Kelly Tomkies

Friday, 30 May 2003 06:43

Celebrating community spirit

I've been thinking about how we celebrate people.

Movie stars, sports stars, music stars and even national and world business and government leaders get their 15 minutes of fame, but we are not always celebrating what's important. There are highly publicized lists: "The World's Most Beautiful People," "The Best Dressed," "The Richest," etc., and the message being sent to the public -- including our youth -- is that unless you are beautiful or rich, there's not a lot to celebrate.

Yet so often these same stars also contribute a great deal of time and money to worthwhile causes. And there are a lot of nonstars, a lot of caring people, who do the same. These people believe that a little (or a lot of) effort can make a big difference in the communities where they live.

We don't often hear about their efforts, or if we do, it's on a much smaller scale -- a paragraph on page 20 in the newspaper or the final item on the local news, overshadowed by the other events of the day.

Alex Shumate, managing partner of the Columbus office of Squire, Sanders & Dempsey, was raised on the belief that it's important to give back to the community. His community involvement began in his teens, but his story is becoming a more unusual one.

Sometimes as parents we are so overwhelmed with our day-to-day responsibilities and chores that we forget that important message. Teaching children to be civic-minded and to care about their world should begin at home, but it shouldn't end there. Maybe national media outlets should create new lists: "The 50 Stars Most Active in Giving Back," "The 50 Sports Stars Who Give The Most Time" or "The 50 People in the United States Who Give The Most To Their Community." I'd even settle for "The 50 Most Beautiful People Who Give to Their Community."

The names are a little unwieldy, but if a lot more attention were given to the fact people, celebrities and non-celebrities alike, do care and give of their money and time, maybe it would spark more people to do the same. Maybe children and teens who now look up to sports and music figures would want to become more involved.

I think it's worth a try.

Monday, 12 May 2003 11:19

Financial expertise

Whether you're trying to maximize cash flow or handle a tough tax issue, you may need the expertise of a chief financial officer (CFO).

But what if your company doesn't have the budget for a full-time person or someone with the know-how you need? The answer may be a part-time CFO, says Brad Martyn, president of Focus Business Solutions (FBS) in Westerville.

"Small and mid-sized businesses may not need a full-time person. Our company fills that need," he says.

Martyn's full- and part-time controllers and CFOs brings more than 20 years experience to the table, with most spent working for large companies.

"Our CFOs can act as a proactive financial and business adviser," says Martyn.

While CPAs offer bookkeeping services, managing a company's accounts is just part of what FBS provides clients.

"We help the business owner or executive understand how well the business is performing financially and suggest improvements," he says.

The client company's new CFO becomes part of the team, working at its facilities to be available to key personnel.

"Typically our staff is on the job about 12 to 20 hours a week," Martyn says.

FBS also offers clients access to a network of service providers, including CPAs and tax experts.

Bruce Glick, CEO of Ultryx Corp., an enterprise channel software provider, says FBS' John Loughlin has been an asset to his company.

"It was a seamless transition. There was no disruption when the former CFO left," says Glick. "We literally showed him the office and gave him a password for the system, and with nothing more than that, he took over."

Glick says FBS met Ultryx's need for financial expertise at a cost it could afford.

"It is affordable and meets our requirements," Glick says. How to reach: Focus Business Solutions, (614) 794-1500 or www.focusohio.com; Ultryx Corp., (614) 410-2020 or www.ultryx.com

Tuesday, 29 April 2003 05:25

A taxing situation

Contrary to popular belief, estate taxes are not being eliminated.

Thanks to the Economic Growth and Tax Relief Reconciliation Act, which was signed into law in June 2001, the estate tax is being phased out over the next several years and by 2010, no estate will be taxed. But unless new legislation is passed, the estate tax will return in full force in 2011.

"We believe that estate tax in some form will be in place in 2011," says Darci Congrove, director of tax and business advisory services at GBQ Partners LLC.

Congrove advises clients to start transferring assets to heirs as soon as they accumulate significant wealth.

"There are straightforward, easy things to do that people often don't," says Congrove. "It can be as simple as having a will."

According to Congrove, a common mistake is assuming your life insurance will pay estate taxes.

"Life insurance is taxable," says Congrove. "But if you have an irrevocable trust insurance, the insurance payment goes through the trust and is tax-free to the heirs."

Eileen Bower, tax attorney with accounting and consulting firm Schneider Downs, agrees that gifting as much as possible during your lifetime is advisable for protecting your wealth.

