Dustin S. Klein
Over the past several months, thousands of new jobs have been created, and the number of CEOs and executives who say they're hiring or spending money again continues to climb.
Whatever happens in November's election for president, it's a pretty sure bet that, come 2005, the U.S. economy will be healthy once again. It's imperative, then, to begin turning your sights from today's corporate survival to tomorrow's potential opportunities and begin to develop strategies to expand.
There are numerous issues to consider. Here are two.
Now is the time to reward vendors and customers who stuck with you and worked with you through the tough times. That doesn't need to translate into a new hard cost just when your company's finally staring at black ink again.
Think simple. Consider a one-time or period-of-time discount. Knocking off 10 percent or even 20 percent on your goods and/or services for a month, a shipment or a designated period can go a long way toward strengthening your business relationship and thanking the vendor for its continued support.
Conversely, if you felt taken advantage of by a stronger business partner that seized the opportunity to collect higher fees, increase interest payments or demand lower rates, it's time to repay the favor and seek out more favorable relationships with more ethical partners.
Look to the future
Dust off the obsolete strategic plan you commissioned during the go-go '90s. Then toss it in the trash can and start from scratch.
Unless you were one of the very few businesses that benefited from the battered economy -- such as mortgage brokers, who reaped the rewards of miniscule interest rates and those flooding their offices to refinance -- odds are your business operates drastically differently now than it did in 2001.
You're probably running a leaner operation, with fewer employees and tighter fiscal controls. And, depending on your industry, your prospective customer base may have changed or even shrunk.
Either way, you'll need to take a hard look at your company, its resources and its competencies, and consider pursuing new opportunities you hadn't dreamed of three years ago.
"We've reached an inflection point as we've begun to emerge from the trauma of the last two to three years," Weinberg says. "I've had to make some hard decisions."
Hawk, which manufactures friction materials used in brakes, clutches and transmissions, as well as powdered metals used in numerous industrial applications, recently moved from the New York Stock Exchange to the American Stock Exchange and announced a strategic repositioning action plan. Hawk will move its Brook Park production facility out of state, pulling 200 jobs from the region, and sell the company's Motor and Tex Racing business units.
It's all been done with one goal in mind, says Weinberg.
"These moves will position Hawk to put our full force and effort into carrying out the long-term strategic initiatives of our Friction Products and Precision Components segments. Each are leaders in their field and will be the key to reinvigorated growth as the economy improves."
Weinberg is so confident that Hawk's two-unit focus is the best solution that in the fourth quarter of 2003, he decided to take pre-tax write-downs of $6.3 million connected with the closure of its Brook Park facility and the discontinued operations of the company's motor segment, difficult decisions that caused the company to report a loss rather than a profit to end the year.
With 1,700 employees worldwide, Hawk reported year-end revenue of $202.6 million, a 9 percent increase over 2002. Smart Business sat down with Weinberg to discuss survival during a manufacturing recession, innovation and how to make the hard choices.
It's been a tough economic climate for manufacturers. How has Hawk weathered the storm?
We're at the tail end of a very difficult three-year period, and as I look at where we've been and what we're doing, it's an interesting juncture. We had great growth during the '90s -- in the double digits -- and we responded well after 9/11.
During the late '90s, we perceived that the boom was not going to continue forever, so we were fairly cautious about our acquisitions. We never paid more than five or six times EBITDA dollar. And, we had a $50 million unused bank line going into 2000. The plan was, when things got difficult for the rest of the world, to have some liquidity.
Then 9/11 happened. The management team responded very fast. As the economy sunk lower, everybody in management, 35 people, took a salary cut. I went off payroll completely for six months. It made a good statement of leadership, and we came through relatively unscathed, where a lot of industrial manufacturers were hurting.
We managed our balance sheet very aggressively, watching our working capital closely. And we repositioned our liabilities on our balance sheet and did an exchange on our high-interest notes. We also watched our projects and tried not to take on more projects than we had the working capital to do.
