationship with another company, especially when both are doing business with a third party.

They can be lucrative for both partners. Or they can sour quickly.

Call them alliances or strategic partnerships or strategic alliances or even strategic alliance partnerships, but they’re designed to be symbiotic, allowing two or more companies to work together so that both can benefit in ways they may not be able to alone.

Chud Fuellgraf sums up what he looks for in an alliance this way: “I’m looking for something where one and one equal three.”

He should know. Fuellgraf, president of Fuellgraf Electric, a 130-employee, full-service electrical contractor based in Butler, thinks he’s found that kind of bargain in a relationship with LLI Technologies and Construction Inc., a Pittsburgh consulting engineering and construction company.

Fuellgraf and LLI had worked on many of the same projects, so when it came time to form a strategic alliance partnership, both parties were able to see what the other would bring to the table. LLI had amassed expertise in designing telecommunications networks, which it is leveraging in its new alliance with Fuellgraf to complete advanced communications projects for which speed to market is critical. In effect, a it’s relationship in which the partners can land more work and do it better as a team than either could independently.

While their forms vary, alliances require a few defining characteristics. Most essential are trust and communication between the partners and the capabilities of both parties benefiting from the union.

Scott Craven, CEO of Off the Page, an e-business consulting and implementation firm, has alliances with five partners. What distinguishes alliances from other casual business relationships, he says, is cooperative marketing efforts, cost sharing and exchange of market intelligence and research — things you might shy away from in a more casual relationship with a vendor or client.

And while your alliance partner might be in a business that’s related to yours, says Craven, you don’t want to find yourself competing for the same business. Instead, you want partners which can offer you something you don’t already have, and which need what you have to offer.

Staying in touch

LLI and Fuellgraf decided that, although modern communications technology gives both the ability to stay in touch electronically, they needed a common location. So the alliance took office space for its employees next to LLI’s headquarters on Penn Avenue.

“In the relationship between the partners in the fledgling stage, it’s supercritical that people are able to communicate,” says Michael Mason, president of LLI.

Both parties have a weekly coordination meeting, supplemented by distance communication via telephone and e-mail.

Even if you can’t be in the same location, staying in touch is essential.

“Ongoing communication is absolutely necessary,” says John Macy, vice president of General Management Technologies, which is among Off the Page’s partners.

Tell your employees — and keep the information flowing. The idea of a strategic alliance and what it means may be harder to grasp than the idea of a merger or acquisition, so employees will have lots of questions. LLI and Fuellgraf held a series of meetings to let their workers know what the alliance meant for them.

In the Fuellgraf–LLI venture, LLI transferred a dozen employees to Fuellgraf and some LLI employees transferred became Fuellgraf personnel. Those kinds of changes can raise concerns, so they have to be carefully and fully explained.

And, as Fuellgraf points out, the relationship will raise questions on a day-to-day basis about procedural issues, so the partners must establish an ongoing process of explaining what needs to be done in a given circumstance in which the other partner might be involved. Whereas one vendor had been used in the past, for instance, the alliance might make it practical to use another to reduce costs or eliminate overlap.

Doing your homework

Alliances can break down quickly if the partners aren’t compatible, so due diligence is recommended. You’d better have sound business reasons to join forces, and the two cultures have to be compatible.

When Off the Page was looking for a consulting firm to partner with, it investigated several before settling on General Management Technologies. Craven says a deciding factor for Off the Page was that General Management Technologies’ process for evaluating potential alliances was nearly identical to its own, indicating that the companies shared common business philosophies.

However, striking a relationship with a partner that does something related to what you do but doesn’t interfere with your business can be tricky. Craven says technology companies sometimes strike alliances with other technology firms simply because it seems like a good idea, only to find that the relationship doesn’t make sense. A good strategy allows you to collectively offer something to your clients that has value but doesn’t require a huge investment or the building of an organization from scratch.

General Management Technologies, for instance, can help a client form a strategy, then bring along Off the Page to handle the client’s e-business needs. Off the Page can tap General Management Technologies’ strategic consulting talent to make sure the e-business solution is compatible with the client’s overall goals.

“We believe that having end-to-end capability is important in the e-business strategy arena,” says Macy. “It’s a cost-effective way to ramp up a technology and bring those skills to our clients.”

Last but not least, owners of all kinds of firms agree that a concrete, everything-in-writing commitment to work together is an absolute necessity. LLI and Fuellgraf put teeth in their alliance by agreeing on a joint business plan and engaging in a long-range planning process. In the case of General Management Technologies and Off The Page, the partners say the level of business activity that each generates for the other is the indicator of whether each is committed.

Says General Management Technologies’ Macy: “One of the ways I look for commitment in these kinds of relationships is, ‘Are we getting leads and prospects and vice versa?’”

How to reach: LLI/Fuellgraf, (412) 338-0700; General Management Technologies, (412) 279-3501; Off the Page, (412) 654-3335

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.