Currently, only estates of more than $1 million are taxed, and that exclusion amount increases over the next seven years. So, says Bower, the goal is to maintain an estate that meets the exclusion amount by gifting the maximum amount possible each year.

"Every year, you may give each of your heirs $11,000 with no penalty," Bower says.

In addition, says Congrove, you may give a total gift of $1 million during your lifetime or at death.

When it comes to your business, there are a number of ways to transfer interest to your heirs without transferring control.

"You can create a limited partnership," says Bower. "The limited partner cannot have control in the business, but there is a lot of flexibility to the arrangement."

For instance, you can transfer a part interest in a commercial property to an heir, which reduces your estate in two ways, says Bower.

"You can discount the value of the property, because transferring part of it decreases its marketability," she says.

Another option Bower recommends is creating, then gifting, nonvoting shares of stock in the business to your heirs. How to reach: Schneider Downs, (412) 261-3644

Tuesday, 29 April 2003 05:13

A taxing situation

Contrary to popular belief, estate taxes are not being eliminated.

Thanks to the Economic Growth and Tax Relief Reconciliation Act, which was signed into law in June 2001, the estate tax is being phased out over the next several years and by 2010, no estate will be taxed. But unless new legislation is passed, the estate tax will return in full force in 2011.

"We believe that estate tax in some form will be in place in 2011," says Darci Congrove, director of tax and business advisory services at GBQ Partners LLC.

Congrove advises clients to start transferring assets to heirs as soon as they accumulate significant wealth.

"There are straightforward, easy things to do that people often don't," says Congrove. "It can be as simple as having a will."

According to Congrove, a common mistake is assuming your life insurance will pay estate taxes.

"Life insurance is taxable," says Congrove. "But if you have an irrevocable trust insurance, the insurance payment goes through the trust and is tax-free to the heirs."

Eileen Bower, tax attorney with accounting and consulting firm Schneider Downs, agrees that gifting as much as possible during your lifetime is advisable for protecting your wealth.

Currently, only estates of more than $1 million are taxed, and that exclusion amount increases over the next seven years. So, says Bower, the goal is to maintain an estate that meets the exclusion amount by gifting the maximum amount possible each year.

"Every year, you may give each of your heirs $11,000 with no penalty," Bower says.

In addition, says Congrove, you may give a total gift of $1 million during your lifetime or at death.

When it comes to your business, there are a number of ways to transfer interest to your heirs without transferring control.

"You can create a limited partnership," says Bower. "The limited partner cannot have control in the business, but there is a lot of flexibility to the arrangement."

For instance, you can transfer a part interest in a commercial property to an heir, which reduces your estate in two ways, says Bower.

"You can discount the value of the property, because transferring part of it decreases its marketability," she says.

Another option Bower recommends is creating, then gifting, nonvoting shares of stock in the business to your heirs. How to reach: GBQ Partners, (614) 221-1120, Schneider Downs, (614) 621-4060.

Tuesday, 29 April 2003 05:08

Customized success

Columbus offers local businesses a wealth of educational opportunities for their employees. Whether it's a mini master's of business degree program through The Ohio State's Fisher College of Business or teaching English to non-English speaking employees through Columbus State Community College, the resources are many and varied.

The Online Computer Library Center Inc. (OCLC), an international nonprofit membership organization serving more than 43,000 libraries around the world, is one organization that took advantage of these opportunities. With nearly 1,200 employees, its goal is to be the No. 1 worldwide source of online information to libraries, and it earned more than $178 million in revenue in the past year.

OCLC president and CEO Jay Jordan felt the company needed a training program to meet its leadership needs, and worked with The Ohio State University's Fisher College of Business to create the company's own Center for Leadership Development.

"The Center for Leadership Development has had some anticipated and unanticipated benefits," says Jordan. "Among the anticipated benefits for the participants were improved leadership -- particularly more accountability for performance -- and increased business acumen regarding business planning, understanding OCLC's markets and the leverage points for product performance."

Joseph Marth, manager of organization development and learning for OCLC, says nearly 90 mid-level and top executives attended the five modules -- strategy and planning, marketing, organizational changes/issues, developing people and project sponsorship -- co-developed by OCLC and Fisher College experts.

"We were looking at succession and what traits our future leaders needed when we developed the training," says Marth.