Was this the impetus for the company's recently announced focus on key core parts of the business -- friction products and powdered metals?
We had to get stuff behind us, and that meant addressing some of the divisions that don't have the strength that they should. So we announced we were selling our Hawk Motor segment, which makes components for motors, and we're examining the alternatives for Tex Racing, which makes transmissions for NASCAR race cars. That will probably be sold as well. That puts the focus on Friction Products and Powdered Metals, which is now called Hawk Precision Components Group (HPCG).
We have a broader mandate now because we have another technology in HPCG, metal injection molding, where you use metal particles and make parts quicker with high precision, such as making parts for pacemakers.
It's a very good business, growing as fast as any of our divisions. And, the markets it serves are attractive -- medical and high-tech. They also have strong positions worldwide. We're on Boeing airplanes, sell to Parker Hannifin and are installed on military aircraft.
What does that do for your R&D?
We are at the cutting edge of friction technology. The company just produced a brake material for mining trucks that will last four times longer than the existing material, and we're starting shipments to Caterpillar now. On the powdered metal side, we've been making many technological advancements.
It's a much more efficient process because you're forming the product out of powder without having to machine or mold it. We're also getting more involved with the aftermarket. We're already in the fleet business and in street performance because we manufacture braking material for auto racing.
The good news is that our brand name is getting recognized.
You moved to the AMEX at the beginning of the year. A lot of small and mid-cap public companies are going private because of the cost of remaining public. Did you consider this option as well?
Yes, we considered it. But we rejected it because we didn't see the right way to pull it off right now. I can understand why some companies are doing it; being public has gotten very expensive. Also, I've been adding to my ownership position within the company the last few years, so that's a dedication of the stock.
The AMEX has been a good place for us -- there are many companies there our size. And, our stock is doing well for a couple reasons. One, the recession is coming to an end. Second, small cap stocks are the last to benefit from a recovery. And finally, we come up on a lot of profiles (people's lists) because we have strong management positions of ownership. That shows we care about shareholder value.
Also, we're making hard decisions that people can appreciate. Our revenues are heading in the right direction, we're winning customers and building market share. Put those together and you can see why we're starting to expand into the aftermarket business. There's been a bit of pain in the short run but we're moving past that.
Talk about the hard choices you've made, such as moving the Brook Park facility, which will take 200 jobs out of Northeast Ohio.
One of our core values is integrity. You can't B.S. yourself. I talk to our people all the time about being realistic and candid, so when there's a problem, I face it and try to solve it.
There were tough choices, but our corporate culture made it easier. One of them was to focus on the two larger divisions. The upside is we have greater opportunities. The other is we had to take writeoffs of $5.1 million. That was a hard decision. I would have rather been announcing that we're buying 20 companies.
The other thing was that we announced we're looking at moving that plant in Brook Park. It's particularly hard for me because I live in and like Cleveland. But I realize that we've got to do what's in the best interest of the company. If we can locate ourselves in an area where we have business incentives and a climate to be successful, we need to do that.
We've pretty much made the decision that the plant will be moved. We're talking to Oklahoma and have a letter of intent with them (nonbinding). I wish Ohio would replicate the business climate that's been developed in some other states. I don't like to close a plant. But there will be opportunities for people to apply to work in Oklahoma.
The good news is that I have a management team proven by fire. The guys we've got now are battle hardened and know how to work through difficult issues. How to reach: Hawk Corp., (216) 861-3553
Commercials are abundant in the middle of the night and I am, as Laura often tells me, an advertising snob. These days, I rarely pay attention to the drivel that's played between the short breaths of programming, not because I don't care about what's being promoted, but because advertisers have stopped telling me what they're peddling.
If you write or produce TV commercials for your clients, do me a favor. Don't beat around the bush. Don't imply the sales pitch. And stop trying to wow me with stunning visuals or half-naked people -- I ain't buying it. Just get to the point.