Monday, 22 July 2002 09:39

On the Mark

When it became apparent that Florine Mark had achieved success in her early days as a Weight Watchers franchisee, some people attributed it to good luck. She didn't necessarily disagree with the assessment.

"They used to say, 'Well, you're very lucky,' and I used to say, 'Yeah, I'm very, very lucky, but I work very hard at being lucky,'" says Mark, president and CEO of the WW Group, the largest franchisee of Weight Watchers International. "I think that's what everybody has to do, you have to work hard and you have to -- I believe I'm lucky, I really believe I'm lucky. So it happens. If you believe it strongly enough, it will happen."

If her operating principle is valid, Mark has worked quite hard. Her company, located in Farmington Mills, Mich., spans 10 states, including Pennsylvania, as well as Mexico and Ontario. Across the WW Group, approximately 100,000 people regularly attend 2,500 meetings held at more than 1,000 locations. In Greater Pittsburgh alone, 10,000 people meet in several hundred sessions at more than 90 locations.

Ironically, Mark turned to Weight Watchers in desperation as a final attempt to shed excess pounds.

"I had lost 50 pounds nine times before with diet pills," Mark recounts, and she eventually overdosed on amphetamines. "My family doctor said, 'I'm not going to be responsible for your life if you take any more diet pills,' and I didn't know how I was going to lose weight, because I never felt I could do it myself."

Mark joined Weight Watchers in New York in 1966, dropped 50 pounds and gained the idea for a business venture. She started her franchise in Detroit with a single meeting.

In this month's One on One, Mark, who was recently a guest speaker at The Business Show in Monroeville, talks about what it takes to be successful in business, why she and Weight Watchers continue to prosper -- and why she's got a dream job.

SBN: Why has Weight Watchers been successful?

Florine Mark: We believe in what we say; we walk our talk. We don't give pills, we don't sell food, we don't make you pay in advance for anything. Everyone that works with us believes in our product and our service. We have a big staff of advisory boards of the finest doctors, psychologists, exercise physiologists, psychiatrists, M.D.s, D.O.s, constantly researching the best ways to lose weight, the best ways to exercise. We've changed out diets several times, four or five times over the last 30 years. We always want to be up to date.

You seem to be very enthusiastic about your business. How does Weight Watchers hold your interest after all these years?

Weight control is a very passionate, fabulous field because you see only your successes. Your failures seem to drop out and don't come back, so you'll see among the people who are there, your customers -- we call them our members -- people who are happy, who are doing something about themselves, are getting healthier, who are getting motivated to do better in life. It's a very passionate, very wonderful business.

The product we sell is self-respect. When people ask me, 'What do you sell?' it's not losing weight. We sell self-respect. When you see an 11-year-old kid that's lost 30 pounds and feels good about himself and is playing soccer and baseball, how do you put a price on that?

When you see a man that comes in and says, 'After I lost 70 pounds, I found out I had a rare form of breast cancer in men, and the doctor said that if I hadn't lost the weight, I'd have been dead in a year,' how do you put a price on that? It's been the most wonderful business ever. I could never think of changing, I could never think of doing anything else.

What kinds of risks did you have to take when you were starting out with Weight Watchers?

Well, I had no money. I had small children and a lot of responsibilities. I could have gone out and gotten another job that would have paid a steady salary. I didn't know if this was going to pay off as far as the money was concerned, but every day is taking a risk, whatever you do. But I have no regrets.

In fact, I'm more passionate about what I do today than I was, say, 25 years ago. But it's easier now. Then, I was the bookkeeper, I was the controller, I was the advertising person, I was the marketing person, I was the leader, I was the receptionist, you know, I did everything myself. Now, I have a full staff of people all over the country from Mexico to parts of Canada and the Midwest and to the East. And it's very exciting.

What might you have done if you hadn't become a Weight Watchers franchisee?

I wanted to be a movie star, I wanted to do television on-air, I wanted to do radio. I like to write, I wanted to do public relations. I think that's what I would have done, but I think marketing is what I love the most. And I do all of that now. I'm on TV. I write for our newspaper, with a circulation of 350,000; I'm very involved in that. So all of my dreams of what I wanted to be -- I'm writing a book -- all are happening.

Who were your mentors?

At the very beginning, there were no women around, so my mentors were my CPA and my lawyer. What I did, even though I had no money, was to find the finest law firm and the finest CPA firm, and I told these guys that I had no money but I was going to be successful. I must have convinced them because they treated me the same way then as they treat me today, and today I'm their largest woman client. Then, I didn't have 500 bucks.

What are the factors that have helped you to become a success as a Weight Watchers franchisee?

I believed in the product. I had a fire in my belly, a passion in my heart. I recognized that success was, first, what you want, and then what you're willing to give up to get it. I've always done strategic planning. I've always had goals. I've always written things down; when I get up, I'm always writing things down. I believe in people, I believe in my gut.