OCLC not only financially backed the training, which took place in a classroom setting on site, but also tied its management incentive plan compensation to how well departments perform in these areas.

In addition to the expected results, OCLC gained some unexpected benefits.

"When we brought together managers from various levels -- managers, directors and executives from various parts of the company -- product development, research, finance, systems, marketing and sales, and from various regional and international offices -- the result was a shared and synergistic view about our organization and a realization of how critical leadership was to the successful implementation of our global strategy," Jordan says.

The results are measurable in dollars and cents.

"In addition to traditional evaluations, we also used a return on investment measured utility program," says Marth.

According to Marth, OCLC has seen a $2 million return on a $400,000 investment. The program looks at positive and negative changes in employee performance since the Center for Leadership Development started two years ago, and it has had a positive economic impact.

"Thirty-six percent of the executives that went through the program say they have a better understanding of our goals," says Marth. "And the executives evaluated the classes on average at 4.3 out of 5. That's pretty darn satisfied." How to reach: OCLC, (614) 761-5125 or www.oclc.org

Thursday, 27 February 2003 08:50

Recipe for success

Ever thought of Damon's as a great place to get a salad or a grilled panini sandwich? Probably not.

Damon's International Inc. president and CEO Shannon Foust, has led a four-year mission to change that, performing a drastic makeover on nearly every aspect of the restaurant and its offerings, and on some of the basic ways it does business.

When Foust took the reins of the $300 million company in March 1999, its concept appealed to a largely male market. The dimly lit restaurants offered mostly hearty food -- like Damon's well-known ribs and onion loaf -- and a sports bar atmosphere.

Foust admits this concept was a bit limiting.

"I felt our old business model was a barrier to our growth," he says.

After 18 years with the company, he felt the restaurant's core concept was solid, but, "that said, though, there were definitely some things that weren't right," he says.

Foust felt some modifications were in order. The result of these changes was a long overdue, head-to-toe transformation.

"Damon's was not as relevant to consumers as it is today," says Foust.

Food face-lift

One of the first changes was to the restaurant's name, from Damon's Ribs to Damon's Grill, to indicate the wider menu choices available. The logo was also changed, to one which graphically depicts the company's new emphasis on its grilled menu items.

Damon's menu was already well-grounded in grilled foods, so it wasn't straying far from its origins. It was just broadening its appeal in a market where so many other competitors also offer ribs.

"Fifteen years ago, the restaurants that served ribs made up a pretty short list," Foust says. "Today, only a couple of casual theme restaurants don't. Of course, we still have the best ribs in America."

In October 2001, Damon's introduced its revamped dinner menu, with 12 new entrees, salads, sandwiches and desserts. The restaurant strived to put a contemporary twist on its traditional comfort food offerings, introducing items including steak gorgonzola and grilled honey lime chicken salad.

The second phase of this menu makeover took place in July 2002, when the company modernizes its lunch offerings. Not only did Damon's add 14 items -- including a pulled pork quesadilla and a grilled turkey and cheese panini -- it also targeted the working population by promising lunch in 10 minutes or less.

The new items are in stark contrast to items the company eliminated -- like the more traditional prime rib, jumbo shrimp platter and pork chops -- items that were not selling well and didn't fit the new concept.

The last phase of this menu evolution was launched last month when Damon's began offering Tuscan shrimp dip, homemade soups and nightly specials.

Changing spaces

"When you walked in to Damon's, you walked into the bar," says Foust of Damon's original layout.

A great deal of square footage was dedicated to the sports bar, and, "that layout wasn't very comfortable for families," he says.

So the restaurants were redesigned to expand dining room seating and lessen the impact of the bar.

"We are, above all else, a restaurant," says Foust. "Everything else is ancillary. The main reason you come in is for the food, not to play trivia."

Foust felt the restaurant's physical appearance was dated. So under his direction, the company not only changed the division of space, it lightened the color scheme of the restaurants, down to the lighter stain on wood tables and floors, and added windows.

"We lightened and brightened the interior so we are more female-friendly," Foust says.

The biggest change was one not all of Damon's team members were enthusiastic about: an open kitchen.

"When I wanted to open the kitchen, there were some raised eyebrows," says Foust.

Concerns included the fact that kitchen staff members were not always well-groomed, and they played music and talked, not exactly the image Damon's wanted to portray. But Foust says once the kitchen was opened, the chefs shaved and wore better attire, and the music and talk were minimized.

As a matter of fact, he says, an open kitchen has offered numerous benefits.