How many vaguely happy people dancing in a field with a tagline like "Enervate -- see your doctor today" do I have to watch before a drug company finally explains what disorder the drug treats? It is strangely humorous, though, that the only ads that get straight to the point sell allergy medication, male enhancement products or erectile dysfunction drugs.
Next, stop pitching mascots that make absolutely no sense, like the Arby's oven mitt. The restaurant's brain trust must know that the company's logo is a cowboy hat. Whatever happened to creative ads that at least offered mascots close to the mark (though not exactly politically correct) such as the talking Mexican Chihuahua who wanted Taco Bell? It was silly, but at least I could associate Taco Bell with Mexican food.
And finally, quit overpromising and underdelivering. If you produce beer commercials, listen up. This means you. I've been to college -- and numerous bars before I got married -- and let me assure you that pounding cheap American swill with your friends doesn't lead to a gaggle of supermodels suddenly joining your private soiree.
However, if it did, I can guarantee you that the world would be a much stranger -- and less sober -- place. And that would be truth in advertising.
Beyond game rooms in the office and pets wandering around the workplace, new-age entrepreneurs simply weren't considered hip or cutting-edge unless they showed up for meetings with potential investors clad in polo shirts, khaki pants and even wrap-around sunglasses.
Business suits, if worn at all, were reserved for important shareholder or board meetings or used as that finishing touch for closing deals with large, traditional industry clients or old-line investment banking houses that looked down upon the laid-back style.
That look eventually seeped into the traditional workplace and supplanted the dress code as we knew it. No longer were men required to wear suits and ties or female employees restricted from arriving in pants.
Now, several years after the dot-com meltdown, casual dress remains alive and well in the workplace. A Smart Business/Employers Resource Council survey of Northeast Ohio businesses found that 77 percent of companies allow business casual dress every day. Another 22 percent permit it once a week, and 1 percent extend the practice on a seasonal basis.
But with a rocky economy lingering, suits are finding their way back into the day-to-day wardrobes of senior executives and top sales representatives looking to recapture that professional look.
"People need to dress up again," says David Cotugno, president of davide cotugno executive tailors. "They need to have an edge over the competition. Those dot-com companies were dressing down a lot, and now they're gone. A lot of people have had to say, 'Let's get back to basics,' and that's what they've been doing.
"If executives are going in for meetings, they have to look better than the other guys vying for the contract. Three or four years ago, the person who came in wearing khakis and a polo shirt was OK. And a lot of guys in sales have always dressed for whomever they see. If it's a high-level exec, they'd better wear a suit."
This attitude shift, which Cotugno first noticed in Europe a year-and-a-half ago, may not apply to your employees' dress. The casual dress revolution of the '90s may simply have left an indelible imprint upon the American workplace that could be here to stay for non-senior level executives.
"I think it's going to be a compromise between where it was prior to 1999 and the dress down," Cotugno says. "It could be some sort of dress casual -- a nice sport coat, pair of pants and maybe a polo shirt underneath.
"For the most part, the law firms and brokerage firms have gone back to dressing up. If you go to New York or Chicago, you're seeing a lot of more of it on the streets."
Here in Northeast Ohio, the trend is returning, albeit more slowly than in other regions.
"Walk around on the streets during lunch time," Cotugno says. "You'll see more people dressed up. That's a good indicator." How to reach: DGC Executive Tailors and Shirtmakers, (440) 526-8860
Dressed for success
There's an old adage that says clothes make the man.
In business, what you wear can say a lot about your level of professionalism, as well as the image you want to project for clients, investors, peers and employees. David Cotugno, president of davide cotugno executive tailors, offers these tips for ensuring your look conveys the right message.
* Make sure your suit fits properly. This is crucial to any professional look. Many people don't take the time or expend the energy to buy a suit and have it made to fit.
"Take it to a tailor to get fixed the right way," Cotugno says. "A lot of department stores don't have the right tailors on premises."
If it's a custom-made suit, it will be tailored at the store where you purchase it.
* Create a packaged look. If you look at a picture on the wall, the suit is like the frame, Cotugno says, and the shirt and tie are the actual picture.