My goal was always to hire people that were better and smarter than I was and let them do the job; I've always done that. When I find out that it's not working, I have to make changes. But I've been pretty right for a very long time. I have a lot of people that have worked for me for 25 years.

How is running Weight Watchers like operating any other business?

I think in most businesses today, if you want to be honest about it, the intellectual problems can be solved very easily. You hire the best CPA or the best engineer, you buy the best equipment, whatever. The real problems are people problems, and that's where a lot of people in business seem to go astray because they don't keep their eye on the thing that's most important -- that's the people who work for them, and their customers.

And if you pay 100 percent attention to that and pay other people to do the financial and the other stuff, you will have a good business. If the people who work for you, if their morale is good and they like what they're doing, you're going to have customers.

What occupies most of your time?

The morale of my staff is 50 percent of my time, and 50 percent of my time is everything and anything to do with bringing members into classes. I'm involved in the marketing department, I'm involved in the advertising, I'm involved in the training of the staff and the retraining of the staff.

What advice do you give to entrepreneurs?

Be very passionate about your product; believe in it. If you don't believe in it, forget it. Take the risk. Keep your eye on the people that work for you and the ones who are buying your product. Write plans. My plans change all the time, but at least I write them. I put them down on paper; I know where I'm going. I trust other people. I manage my team and I certainly have the final say, but I can't ever remember having to use that authority. It can't be right for me and not right for you, and it can't be right for you and wrong for me, so we have to sit there and talk about it and communicate until it's right for both of us. You have to be able to give. You can't be egotistical, you can't be a monarch -- the only authority in your business. First of all, it won't be any fun, people won't respect you for it, and I don't think you'll do as well.

Ray Marano (rmarano@sbnnet.com) is associated editor of SBN.

Monday, 22 July 2002 09:38

Firing your customers

The opportunity to supply major components for a 52-story high-rise in the middle of Manhattan seems like the kind of project that most companies might jump at the chance to snag.

That's not necessarily so, as far as Sandy Ussia and Laura Huch are concerned. The sisters, owners of Cranberry Township-based Castcon-Stone Inc., a $3 million revenue fabricator of precast concrete stairs and architectural products, have discovered that basing their business relationships on anything but predictable profitability is worth avoiding.

Castcon-Stone is doing work for the aforementioned New York City project, but Huch, Castcon-Stone's president, emphasizes that she had to first be assured that her company could do the job on its own terms.

"They would have very much liked to have done it on their terms," says Huch of the client.

What allows Castcon-Stone to wield such clout? Huch acknowledges that a surging economy has produced strong demand for its products, keeping the business growing at a brisk clip. But a more deeply held principle is involved as well.

"Even if we weren't busy, it would still be my position," says Huch.

Huch and Ussia have learned that having a lot of customers, even a lot who place big orders, isn't necessarily a sure path to solid profitability. For Castcon-Stone, that has meant taking a hard and comprehensive look at the company's costs -- and its customers.

While Huch and Ussia assumed ownership of Castcon-Stone just this year from their father, both have worked in the 46-year-old business for more than a decade. About five years ago, they got the feeling that something wasn't quite right with the company's growth efforts. They were working hard and doing business, but their profits weren't reflecting their efforts.

"I was having a lot of problems with our profit margins fluctuating so much," says Huch.

The partners decided they needed to analyze two general aspects of their business -- their product offerings and their customer roster -- and how the two combine to produce profits.

They realized it would be no easy task. The variables proved complex and sometimes difficult to quantify. They knew that the cost of projects didn't just involve time and materials, but other factors as well, including the terms and conditions of payment and the level of hand-holding they might have to do with a client to complete a project.

And they suspected that some of their long-time customers would be among the poor performers.

They also knew that some of their products weren't bringing enough profit. They sensed that if they were selling low-profit products to customers who were stretching out payment schedules, their margins likely would shrink even further.

Ussia, who joined the company in 1990 after spending several years teaching college-level computer and accounting classes, had upgraded the company's information systems, giving Castcon-Stone a good handle on its costs. That allowed them to figure out what their profit is on each type of product and to have detailed records of all the projects they had performed the previous five years.

They also looked at how terms and conditions of payment affected their profitability with each customer.

Says Huch: "Certain customers, no matter what we were selling them, weren't profitable."

In some cases, the payment terms they had arranged required Castcon-Stone to draw on its line of credit or dip into cash reserves, something that increased its costs.

After they crunched the numbers, they concluded that about 15 percent of their customers were producing little profit for the company because they weren't purchasing profitable products or they operated under terms that cut into Castcon-Stone's margins. In some cases, it was both. The answer, they decided, was to increase prices on their low-profit products and adjust the terms and conditions of their contracts.

The number crunching was relatively easy. Huch and Ussia say they realized they would have to approach customers with some adjustments in pricing and terms. For some, it was a case of "sticker shock." Some accepted the new arrangements, others objected. In the end, they lost about half of the bottom 15 percent as customers.

