But by the time Schwartz was promoted to president and CEO in August 2002, Asyst had gone plummeting down the mountain it had scaled.
The next fiscal year, net sales dropped 63 percent and profits evaporated. Asyst finished fiscal 2002 with a $151.3 million net loss. After falling so heavily and so quickly, Schwartz needed to evaluate everything the company was doing. He looked closely at what Asyst had done over the last couple of years and what the industry had done during that same time period to catch up.
“We were really on the outside looking in at a business we had created in the ’90s,” Schwartz says. “We dominated a space we created, and when the industry moved ... our competitors had caught up, the markets had moved beyond where we were capable to deliver, and we really were without a product portfolio to offer into the market we had created.”
Asyst had become a leader focused on systems that used 200 millimeter wafers in the production of semiconductors, but after the 2001 downturn, the market had shifted to 300 millimeter wafers because it makes manufacturing chips cheaper and uses less resources. Many customers wanted the new 300mm systems, but Asyst hadn’t moved with this trend.
Instead it had made some acquisitions to improve its manufacturing processes with the older 200mm technology and bought 35 acres of land in Silicon Valley, anticipating a need for expanded facilities.
In failing to talk with and listen to customers to meet their needs, the company’s competition had surged ahead, trampling Asyst in the process.
Schwartz started the comeback by examining the company’s strengths and weaknesses so he could find a way to make the business a leader again.
What he found was the company was better at designing and supporting products than it was at actually manufacturing them.
“We never got a premium from the customer because we were the ones who built the product, but we got evaluated, scored and selected because we designed it, supported it in the field and absolutely assured performance,” Schwartz says.
With this realization, he outsourced manufacturing and divested the company of 17 North American manufacturing sites and sold some of the companies and the land that Asyst had previously purchased. It was a start, but there was more work to be done.
“We knew we had a big change to make,” Schwartz says. “We didn’t know if we had enough runway.”
The right people
While selling some of the acquisitions and all the manufacturing sites reduced the total work force, Schwartz had to evaluate who was left and which of those people could help him put the company back on top.
“Without question, it starts with having really good people because that’s how all the work is done,” Schwartz says. “Have people who can understand what needs to be done and get unified around the necessities.”
Asyst was in survival mode, and the pace was fast. Schwartz didn’t have time to mess around with people disgruntled over the changes, so if they were grumbling, he let them leave or fired them.
“Don’t spend extra time on it,” Schwartz says. “You can spend a lot of energy on those kinds of things, and it’s most important to get people who can understand and agree and help you through them rather than to fight them along the way.”
Because Asyst had problems meeting customer needs, he needed people who could focus on their issues and not get caught up in the frustration and unknown of changes. He wanted people who could drive product development and own significant problems by solving them themselves without bringing every issue to him. People who were bombarding him with messages asking how to solve problems were people he identified as not being critical to the company’s turnaround.
“The first days at Asyst, there were a couple hundred e-mails a day, and those are easy conversations that you have with the people that send them to you because you could deal with the issue, or they could deal with the issue, but if you deal with it, then you don’t need that person who’s there,” Schwartz says.
Those who weren’t contributing were let go. Schwartz cut people in four waves, although he says if he could do it over, he would have done it in two to speed up the process. What started as 1,800 employees in early 2001 has evolved into 1,100 today.
“We certainly needed different skills, and the prospects associated with when the business was going to turn back around, it turns out it was important to cut as deeply as we did,” Schwartz says.
Communication and delegation
With the work force pared down to people with the right skill sets, Schwartz then delegated critical issues down to the managers.
“We were able to at least understand where we were from a business standpoint within a couple quarters by dividing the issues up under very responsible general managers,” Schwartz says. Giving these point people specific tasks also allowed them to get the rest of the company focused and rallied around specific goals.
“The people who were still with the company were engaged even more,” Schwartz says. “They could understand not just that there was going to be hard work, but on the back end of hard work, there was going to be results that would be recognized and rewarded.” Having the right people in place helped him not waste time trying to get buy-in, which helped with the pace he was operating the company at. He needed people to simply trust him and his management team and to have faith that they were moving everyone in the right direction.