"If either one of those are off, it will upset the whole look of the outfit," he says. "For example, if you have a nice-looking suit on and have a cheaper shirt and tie with it, it will upset the balance. So make sure everything matches correctly."
Also, consider two to three ties and two to three shirts to go with each suit, and don't forget the belts, socks and shoes. And make sure your belts match your shoes.
* Get the most bang for your buck. Buying a suit doesn't have to cost as much as a European vacation.
"A lot of people are under the misconception that all custom-made suits cost several thousand dollars," Cotugno says. "You can get nice ones for prices starting around $700."
And if you're on a budget, you can find suits for $200 to $300 at places like the Men's Wearhouse. But if you can afford it, Cotugno suggests buying two good suits in the $700 range and coordinating multiple shirts and ties for several different looks.
"It changes the look and feel," he says. "A lot of times, you have six suits in your wardrobe and only wear two or three regularly. You're not getting the most out of your clothes."
Over the past decade, Roulston has led the dramatic transformation of Fairport Asset Management, his well-established, family-owned brokerage firm, into a comprehensive investment and wealth management company. Along the way, he's shifted investment strategies, reworked the way the company was staffed with experts, consummated a merger of equals and, in a year when the market as measured by the Standard & Poor's 500 declined by more than 22 percent, increased assets under management and advisement to in excess of $1.5 billion.
"We brought in $120 million in new assets last year from existing and new clients," Roulston says. "Part of that success was strategic -- from mergers and additional people -- and part of it was organic growth through new business," says Roulston.
A large piece of Fairport's growth was due to an explosion in the firm's wealth management business; Roulston says the number of clients in this area grew by 60 percent last year.
"In these roller coaster markets, a lot of people were taking a step back and looking for a personal CFO as a sounding board," he says.
One example is Fairport's strategic alliance with Charles Schwab Co., which tapped Roulston's firm as one of its AdvisorNetwork partners. The program, launched in April 2002, refers Schwab clients who are looking for investment advice to local money managers.
During the eight months of 2002 that the program was in effect, Fairport snared 35 percent of the market share for the number of Schwab clients referrals in Northeast Ohio and 60 percent market share for the number of asset dollars referred to Fairport's money managers.
Roulston views this as third-party validation that his firm does things the right way.
"Basically, it was a crummy year for investors and the investment industry," says Roulston. "It was painful. But on a relative business measurement, we knocked the cover off the ball." How to reach: Fairport Asset Mangement, (216) 431-3000
Ups to the Cleveland Public Library and OverDrive. The partnership, which will result in offering library patrons electronic books via a digital catalog, could be a big boost for the fledgling e-book industry and provide the region with a true pacesetting venture.
(Ups) to OAI. The Ohio Aerospace Institute hired William Seelbach as interim president to replace Michael Salkind, who left last year. Seelbach, a venture capitalist, former president of Brush Engineered Materials and well-known business mind, is a natural fit for an organization that facilitates partnerships among public, private and government organizations in the name of furthering traditional industry.
(Ups) to Cleveland's business and government leaders. The two groups stopped bickering over the proposed location of a new convention center to focus on a Cuyahoga County 4.5-mill health and human services levy that voters will decide on May 6. While there's no proof a convention center would spark economic activity downtown, the levy's passage is crucial to the city's ability to support much-needed public services.
(Ups) to University Circle Inc. for hiring Terri Hamilton Brown as its president to lead the efforts to develop University Circle. Brown, who is leaving a job at Cleveland Metro Housing Authority, where she picked up the pieces after numerous scandals, is the first woman president to serve UCI since its founding in 1957.
As a life-long Clevelander, I've never been shy about sharing my opinion about what I think the region's future should be. So the opportunity to network with my peers to discuss issues of interest was appealing.
At my first meeting in February, about 20 of us met with Dave Abbott, the new head of the George Gund Foundation to hear his views about Cleveland and the regional economy, as well as pick his brain without the restraints that accompany a public forum.