"For one thing, the kitchen staff isn't shut away like they aren't part of the team," he says. "And they can see the tables and the people walking in the door."

That means, along with the servers, they can pick up the pace and more easily meet customer demand.

Faust also added equipment to the kitchen, which decreases customer wait time.

"When you're asking people to deliver for you, you have to provide them with the tools," he says.

All the changes to the decor and the restaurant design weren't made arbitrarily, Foust says.

"We didn't load our gun and start shooting in the air," says Foust. "We hired professionals to help us with the desicions."

Damon's also abandoned its locations in strip malls to focus solely on freestanding buildings, giving the restaurants a higher degree of visibility.

Business model makeover

Damon's transformation didn't end with the restaurants. Facing a tough, competitive labor market, Faust invested heavily in its people, developing the Learning Center, a place where Damon's employees are trained in a realistic setting.

The center, a building near the company's headquarters which is retrofitted to look like one of Damon's new restaurants, offers role-playing, videos and a full test kitchen.

"Before I took over, our training was not as professional," says Foust.

Before, the company hired promising new managers, then took them into a basement for training, primarily through textbooks.

"Today's young people learn from interaction," Foust says. "The Learning Center will provide us with more value than any other change we've made. We'll use it the next 30 years."

The company is also taking a new look at franchising.

"It comes down to return on investment," Foust says. "Franchisees in the full-service segment have a greater depth and sophistication than in the fast food market."

Franchisees usually agree to open multiple locations in a region, and Damon's has franchise agreements in the works in most of Michigan, the Philadelphia area and for its first unit in the New York City area.

A largely regional operation, Damon's geographical focus remains primarily on its existing markets -- Puerto Rico, Pennsylvania, Ohio, Minnesota, Virginia and Arizona. With the exception of Arizona, these are not necessarily hot spots for the restaurant industry, according to the National Restaurant Association's 2003 forecast. It identifies the Rocky Mountain region, which includes Arizona, as the area that will see the biggest sales growth this year.

Nevertheless, Damon's strategy includes attracting prospective franchisees by opening seed stores -- units in prime real estate locations Faust calls Main and Main -- in targeted cities like Chicago.

"We realized that if we offer high visibility and invest more money, that it pays off," he says.

A franchisee can then purchase that seed store and develop additional locations in the area. Despite the economy, Faust says Damon's plans to open 20 restaurants in 2003.

Foust says he's proud of Damon's new business model, which is the sum of all the changes made in the last four years.

"Everything we did was to change our business model," he says. "We're secure enough to say the old one didn't work."

So far so good?

Have all these changes in menu, physical plant, training and franchising strategy paid off? Foust says if sales are any indication, the answer is yes.

Total system sales have grown from $229 million in 1998 to more than $300 million in 2002. And perhaps a better indicator is a comparison of average store sales. In June 2000, average sales per freestanding store were $2.3 million; by June 2002, that had risen by $100,000 to $2.4 million.

Still, Damon's has its work cut out for it if it expects to become a major national contender and achieve its goal of doubling its size to 300 restaurants by 2008. And it will need to achieve a much higher level of sales growth.

According to Restaurants and Institutions Magazine's annual Top 400 ranking of restaurants by sales volume, even though Damon's has achieved significant sales growth, it slipped in the 2002 rankings by three places (from No. 99 in 2001 to No. 102 in 2002), while competitors like Applebee's and Outback Steakhouse rose.

To help meet its goals, Damon's recently hired former Bob Evans marketing executive Roy Getz to lead its evolving brand strategy.

"Roy will add his own personal touches," Foust says. "I intend to let him have a good time and spread his wings."

The one constant in the process will be change.

"It's a continually evolving process," says Foust. "We are constantly tweaking everything. We want to hold on to our heritage but also expand beyond it." How to reach: Damon's International Inc., (614) 442-7900 or www.damons.com

Friday, 31 January 2003 05:43

Reducing your risk

The nation's economy is fragile and uncertain, and there's a lot of confusion when it comes to low-risk investment options. But diversifying your portfolio can minimize your risk.

"There is a lot of economic uncertainty, so it is best not to put all your eggs in one basket," says Rick Jandrain, chief investment officer of equity products for Bank One Investment Advisors, a group that manages more than $155 billion in assets. "Diversification spreads the risk."

Frank Wojcik, senior portfolio manager of Fifth Third Investment Advisors, agrees.