Bracing for the change

As Huch and Ussia learned, making changes in the fundamental ways you do business isn't always easy. Customers are going to resist change, especially if it might cost them more.

"Certainly, you're going to have long-term customers saying, 'What's going on here?'" says Huch.

Even so, having hard data and a solid rationale makes it easier for customers to accept.

She also points out that the changes can alter the way you look at your company. Cutting back on some lines of business and increasing others can have dramatic internal effects, the sisters acknowledge.

The process, which Huch says needs to be ongoing, has yielded positive results. While some customers went elsewhere, the company made up for the losses by focusing sales and marketing efforts on more profitable customers and products. Sales last year increased 25 percent, and are expected to increase by the same amount this year. Even more important, profitability is up -- a fact that makes the effort worth it.

Says Ussia, "It's not a good feeling to have busted your butt for a whole year and only made 1 percent." How to reach: Castcon-Stone, (724) 776-1777

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.

Monday, 22 July 2002 09:37

Fisher Scientific's surplus solution

You have a large company with a commensurately large and complex problem to solve. It's obvious that technology is the solution, right?

Well, sure it is. But identifying just the right technology, how to acquire it and the best way to do it is the real trick to pulling it off.

Fisher Scientific has tackled such a problem with EinsteinsGarage, an online auction site that went live earlier this year with 12,000 items and $8 million in starting inventory. The solution seems simple enough, but the company's experience demonstrates that simple doesn't necessarily translate into easy.

Fisher Scientific, a $2.5 billion manufacturer and distributor of scientific instruments, equipment and related products to labs, schools and universities, was experiencing growing difficulty in dealing with the large quantities of surplus, returned and damaged products it had to liquidate.

Here's a glimpse at the scope of the problem: Fisher Scientific handles products manufactured in its own facilities as well as 3,200 independent suppliers and thousands of other producers. With warehouses spread out geographically, 260,000 products and a quarter of a million customers, the company had a logistical albatross on its hands.

Excess inventory, after all, ties up space, capital and human resources to hold, handle and liquidate it. In short, it's a pain and it can be expensive.

That problem became acutely apparent a few years ago when Fisher Scientific streamlined its distribution system and cut its warehousing facilities by a third, down to 20. It then squeezed its surplus inventory into fewer buildings, making the problem even more glaring.

Enter Rob Carskadden, now 33, and EinsteinsGarage's general manager. Carskadden had a penchant for being assigned to solve quirky and troublesome problems since joining the company in 1996. He had been looking at the issue of duplication throughout the company's operations, and was eventually handed the challenge of solving the surplus inventory problem.

Fisher Scientific had, in the past, tried to deal with the problem in the traditional way, with on-premises auctions at the warehouses. But the auctioneers knew little about the products, the company didn't get the attendance it had hoped and Fisher Scientific still had to handle fulfillment.

"It was an utter failure," says Carskadden.

Doing it in house

Carskadden concluded that no one knew Fisher Scientific's business better than the company itself, so why not handle it on its own? Most of the rest of the pieces were in place -- employees had the product knowledge and they knew how to purchase, market and distribute. Creating a marketplace for the products, it seemed, was the obvious choice.

Carskadden began by consolidating the surplus into a single location, the company's Raleigh, N.C., facility. Then he came up with a business plan for an e-commerce site, put on a 20-minute PowerPoint presentation to the company's top brass and got the OK to implement the concept.

"They said, 'Hey, run with it,'" Carskadden recalls.

He stumbled at first, however. Carskadden tried to use off-the-shelf auction software provided by a vendor, but found that he had to go to the added expense of paying software integrators to link it with Fisher Scientific's existing information technology. That led to the decision to use an applications service provider, or ASP, to set up, maintain and host the site.

Why an ASP?

As EinsteinsGarage discovered, using an ASP may be the wise route for any company considering an e-commerce solution, says Michelangelo Celli, director of marketing for CommerBuilder Inc., a Pittsburgh-based ASP.

While large companies may have the internal information technology resources to do the job in house, many, nonetheless, are choosing to use an ASP because of the shortage of information technology talent and the technological barriers. Mid-sized and small companies, says Celli, simply can't do it themselves.

But simply choosing an ASP is no guarantee of success, Celli warns. Unlike selecting an Internet service provider, the decision to use a particular ASP is not easily or inexpensively undone.

"When you choose an ASP, you need to understand that you're making a long-term investment," says Celli. "You're picking a partner. It's expensive to move after you've set up your business on their applications."

The EinsteinsGarage site is up and running, and while it did a modest $120,000 in sales in its first few weeks of operation, Carskadden has good reason to believe that revenue will grow substantially. The Winterberry Group, a market researcher that focuses on e-commerce, forecasts that the so-called "e-surplus" market will grow from $7.8 billion in 1999 to $93.3 billion in 2002.