“You can always do a better job [communicating],” Schwartz says. “There are instances where you just have to act urgently, and you make some decisions and communicate them almost on the fly because there’s not a choice. We didn’t have the luxury of getting a lot of buy-in and deliberating.”
The more risks that work out, the more that proves to employees that you know what’s going on and that they can trust you.
“When there are results on the back end, when you go to make another change, people understand that changes are being made with an expected result at the end, which is ultimately good for the customers, good for the company, good for the employees,” Schwartz says.
“When you do that at first, it’s really hard ‘Hey, what’s going on here?’ But as it becomes part of the culture, it’s a lot better understood and a lot better accepted.”
Trust has to go in both directions when it comes to making a quick turnaround. Schwartz had to trust that his people could get things done and recognize the different ways tasks could be accomplished. Instead of communicating exactly how he wanted something done, he communicated what he wanted the end result to be and let employees figure out how to get there.
“As long as they’re generally getting there, everybody does things a little bit differently,” Schwartz says. “Focus on what’s the result, and where are we going at the end. Everybody’s going to get there a slightly different way, and people have to be allowed to do that.
“If they have a question ‘Is this the general direction? that’s the one we want to get calibrated on. ... Lock in on what are your common values, and then the methods you use are different.”
To ensure the end results were accomplished, he set three- or six-month goals, allowing him and management to maintain their focus to keep moving forward.
“On some of these big issues ... these were impossible tasks, but if you know it’s the right thing, just go through [with] it,” Schwartz says.
“Each of the major issues we had as a company ... it was probably easy a bunch of times to not go all the way through, but if it was the right decision when you started and the right decision even in the hardest times, just following through was probably the most important thing we had, because it would have been easier to ... not go through the entire transition ... but it wouldn’t have been right.”
Thinking of the future
Part of getting back on track was finding a way to lead the market again, and to lead, Schwartz needed the best technologies. He examined the market’s major players and found a Japanese company leading the way in the automation solutions he needed to be the best. vHe spent a lot of time talking to the people there to see what the company’s goals were. He discovered a win-win situation for both
Asyst and that company if they entered a joint venture because it would help make Asyst the leader in the systems it needed, and Asyst would help the Japanese company expand its North American presence.
With goals meshing, he entered a joint venture with the company with a 51 percent ownership stake. Schwartz says the joint venture has allowed Asyst to move from the No. 20 range on a list of top potential vendors to the No. 4 or 5 spot.
In July, Asyst increased its ownership stake in the venture to 95 percent. With the right technologies in hand, Schwartz could turn his attention back to customers and assessing their needs so he can bring more value to them and capture market share.
He says every semiconductor factory in the world today has products from either Asyst or its joint venture, and right alongside those products are his people, keeping close tabs on what problems customers have.
“We have people on the floor, in the factory, every day helping the customers, making sure the systems are running, making sure the products are running, so we get a firsthand look and the customer is eager to engage in a conversation on how things could be better, how things could move more quickly and where they would like some help,” Schwartz says.
Having that in-field contact helps Asyst continue to improve and grow with its customers’ needs so that it doesn’t end up again on the outside looking.
“Now it’s mustering all the resources of the company a lot more outside the company than inside,” says Schwartz, who is now also chairman of the company. “The part that feels really good inside the company is that we spend a lot more time with customers, talking about customers, talking about customer problems instead of our own problems, and we’re starting to get really energized about what our prospects are.”
While the company’s turnaround isn’t completely over, Schwartz’s strategy is paying off, and the business has made great strides. From fiscal 2002 to fiscal 2006, net sales have gone from $183.2 million to $459.2 million; net loss went from $151.3 million to $104,000, and income from operations went from a loss of $136.1 million to income of $32.3 million.
“Once we achieve market success, we can’t coast, and even if there’s not a competitive threat in a particular segment, the thought that you have to go and make your own product better, or possibly obsolete your own product, is the process we have to continue to drive through the company, and I think the lesson there is whenever you don’t, a competitor is willing to get close, and we’re learning that lesson every day.”
HOW TO REACH: Asyst Technologies Inc., (510) 661-5000 or www.asyst.com