As a journalist, I frequently meet with business leaders one-on-one for in-depth conversations. I also regularly attend large-scale conferences and events with speakers who present their views to a captive -- and sometimes interactive -- audience.
But it is rare to be part of a conversation involving 20 or fewer people, engaging in a free-flowing roundtable-type exchange.
Abbott offered a short presentation. We then launched into a thoughtful and provocative 45-minute dialogue. About a dozen people joined in, each passionate about Cleveland and the region.
The questions and comments displayed a sense of commitment and concern about the area, and a desire to define and understand the roles each person could play in its future.
Nearly every executive I speak with networks with their peers in some way. Some enjoy networking events, such as cocktail receptions, lunches or after-hours programs. Others opt for country club memberships or groups of executives who get together and trade war stories about their businesses.
Then there are those who belong to social or professional associations, sit on nonprofit boards or get involved with their communities, churches, mosques or temples, and get their satisfaction from a sense of commitment, learning, giving and belonging.
The key is to find -- and join -- the right groups, rather than associate with every group that opens its doors to you. Your time is too precious to waste.
UP to Akustica Inc.'s $2.25 million in venture funding that follows a $2.25 million round in October by private investors. As private investors have been saying, their money attracts attention from the VCs.
DOWN to the seven-year high of the jobless rate reported for December. The one bright spot was a slight rise in manufacturing employment, to 132,300 jobs.
UP to the sale of Sengstacke Enterprises Inc., the parent company of the New Pittsburgh Courier, to Real Times Inc. of Chicago. A promised infusion of capital and resources into the storied Pittsburgh newspaper that's been a stalwart in the African American community will no doubt raise its stature and ensure its survival in a competitive media market.
UP to Hartman Products LP, Product Soft and Atritech Inc., winners in the first round of the Pittsburgh Technology Council's Enterprize competition. Each received a $2,000 award.
DOWN to Sony Technology Center-Pittsburgh's layoff of approximately 1,000 workers because of slow holiday sales and fat inventories at its retail customers' facilities. Sony's role as a key economic generator in Western Pennsylvania makes the furloughs that much more chilling.
UP to Kmart's decision to close only two of its stores in the Pittsburgh region. Stores in Duquesne and Richland Township will be shuttered, but about 20 area Kmart stores will remain open.
UP to the new David L. Lawrence Convention Center's strong record of bookings for 2003. Even with a shortage of hotel space, the center has scheduled 27 meetings for the year, beating its own projections. That's up from the 19 the center booked in 2000, the last year the former convention facility was fully operational.
UP to Scozio Supermarkets Group's plan to open its fourth Festival Foods store at a former PharMor location in McIntyre Square.
They are the main reason I spend too much money on a phone package that includes caller ID, calling name display and an unlisted phone number. So it should come as little surprise that 10 consecutive days of calls from a technology provider that didn't get the "stop calling me" message set me off.
This particular ISP provider hoped to acquire my business after my DSL provider suddenly went belly up and left me with less than a month to replace its service. During each call, I politely informed the telemarketer that I had already chosen a different provider and that I wanted them to take me off their prospect list.
So who exactly are these clueless wonders?
Without directly naming names, the company's Web site touts it as the ISP solution for an impatient world. It further has earned a national reputation for outstanding customer service.
According to J.D. Power and Associates, this ISP ranks highest in customer satisfaction among dial-up ISPs and is tied in the ranking for highest customer satisfaction among high-speed ISPs.
Unfortunately, despite its boast of superior customer service and its ability to link Internet users across the Earth, it took a full 10 days for a handful of the company's telemarketing reps to get the message and take me off the phone list.
It's a sad commentary on what anyone who understands database management already knows. If you're working with a dirty database that isn't kept up-to-date, you run the risk of alienating prospects or clients who are forced to tell you the same information time after time.
Worse, you could end up painted the fool in the column of some irate editor who happens to be on the other end of the phone and doesn't like telemarketers to begin with.