Fisher Scientific has on its e-commerce site 90,000 registered users, a group that EinsteinsGarage plans to contact by permission-based e-mail. Additionally, Fisher Scientific in June acquired PSS World Medical, Inc., a leading specialty marketer and distributor of medical products and a potential source of additional surplus products.

The scope of EinsteinsGarage has expanded considerably since it was conceived. Other companies can put their own online sites within EinsteinsGarage and it has added calibration and repair services to its offerings, as well as product locating capabilities. It can help purchasers identify the best way to transport a purchase, and, in some instances, arrange to have some kinds of equipment donated to charity.

In the end, Fisher Scientific's executives asked themselves what they did well and what they wanted to accomplish, then identified someone to help them achieve their goal.

"No one knows our products and services better than we do," Carskadden says. "But I didn't want to have to manage the technology." How to reach: EinsteinsGarage, www.einsteinsgarage.com; Fisher Scientific, www.fishersci.com; CommerBuilder, www.commerbuilder.com; The Winterberry Group, www.winterberrygroup.com

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.

Monday, 22 July 2002 09:34

The $15,000 phone card

On Thanksgiving Day 1998, Michael Solomon seemed to have little to be thankful for.

The prepaid long-distance phone card business he launched as a college student had suddenly hit the wall, and he was faced with 35 wholesale customers which had sold his cards to hundreds of users.

Solomon is not unlike many young entrepreneurs who see an idea and go on a tear with it. Quick to take advantage of a hot new idea, he leapt before he looked carefully -- and paid dearly for his impetuousness.

Fortunately, he was able to recover from his losses, restart his prepaid long-distance service and launch an Internet service provider company that targets business customers. Steel City Telecom now offers Internet access to about 130 business customers, in addition to its long-distance services.

A promising market

Eager to take advantage of the emerging prepaid long-distance card business, Solomon launched Steel City Telecom in the mid-1990s while still a student at Robert Morris College. He figured he could build a viable business by selling the cards to wholesalers, who, in turn, would sell them to operators of high-traffic retail locations like convenience stores, newsstands, even halfway houses and penal institutions.

The industry was in its infancy, and Solomon saw a market that was going nowhere but up, and fast.

He had worked as a bartender, a telephone solicitor and a delivery driver for a restaurant operator, but he saw an opportunity to launch his own business in the emerging prepaid long-distance business. He located a company in Miami that would allow him to sell prepaid cards for access to its long-distance service, which it provided through a long-distance carrier.

Solomon beat the pavement and sold the cards to his target market.

But just before Thanksgiving 1998, the prepaid business turned into a disastrous house of cards for him. The company went belly up, leaving hundreds of unsatisfied customers that couldn't use their cards. Solomon was in a bind. He wanted to stay in the prepaid long-distance business because, he says, he believed that it had great potential.

But he knew he couldn't unless he made good on his promises. He had to either provide the service he promised or pay back the money to holders of the worthless cards.

"It was bloody," says Solomon.

It turned out to be $15,000 worth of blood. Solomon tried to contact his supplier, he says, but couldn't get a straight answer. Ultimately, he discovered it had gotten behind in its payments to the long-distance carrier. So he stopped payment on checks to the company, but the losses mounted.

"To be put out of business by someone else -- I didn't think that was an option at all," says Solomon.

He borrowed money from family and friends to pay off the useless cards and buy his own long distance switching equipment so he wouldn't be dependent on third parties for the service. The move means Steel City Telecom has more control over the service and can reap bigger profits.

But in Solomon's mind, the company wouldn't have been able to take that step unless he had made good on the worthless long-distance cards.

"If you don't, in the future, no one's going to believe what you say," says Solomon.

He acknowledges that, in retrospect, he should have done more due diligence before agreeing to sell services on the promise that his vendor would be able to continue to provide them.

Worth the risk?

Getting into business arrangements that rely on the services of one supplier is risky, but sometimes necessary and not entirely avoidable, says Louis Plung, partner with Louis Plung & Co., a downtown accounting and business consulting firm.

Solomon's situation isn't all that unusual, it turns out.

"Particularly when you're starting out, you have to take some business risks," says Plung.

He suggests due diligence be undertaken to mitigate the risks you might face when engaging a supplier or vendor. Informal checks can be done with other customers of the company, or business owners can hire a firm to check on the prospective supplier.

Dun & Bradstreet is probably the best-known firm that researches businesses and provides information on their creditworthiness and other data, but several others offer the service as well. And the Internet makes it easier than ever to track down information that can help you make a smart decision.

Nonetheless, Plung says business owners always face a degree of risk when fulfillment of their business obligations hinges on the ability or will of a third party to deliver.

Says Plung: "Even then, when you do all the due diligence, there are no guarantees." How to reach: Steel City Telecom, www.steelcitytelecom.com or (412) 209-0065; Louis Plung & Co., www.louisplung.com or (412) 281-8771

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN.