"There are two basic keys for protecting a portfolio from a volatile stock market -- proper asset allocation between stocks, bonds and real estate, and diversification within these asset classes," he says.

Wojcik recommends a combination of 60 percent stocks and 40 percent bonds, depending on how long you have to invest before you'll need the cash from your investments.

"The shorter your time horizon, the more money you should move into fixed income assets like bonds," he says.

When it comes to stocks, Jandrain and Wojcik advise investors to include a blend of large-, mid- and small-cap stocks in their portfolios, as well as a balance between growth and value stocks. Wojcik says growth stocks do well when the economy is expanding, while value stocks perform well when the economy is slowing down. Having both in your portfolio can minimize your risk.

And don't forget to include international stocks.

Although mutual funds didn't perform as well in 2001 and 2002 as they had in previous years, they are still worth investing in instead choosing several stocks on your own, as long as they follow the diversification rule.

"Just because you have four or five funds doesn't mean you have diversification," says Jandrain. "Make sure your funds have a blend of investment styles."

If you do choose your own stocks, make sure you have at least 20, and that they pay dividends.

"Dividend paying stocks are less volatile in the long run," says Wojcik.

And again, diversify.

"One mistake people make is buying a handful of stocks all related to one industry," says Wojcik. "You should never invest more than 20 percent of your money in one industry." How to reach: Bank One Investment Advisors, (800) 480-4111 or www.onegroup.com, Fifth Third Investment Advisors, (614) 233-4429 or www.53.com

Tuesday, 26 November 2002 08:31

Animal operations

Jerry Borin has been managing daily operations at the Columbus Zoo and Aquarium for more than 15 years, if you include a seven-year stint as general manager that began in 1985.

Borin took the reins from the well-known Jack Hanna and became executive director in 1992, although he says many people aren't aware that Hanna isn't in charge anymore. But as director emeritus, Hanna is still an important part of the zoo's brand identity -- a good thing for the organization -- and Borin isn't worried about becoming the national figure that Hanna is.

"I'm just focusing on moving forward and building a better zoo," he says.

Like many zoos, the Columbus Zoo faces challenges including increasing its visitor count, recruiting a quality seasonal work force and battling Mother Nature.

With more than 500 acres, the zoo has plenty of room to develop and grow, something many zoos don't have. Borin says future development plans include an African savanna and a new Powell Road entrance.

In the meantime, he continues to do what he loves -- promote and manage the zoo.

SBN Magazine sat down with Borin to discuss the zoo and its operations.

What are your biggest operational challenges?

What we're finding is one of our biggest challenges is increasing our number of annual visitors. There is a lot of competition for people's leisure time in Columbus.

People have a lot of choices. That's why we develop new exhibits and programs, so that it is a fresh place to visit. It also pays to invest in marketing and promoting the zoo.

Periodically, it is a challenge to hire and train a large seasonal staff. During the summer, we increase our staff to 400 workers. After Labor Day, that number drops off to about 250.

How do you develop new exhibits?

When we discuss which animal exhibits we want, we first select the animals that need help in a captive situation. We also pay attention to what the public is interested in seeing, so the combination of the two criteria determines which animals are selected to be exhibited.

We have a comprehensive master plan and have identified animals and areas of the zoo we plan to develop. This allows us to organize the exhibits logically by geographical area, although animals that were available five years ago are not always available now.

Do you have adequate funding?

We have a budget of more than $1.25 million. We generate 75 percent of our revenue through earned income and the remaining 25 percent consists of the property tax levy and philanthropy and fund-raising. A large part of our budget comes from visitor admission, so that's where we focus our attention.

How do you go about hiring a seasonal staff?

We start hiring early in the year, in January and February, and we advertise at area colleges and universities. We also go to senior citizen job fairs and we do some print and radio advertising.

Each year we get a little better at recruiting, and we encourage the students to come back each year -- and that is happening more. The advantages are we have less recruiting to do, and the returning employees have already gone through the four-week training program and are familiar with our operations.

Some of the local students do continue to work part-time at the end of the season.

What are your biggest personal challenges?

Fund-raising is always a challenge, especially in this economy, and there are a lot of other organizations trying to get money. Weather can also be very influential on how well we do each summer.

We are working on ways to overcome rainy weekends and poor springs. Some of our newer facilities are designed as all-year-round exhibits, and we are working to get more exhibits under roof.

