The COVID-19 pandemic sparked an unprecedented downturn, one that President and CEO Ben Huffman hasn’t seen anything like in his 17 years with ELLWOOD Group Inc.
“Everything is very up in the air right now,” he says. “With much of the economy just now restarting, the demand shock of how much is actually going to be needed is still very uncertain in a lot of companies’ minds. So, we have little to no clarity.”
But as bad it is — with some lines of business down 50 percent and the company using some rolling furloughs in which employees have one week on, one week off, in order to keep the workforce intact — he considers it a short-term challenge that the Beaver County company will get through.
The bigger concern for the producer of steel, aluminum and engineered components is figuring out how to compete with foreign producers that have low-cost subsidized labor and less stringent environmental standards.
The trend is not new, but Huffman has noticed it has snowballed over the past five years, especially as the Chinese Communist party uses organized industrial policy to manufacture and export as much as it can to the rest of the world.
“We’ve seen thousands of jobs lost in our customer base, probably billions of dollars of economic activity removed where components and machinery and equipment that used to be built here have moved offshore,” Huffman says. “We’re certainly biased, but we don’t think we’re competing on a level playing field. We’ve seen the economic damage that’s been done from this globalization.”
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Huffman says the phrase, “Our people are our greatest asset” is overused, but that doesn’t make it any less true.
“We’ve been around 110 years,” he says. “Our past success is attributed to our people. Our future success will be attributed to our people.”
ELLWOOD employs 2,000 at 30 locations, which are concentrated in Pennsylvania, Ohio and Texas. The modern-day blacksmith works with the aerospace, defense, automotive, and oil and gas industries, among others.
In order to compete, ELLWOOD doubled down on its training and development, while working to give its employees advanced technology such as modeling and simulation systems, robotics and smarter machine tools.
“It’s investing in our people and trying to generate accelerated technical development to be more competitive on a global scale,” Huffman says.
About two years ago, the business embraced some big robotics projects, he says. And while employees were initially concerned about losing their jobs to automation, ELLWOOD assured them that no one was in danger of that. The pie was going to get bigger for the benefit of everyone.
“If you’re going to ask for the productivity gains, people cannot feel threatened that their livelihood is going to be endangered,” Huffman says. “Then you have to carry through with finding more ways to win in the marketplace.”
Today, the company employs more people than it did before the robotics installation.
It has also moved up the technical and intellectual property curve with the type of products ELLWOOD takes on. However, he says the rate at which the less technical products have been cannibalized exceeds that growth rate.
“It boils down to, there is no past, current or future success without the best people who are continuously learning,” Huffman says.
That’s why ELLWOOD has changed how it seeks to institutionalize and accelerate the rate of learning. For example, as baby boomers transitioned out of the workforce, ELLWOOD has partnered with tech companies to capture that knowledge via online training. On-the-job training was transferred to online modules for each discipline, which is then combined with traditional on-the-floor training.
Continuous learning to increase productivity and efficiency also has been aided by ELLWOOD’s culture. The company’s employees are chronically dissatisfied, always looking for a better solution.
In addition, with an increased rate of investment in R&D, the company has been paying more attention to startups and their offerings. ELLWOOD has been asked to make investments, but Huffman says it hasn’t made sense to do so yet. The business has helped early stage companies test their technology, brought them in to consult about what’s possible and bought software, such as programs to monitor a machine’s efficiency in order to predict maintenance.
With the need to invest in your business in order to compete, you have to avoid the trap of thinking incrementally, Huffman says.
“Our philosophy is that the world is changing too fast for us to look at incremental benefits, and we need to really be thinking exponentially,” he says. “And that is leapfrogging the status quo and not trying to make it incrementally better 3 to 5 percent; we need to improve it two times, three times, five times to not get left behind.”
That requires weighty decisions, and you don’t always know the outcomes until 12, 24 or 36 months later, Huffman says. That’s why you have to rely on your network of employees, mentors and board members as a sounding board.
Exponential leaps also have a higher risk profile, so you have to make sure your team members are willing to support those types of efforts.
“To use a baseball analogy, you’re never going to bat a thousand,” Huffman says. “But you’ve got to make sure your batting average is significantly higher than those that you’re competing with around the globe, or those exponential leaps can become costly errors. Yes, we’re going to make mistakes. It’s OK to make mistakes, but we have to be right far more than we’re wrong.”
And if you don’t consider the higher risk-reward profile of exponential investments, if you only make incremental moves, you’re going to fail anyway.
“If you’re moving incrementally or not moving at all, you know what the outcome is,” he says.
It’s not just a matter of buying the best equipment. People make the difference.
“When we think about any solution, we think about our people first and then make sure they have the best equipment so that they can compete,” Huffman says.
For instance, ELLWOOD is putting in a new aluminum plant just outside of Youngstown, Ohio, because the current market is underserved but growing. Huffman says they hope to displace a large quantity of imported material in aluminum. And while the company has sold aluminum and its employees understand the market, ELLWOOD has never melted aluminum. Huffman wants to expand into markets, such as the commercial transportation and aerospace industries, which are looking for ways to lightweight their products.
“It’s risky for us because we’re entering a field that we haven’t been in in our 110-year history,” Huffman says. “But again, the reward — the markets are multibillion-dollar markets, and we believe if we assemble the right team, give them the right tools and do the right thing by the customers, we’ll be successful.”
- Institutionalize the ability to continuously learn.
- Put your people at the center of everything you do.
- Don’t fall into the trap of incremental investing.
NAME: Ben Huffman
TITLE: President and CEO
COMPANY: ELLWOOD Group Inc.
Born: Alexandria, Virginia. My dad was in the military. I bounced around a lot until I ended up growing up in Morgantown, West Virginia.
Education: Business degree with an accounting and finance focus, West Virginia University
What was your first job and what did you learn from it?
I was a newspaper carrier, and then I worked at Giant Eagle as a stock clerk for six years. Both as a newspaper carrier and then in retail, you learn quickly to focus on the customer.
If you could advise your younger self, what would you say about business?
One of my mentors from Ernst & Young said, “Be strategic,” as I was leaving the firm. It means, to me, think about the future and the desired outcome, and then you can figure out how to get there. The future is unwritten, and we have the ability to influence the outcome that we want.
Where might someone find you on the weekend?
I like to spend time with family and friends. I have two daughters, 18 and 21, so outdoors with family and friends is where you’d find me most of the time.
I also like to travel to unique communities and find restaurants that have popped up with small entrepreneurs — I hope they survive COVID.