Monday, 22 July 2002 09:34

Sales from the crypt

What do the banking and cemetery industries have in common? If you said both have vaults, you're right. And both have a safekeeping role.

Beyond those attributes, it might take a while to figure out a connection.

But PWCampbell saw a link between the industries that made perfect sense to the 90-year-old construction company. It has entered the cemetery sector in a partnership with a Canadian company that introduced a new method for constructing the concrete crypts used in mausoleums.

PWCampbell has built its business substantially on design and construction work for financial institutions, including commercial banks, savings and loans and credit unions and, more recently, for health care clients. Its specialization has allowed it to carve a niche that has provided significant repeat and referral business in a 13-state area for the RIDC Park-based company.

So it was natural, say its owners, to seek out a specialty field in which to expand its business.

"It's a niche market, and one of the things that's been good for us is not to go after something that's glamorous, but something that's good repeat business," says Jim Campbell, the construction company's CEO. "Both of these niches are relationship oriented, and that's what we've been good at."

PWCampbell has teamed with Royal Building Systems, a Woodbridge, Ontario, manufacturer, to develop an extruded PVC plastic product, Plastiform, that is assembled for use as a concrete form and remains in place as an integral part of the construction. The assembly of the plastic parts, which Campbell describes as similar to putting together Legos, produces a crypt that is superior in fit and function to the conventional poured or precast concrete products commonly used in mausoleums.

PWCampbell has completed two projects for the St. Joseph Cemetery in Monroe, Mich.

Securing a strong reputation in the mausoleum industry would provide opportunities for repeat business for obvious reasons, but as PWCampbell officials quickly learned, the barriers to entry are formidable. In the relationship-oriented industry, operators tend to do business with the same circle of vendors and service providers over a long period of time and are slow to switch to alternatives.

"Cemetery people as a rule are fairly conservative and are not anxious to try something new out of the gate," says Campbell.

It's no wonder. Mausoleums are substantial commitments for cemeteries and big-ticket projects, often running in the millions of dollars. Once built, construction features are virtually impossible to alter.

"We provide a product that that has to be maintained for generations," says David Shipper, president of the 6,000-member International Cemetery and Funeral Association.

With that in mind, cemetery managers usually opt for the safe choice when it comes to crypt construction, as a wrong decision could bankrupt a small cemetery or cost the executive of a large operation his or her job.

Playing on their strengths

Campbell and his brother, John Campbell, the company's president, believe they can overcome the barriers and make the cemetery business a mainstay by playing on their strengths.

They have demonstrated their commitment to the business by staying in touch with the industry through trade shows and personal contact. Competitors and others in the close-knit industry were skeptical when PWCampbell showed its wares at trade shows and industry events, but now, the Campbells say, the skeptics are starting to show curiosity about their business.

"In order to gain access to the market, you've got to get yourself known," Shipper says.

The most successful companies in the industry, he points out, are typically those that have mounted strong marketing campaigns.

To get the business launched, PWCampbell hired two people to run the mausoleum business, both of whom have considerable experience in the industry. While the Campbells are experienced in the construction business, they knew they needed expertise in the cemetery industry.

"It was almost like a law firm that does corporate work and wants to do litigation," explains John Campbell. "We went out and bought individuals, by putting them on the payroll, who understand the division."

Gaining a cost advantage

There may be one other factor working in PWCampbell's favor. The cost of building the traditional pour-in-place crypt and the scarcity of labor could tip the advantage to systems like Plastiform, which requires less skilled labor to build.

The cost of construction for the Plastiform system is about the same as for poured crypts, but the Campbells believe that, with time and experience, they will be able to cut their costs.

"We believe that, in the future, as we learn more and get more efficient at it, it will be less expensive than pour-in-place," says Jim Campbell.

That will be a critical factor, says Shipper. Cost plays a central role for cemetery operators. If a company can demonstrate a significant cost advantage with a comparable product, he says, it will be competitive.

And finally, since little succeeds like success in any business, getting a project under its belt was essential to PWCampbell's marketing efforts. With a completed project and a satisfied customer, it has a demonstration site it can use to sell to prospective clients. Selling to once-skeptical prospects will be much easier, say the Campbells, with a real-world example to show.

Says Jim Campbell: "If we can secure three or four more projects next year ... it does appear as if it will snowball. Once one or two people buy into it, it does appear as if it will be what's accepted as the best way to do it." How to reach: PW Campbell, www.pwcampbell.com; International Cemetery and Funeral Association, www.icfa.org

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN Pittsburgh.

Monday, 22 July 2002 09:34


All right, call me crazy. It's not that I love grocery shopping, it's just that I don't dread it as much as most people do.

That might seem doubly incredible to people who know that I spent nearly a quarter of a century working in supermarkets. Maybe it's because I can enjoy a kind of academic interest in the business now that I don't have to worry about whether there's enough bread on the shelf or milk in the cooler.

Besides, I like to squeeze the tomatoes and sift through the apples.