We are also working to generate more revenue through other lines of business, like as a meeting location for companies, and special events and weddings. Generating revenue through these channels lessens our dependence on normal zoo visitors.

What are the pros and cons of taking over the role of executive director from Jack Hanna?

Working with Jack has always been a lot of fun. His association with the zoo is an important part of our brand and works extremely well. But I am following a legend, so to speak, and I fully realized that Jack is unique and there is no way to match his career, the way he has become a national celebrity.

Many people still feel that Jack is still director of the zoo, and that's fine. Whether it's new exhibits or Jack's association -- whatever works for the organization is what is most important. And Jack's such a nice guy. It's a very easy situation to handle.

Are there plans to expand the zoo?

Over the last few years we have acquired some additional real estate, and today we have 580 acres for current and future use. Only 250 of those acres have been developed.

Having that room for expansion is exciting. We won't be landlocked any time soon, and there aren't a lot of zoos in the country in that situation, so we are fortunate.

Some of the projects we are discussing are moving the entrance to Powell Road and building a large African savanna exhibit. That exhibit will give the animals a lot of room to roam and create more realistic exhibits of mixed species.

We will provide some means of transportation through the exhibits. Some exhibits we are planning are open islands of Indonesian orangutans, gibbons and birds, and the following year we are planning an Australian exhibit with koalas and kangaroos within the boundaries of the existing zoo.

The landscaping and horticulture that we have planted in the past years is now reaching maturity, and the zoo has never looked better. With the 580 acres, we are now -- with the exception of a few state zoos -- the largest municipal zoo in the nation, areawise.

Tuesday, 26 November 2002 08:28

Constructing profits

In the steel industry, there are two types of players -- those that produce steel and those that process it.

Columbus-based Worthington Industries is a metal processor; it takes steel and turns it into flat-rolled sheets that other companies use to make their products. And despite an ongoing crisis in the steel industry, Worthington Industries has managed to stay profitable, largely due its renewed focus on its core competencies.

"In the mid '90s, we sold the companies that were unrelated to our core focus," says Worthington chairman and CEO John P. McConnell, who took the helm of the $2 billion company from his father, John H. McConnell, in 1996, after working his way through the ranks for more than 20 years. "Those companies produced a very different product stream involving different groups of buyers."

The company sold Worthington Custom Plastics and Buckeye Metal Castings, and in their place, purchased companies more closely related to the flat-rolled steel processing business. For example, in 1997, it acquired the Gerstenslager Co. of Wooster, which produces aftermarket body panels from flat-rolled sheets of metal for the automotive industry.

To diversify revenue, Worthington also added Worthington Cylinders, which makes and sells pressure cylinders. But no other division comes close to contributing to the bottom line as much as steel processing does.

"Steel processing remains our top revenue maker," says McConnell.

An untapped market

Although the gap between the revenue produced by steel processing compared to that provided by other divisions is large, one division acquired by Worthington Industries in 1996 is closing in.

When Worthington purchased Dietrich Metal Framing in Pittsburgh, it was a leading producer of metal framing products for the commercial and residential construction industries, making floor joists, roof trusses and other metal parts. Now, it is Worthington's second largest income producer, McConnell says.

While the steel produced at Worthington has been used as a building material in the construction of commercial facilities for years, it has only recently begun to enter the residential market.

"Ninety-five percent of our steel framing products are used by commercial construction," says McConnell. "We are working on developing a residential market, a market that is 10 times larger than the commercial market and virtually untapped."

McConnell says the company is also targeting the residential market because commercial construction is beginning to slow.

So far, the primary markets for residential steel framing have been states prone to natural disasters including hurricanes and earthquakes.

"In Hawaii, building code calls for steel framing," McConnell says.

In those markets, Dietrich is building market share.

"We are working to break down the barriers in the rest of the country," says McConnell. "There was a philosophy out there that it was purely a price issue. No one would buy steel until it was priced under wood."

Last summer, Worthington partnered with Centex Homes to provide the builder with steel floors for homes it was building in the Columbus market over the next two years. McConnell says the partnership was a good match for both companies because Centex is new to the area, and adding steel floors to its higher-end home model gave it a competitive edge.

Since the agreement was announced, McConnell says sales have been good for Centex, and home buyers have been selecting steel flooring as an option in other models, too.

In addition to added strength, McConnell says there are other benefits to using steel floors and roof trusses.

