Flood of success Featured

7:00pm EDT February 26, 2006
On Sept. 16, 2004, the management of Benshaw Inc. was looking forward to a banner year in 2005.

On Sept. 17, the company was underwater — literally.

When a deluge that swelled the banks of creeks and streams that day washed away businesses and residences along the Route 8 corridor, it took Benshaw’s production facility out of commission and destroyed 80 percent of its inventory. It took 10 days, hundreds of hours of overtime and $3.7 million to get production of its custom electrical control panel products under way again.

But don’t expect Fran Livingston, Benshaw’s president and CEO, to bellyache over the bad fortune. In fact, Livingston views the experience as an event that solidified Benshaw’s corporate culture and enabled its growth rather than impeded it.

“We said this at the time, and it was kind of just words — you don’t really believe it, but you say it anyway: ‘If we get through this, what doesn’t kill you makes you stronger, blah, blah, blah.’ Well, it’s true,” says Livingston.

The confidence built by the shared experience of recovering from the flood helped rather than hindered meeting the company’s 2005 goals. The resulting strengthened corporate culture, says Livingston, set the stage for Benshaw’s record year in 2005 — $80 million in revenue, up from $65 million in 2004 — several new facilities and a forecast of $100 million in revenue for 2006. And the experience brought a rethinking of how the company produces its products and guards itself from future calamities.

“If it cost us $3.7 million to get that culture, it was worth it,” says Livingston.

Livingston spoke with Smart Business about how recovering from a flood strengthened Benshaw and set the stage for its future success.

How did you deal with the urgency of getting Benshaw up and running again?
We had massive commitments to customers; time was of the essence. We couldn’t wait for help from anyone from a financial point of view because we had so many customers that if we weren’t operational within a short period of time, they would have to go elsewhere.

It took us about 10 days to totally gut the facility, rebuild the electrical equipment, either buy new equipment or have it rebuilt and put the whole thing back together again. Our people had to work around the clock to rebuild the facility and move inventory to other facilities.

When it was all said and done, we had to make up 10 days of lost production and keep up with our growth. We had people who had to work 16-hour days through Christmas and into the first quarter. Customers were incredibly patient for about two weeks, and then they got nervous as hell.

So there was incredible pressure. Day by day, everything we shipped was going right onto a customer’s piece of equipment.

What was the existing culture at Benshaw before the flood and how did management foster it?
We have a very flat organization. We’re hands-on. We’re a $100 million company, very successful financially, but I think we’re also very down-to-earth. It’s not complicated. I think we generally have a tremendous amount of respect for each other, people to people. We work hard at having the right ethic. The organization will purge itself of people who don’t have the right work ethic.

From my point of view, all I did was not screw that up. Give them the environment and reinforce the work ethic, and let them know that the company is headed in a certain direction and that direction makes sense, that we have to compete and win. We’re all working managers, if you will.

Every person on the leadership team is capable of doing about any job in the company. That’s all there to reinforce the culture and the work ethic.

How did you operate day-to-day during that 10-day recovery period?
I spent most of my time trying to think through the next six moves. The problem was that it wasn’t very obvious, so trying to communicate to people and explain why they needed to be doing this two days ahead of what was needed next, that it was the critical path item, that was tough.

We kept everybody in daily communications. We had meetings at each facility. We were taking photos and handing them out to everybody, showing here’s where we were Day One, here’s where we are now, and they could understand what was happening.

We had meetings daily in each work area. They could see the progress and that everyone was pulling their weight.

How did you convince employees that the company could be rebuilt?
The most important moment was when we called everyone in to have a staff meeting here. When I realized the magnitude of what had occurred, it scared the hell out of me. I also realized that if I blinked, it was over.

So really just having confidence that we would figure out how to fix this thing and to make some sure people bought it. I knew we had the financial reserves to handle it, but what I didn’t know was if we could pull it off. I think that was the starting point. People had to realize that I thought we could be successful.

My role was to make sure everyone knew we had a chance, given the resources we had, and to make sure that we had an overall game plan that made sense. From my point of view, the leadership issue was making sure that I could see the whole picture. You can get the factory cleaned and ready to go, but if you don’t have the parts there, you’re in trouble.

What did you learn from the experience, and how did you change operations as a result?
No. 1, never have a situation where you have only one place where you build product. There’s no single place where we build product now. We build all of our products in at least two locations.

Never put all of your inventory in one location in harm’s way. We’ve distributed it among several locations. Another lesson learned was about information. We had a pretty distributed information system. We were able to recover, eventually, all of our information, although there was a lot of equipment washed away.

We have two hot servers now. ... We have one in our headquarters building and one in another building.

How to reach: Benshaw Inc., www.benshaw.com