Until August, Turner Dairy in Penn Hills was a third-generation family-owned business well known locally as one of the few dairies that still offered home delivery service -- something that's become a bit of an anachronism in recent years. Turner Dairy finally gave up home delivery, saying it just doesn't pay for itself, even at almost a buck a gallon premium over the going retail price. Still, 1,200 of its customers were willing to pay extra for the convenience of having milk delivered to their doorstep.

Oddly enough, Turner is getting out of home delivery just as venture capitalists and dot-com entrepreneurs are pouring millions of dollars into home delivery services. Those investors are betting big money that consumers in big enough numbers are going to be eager enough to avoid supermarket checkouts to turn to the likes of Peapod and ShopLink.

Home delivery of groceries, I'm convinced, will catch on. It won't take away all of the business from bricks-and-mortar locations, but it will become a substantial part of the food business. The convenience of it will simply make it an irresistible choice for consumers.

And the companies that will be most successful at it will not be the whiz-bang dot-coms, at least not the ones with lots of Internet knowledge but scant understanding of grocery shoppers. Who will be the ones to figure out how to make this work? The supermarket operators, that's who.

There's evidence that the conventional retailers have an inkling that it's going to take hold. Dutch grocery giant Royal Ahold has poured $73 million into Peapod, of Lake Zurich, Ill., to take a 51 percent stake in the dot-com delivery company.

Analysts take a dim view of the prospects of the home delivery business, citing the high cost of operation, particularly labor, as a barrier to making it profitable. What they don't see, however, is that in both the so-called old and new economies, barriers are often opportunities in disguise.

Automated picking systems could ease the labor cost problem. The transportation logistics field is revolutionizing the conveyance of freight, utilizing sophisticated computer software to route commodities between points at increasingly efficient levels. No doubt the same technology can be applied to the grocery shopping process.

Advances in packaging technology will overcome spoilage issues. And developments in agriculture will bring the day when every head of lettuce or cut of meat is virtually identical, making the quality of those perishables more predictable.

Then there's the convenience factor. With all of the other activities that busy people are trying to pack into their days, a few bucks in exchange for avoiding the hassle of the supermarket might be a welcome trade-off. Under the right circumstances, even I might be tempted to enter a few keystrokes instead of driving to the store.

But I'll probably miss squeezing the tomatoes.

During the day, Ray Marano (rmarano@sbnnet.com) is associate editor of SBN Pittsburgh. On his off hours, though, you may find him in the produce department -- squeezing tomatoes -- at a supermarket near you. We're not sure why.

Monday, 22 July 2002 09:33

Disabling disabilities

When Jeff Hadburg's eyesight deteriorated to the point where it became difficult to do his job, he easily could have found himself out of work.

Instead, Hadburg's employer, Highmark Inc., found out what could be done to accommodate his disability and keep him on the job in his position as a customer service representative, a job he had held for 14 years at the health insurance company.

But Highmark isn't simply being a benevolent employer; it is looking out for its own interests by enabling Hadburg and other employees with disabilities to continue to work. The tightest job market in three decades is encouraging companies to find innovative ways to attract employees and keep them.

"Quite frankly, it just made good business sense," says Elaine Gedman, director of corporate work force initiatives for Highmark, of the concerted effort it has made to keep employees like Hadburg on the job. "The unemployment rate is so low that finding good employees is a challenge for any organization."

In Hadburg's case, macular edema, a condition that makes it difficult to see small print and contrast on computer screens, threatened to prevent him from doing his job. In his position, Hadburg spends about 75 percent of his time at a computer screen. Through a process that involved consultation with his physician and an agency that helps individuals with vision impairments, Highmark fitted Hadburg's computer with ZoomText, a computer software package that magnifies text on-screen.

Had Highmark not been able to accommodate him, says Hadburg, "I probably would have gone on to some kind of permanent disability program." In that scenario, Highmark would have lost a valued, experienced employee and Hadburg would have lost a job that he enjoys.

Gedman says that achieving an accommodation is not always that simple. It sometimes takes patience and a coordination of efforts by the employer, the employee and other consultants. The effort is usually worth it, she says, because it often engenders a strong loyalty to the company.

For Highmark, compliance with the Americans With Disabilities Act, passed 10 years ago and implemented in 1992, means access to a wider pool of employees to fill positions. The company long ago eliminated physical barriers for disabled workers; its focus in more recent years has been to help employees overcome less obvious obstacles that may prevent them from performing at their peak.

As Gedman points out, compliance is much less expensive when compared to the costs of recruitment and retention, lost productivity and the loss of business that could result if Highmark can't maintain its staffing levels.

Companywide, says Gedman, Highmark has about 70 employees for whom some kind of accommodation has been implemented. That doesn't include those with disabilities that don't impede their ability to do their jobs, such as a wheelchair-bound person, for whom accessibility to buildings and facilities exists. Fifth Avenue Place and the adjoining Penn Avenue Place, where Highmark has its offices, are both accessible.