"The frames are pre-engineered, and there is no waste of material," he says. "The floor has tabs where it is screwed into the joists, so it saves a lot of time."

And when it comes to cost, McConnell says steel is now competitive with wood.

"They are both commodity products, so the prices change," he says. "But our interior light steel stud is cost-competitive with wood."

So why haven't steel frames taken the residential construction industry by storm? McConnell says it is a matter of re-educating both builders and inspectors.

"We had problems because construction workers weren't used to putting the floors together," he says. "And there was no one there from our company to help them learn how to use it. Building inspectors didn't know what they were inspecting."

Worthington is solving these problems by training field personnel to assist crews and inspectors on site.

Steeling itself for a more secure future

While McConnell doesn't foresee steel framing overtaking steel processing as Worthington's primary product, he says there's no doubt it will be an important part of the company's future growth.

"We are staying focused and will continue to develop our current markets," he says. "We are building relationships and staying in touch with large national builders."

In the meantime, it will continue to work with Centex and other interested builders locally.

"We are looking forward to next season with Centex, and we'd love to work with others like M/I or Dominion," McConnell says.

Howard Burnett, a research analyst with Salomon Smith Barney, says Worthington Industries' reputation will help leverage its position in this new market.

"Worthington has the reputation of being the best in processed steel, and that will help them be a big factor in the residential construction market," says Burnett.

However he cautions that this market holds as many risks as it does potential profits.

"If looking at a national market, the company needs to look at delivery costs," Burnett says. "The cost of delivery to other places in the United States could be prohibitive."

Burnett says some economists predict the housing construction market has reached its peak. And there are a number of competitors after the same market.

However, McConnell says so far, Worthington has acquired the greatest share of the residential construction steel market.

"But we don't just consider our competitors other steel companies, we also consider wood and masonry competitors, too," says McConnell.

Yet the advantages of steel frames could outweigh concerns about cost and delivery.

"Steel frames are good alternatives in areas where there is environmental concern about the overuse of lumber and in areas where termites are a problem," says Burnett.

McConnell says Worthington Industries is not in the business of trying to predict the future, and it is keeping its options open.

"In the next five years or longer, we could drive down different avenues we don't even have on the radar screen yet, as long as we see synergy with what we're doing," he says. "We might not even have one of our businesses. Will processed steel still be our primary focus in 10 years? I don't know.

"We are interested in generating additional wealth, so we'll focus on being better than anyone else." How to reach: Worthington Industries, (614) 438-3210 or www.worthingtonindustries.com; Salomon Smith Barney, (614) 460-2714.

Thursday, 31 October 2002 10:37

To catch a thief

Most employees are honest and would never consider stealing from your company. But others will steal from your firm and every other one they work for.

How can you be sure an employee isn't embezzling from you?

Often it's the employee you'd least suspect who is the culprit, says Heinz Ickert, president of Columbus-based Ickert & Co. Ickert's firm employs CPAs trained in forensic accounting and is part of a group of companies that form an entity called Fraud Alliance. Weidner Associates, private investigators, and computer forensic expert CompuSloop complete the Alliance.

"Most frequently what is being stolen is cash," says Ickert.

And the vast majority of incidents involve fraudulent disbursements.

"An accounting person creates a fictitious employee or vendor and pockets the paycheck or payment," he says.

Companies like those involved with Fraud Alliance can conduct an audit of a firm's records and question suspicious transactions.

"A CPA doing a regular audit is not looking for this type of problem," says Ickert.

Glen Morrow, president of Morrow-Mackey Inc. in Heath, says that thanks to an employee tip, his company was able to recover 100 percent of the cash that was misappropriated.

"Glen Morrow was smart," says Ickert. "His first action was to call his attorney, who called me."

Once Ickert completed the audit, he confronted the employees responsible for the embezzlement. Both confessed, and they turned over the funds.

Unfortunately, this is not a typical result.

"In a civil suit against the perpetrator, you can typically regain about a third of the money stolen," says Ickert.

To prevent theft at your firm, Ickert recommends keeping accounting functions separate, or incorporating checks and balances.

"Do comparison checks like Social Security numbers of employees and tax Ids or addresses of vendors," he says. "And make it known you have a zero tolerance theft policy."

And, says Ickert, if you suspect an employee, do not confront the person or fire him or her, especially if you don't have evidence. Instead, hire an investigator to determine whether the person is indeed embezzling.

How to reach: Fraud Alliance, (614) 464-3343