Controlling costs

In some cases, says Gedman, agencies that advocate for individuals with certain kinds of disabilities will provide special equipment for them to do their jobs.

In others, they will work with employers to achieve a solution that works for both employer and employee. Most of the agencies, she says, are skilled at finding creative solutions that take into consideration the cost to the employer.

In one instance, an employee needed to have her legs elevated off the floor while she worked. The simple solution: a cardboard carton used to package computer paper put to use as a footrest. The cost: nothing.

Finally, Gedman emphasizes, providing accommodations isn't simply about complying with the law or about lowered expectations for employees who need some modification to their work environment to perform their jobs.

"It's not about lowering the bar," says Gedman. "It's about business, and it's about the bottom line." How to reach: Highmark Inc., www.highmark.com

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.

Monday, 22 July 2002 09:33

Budget chic

The headquarters of Web hosting provider pair Networks Inc. has the earmarks of cutting-edge industrial-look design, with plenty of exposed ductwork and electrical conduit, an angular metal sculpture clock and plasma video screens in the reception area.

Not unlike the offices of many companies in high-technology industries, pair Networks' 12,000-square-foot complex flouts the design of conventional office spaces. And, as with a lot of tech offices, it seems as if the owners must have spent a bundle to get the sleek utilitarian look that has become nearly de rigueur in New Economy companies.

"I wanted it to be a reference to our corporate identity," says Nancy Kumpfmiller, a principal in the company that she and her husband, Kevin Martin, a former research systems programmer at Carnegie Mellon University, founded in 1995 in a 600-square-foot office.

But the company's new offices, while sleek and modern, weren't the biggest expense for pair Networks' headquarters. The real money was packed into the on-site data center -- and for good reason.

The owners say their company hosts 100,000 Web sites but few visitors at its facility. With security and technological redundancies being the highest concerns for clients, the offices aren't used extensively for courting new business or schmoozing customers. For pair Networks, the design of its River Park Commons offices on the South Side in the former Gimbels warehouse revolves around the data center.

A close look at the design details reveals that pair Networks achieved its striking look without breaking the bank. In fact, the idea from the beginning was to achieve a comfortable, inspiring workspace for its 25 employees without spending a fortune. The company's corporate colors, blue and gold, cover large areas of the walls and architectural features.

Kumpfmiller nixed a proposal for linoleum floors and opted instead for retaining the existing concrete floors in most of the space. The rectangular panels that detail many of the walls are inexpensive medium-density fiberboard. Fluorescent light fixtures hang low over the workspaces, and flat, white walls provide soft reflected light.

Common areas are lighted using institutional fixtures bolted to metal tracks suspended from the ceiling on round steel-bar stock. And employees are encouraged to personalize their workspaces to suit their tastes and make themselves comfortable.

Perhaps most indicative of the blurring of the line between work and play that today's information age workers are so comfortable with is the electronic game machine that stands in the corner of the conference room. Even Kumpfmiller's original vision for pair Network's offices reflects a clearing of the barriers between work and personal time that younger workers in the tech industries are demanding.

Says Kumpfmiller: "I wanted it to be almost to the point of looking like a club you would see in the Strip District." How to reach: pair Networks, www.pair.com

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.

Monday, 22 July 2002 09:33

A design to bank on

It is hard to believe that just a few years ago, the Pennsylvania National Bank building was in danger of falling to the wrecking ball. Today, the handsome structure anchors a prominent intersection in the city's resurgent Lawrenceville community.

But since its original owner folded during the Great Depression, the building has housed a succession of short-term tenants with little regard for preservation. In the 15 years before it underwent its lifesaving restoration, the building was vacant, serving mainly as "a retirement village for pigeons," says Luke Desmone, CEO of Desmone & Associates Architects, the architectural firm that now calls it home.

Despite the dilapidated condition of the building, Desmone & Associates teamed with the Lawrenceville Development Corp. in 1995 for a $600,000 project to resurrect the structure. Early next year, it will take over the entire building, as Lawrenceville Development moves into another building that is undergoing renewal.

The building presented a number of opportunities for Desmone. It offered a chance to move from its less-than-ideal quarters in Point Breeze. It could provide a showcase for the firm's restoration practice, which accounts for between 60 percent and 70 percent of its business. It had a large, open space to promote teamwork and creativity. Finally, its design and orientation, with 30-foot ceilings and tall windows, allow natural light to illuminate the 3,800-square-foot space.

The firm's employees had hands-on involvement in the project from the beginning. For instance, Jimmy DeCecco, a senior architect, designed and built the furniture.

Says Desmone: "We're looking for the challenging projects."

Ultimately, the Pennsylvania National Bank building is something of a bargain for the architectural firm.

Says Desmone: "No one could afford in today's market to recreate this building." How to reach: Desmone & Associates, www.desmone.com

Ray Marano (rmarano@sbnnet.com) is associate editor of SBN magazine.