Volume 39, Issue 6, June 2004
Recognize the Problem and Make the Change
by Bill Rochon
Editor’s Note: Logistically Speaking is a new, bi-monthly column, which focuses on ways glass companies can improve manufacturing operations and set-ups.
First, I would like to thank Deb, Ellen and Tara for getting me involved with USGlass. I, like many of you out there, have been reading this magazine for years and have found it to be highly informative, entertaining and inspirational. I am not a big fan of super price slashing, but I do want a deal as long as quality and service comes with it. Yes, it is true that certain companies have chosen to forego quality and service in order to beat pricing into the dirt. Can anyone honestly tell me that they have had a 99 cent burger from a fast food establishment and thought it was the best thing that they had ever eaten? Did it leave such a positive impression that you had to tell everyone how wonderful it was? If you answered yes, then check yourself into an institution that has no exit.
I have worked with many glass companies of all sizes—mostly fabricators—and the same bad aftertaste exists in many mouths as does the taste of a bargain sandwich. There are some companies that harm the vendors by driving their prices into the mud by making large-volume purchasing decisions based solely on price. Needless to say, these vendors now have to make the same decisions, their products suffer and so on down the line. It seems that the only people getting rich are the chief executive officers. That is easy. It is called franchising. Forget about making enough money to live comfortably with one location, get 20 and you will do well. OK, so what about the small independents who enter the market with rock-bottom prices? What about the small shop who decides to expand its fabrication abilities and needs to generate new sales? Many of them also play the low price game as their primary strategy. We don’t hear too much about them because they usually go out of business or are acquired by one of the big guys. Why is that? It’s simple: they usually are inefficient and lack the experience to operate at a level of such narrow margins, or they did not do their homework and entered a market without any extra capacity. This is called competition.
Out of all this there is good and bad news. First the bad news: some companies have gone or will go out of business. The good news is that I doubt prices can get any lower. It seems that we have found the bottom—or at least we are very close.
Let’s Make a Deal
As consumers, we are always looking for a deal. Let’s face it, the average middle-class person lives better than anyone did 25 years ago. Why? Because we can afford it. We have everything that the mega-wealthy have. True, their houses and toys are much bigger and more expensive, but we still can do whatever they do to a lesser degree.
This is the American way. To be aggressive and competitive allows the average person to live comfortably and that is not a bad thing. Sure, I would like to see companies share in bigger profits and pass them along to their employees. I certainly do not want to see any good company go out of business. They do not have to, but they do have to change.
Why is it that so many fabricators are doing well while others are not? Experience. These successful companies are faced with the same set of circumstances in the marketplace as are the struggling ones. They either have the experience needed for continuing growth or they seek it. I have worked with owners and managers in many situations that require change. The difference between the success stories and the failures or struggles can be analogized. Would you let me perform brain surgery on you? Why not? I watched a documentary on brain surgery and it didn’t look so tough. I’m a fairly smart guy; I’ll figure it out. Sounds ridiculous doesn’t it? Yet I have heard this response before, usually by someone who is struggling to get his tempering furnace running after six months or even a year when it should take a month or less.
This reminds me of my first real challenge in this industry. At the time, I had eight years of experience in the glass industry (so of course I knew it all) and then I left to join the Air Force to further my education (thank you, taxpayers) while serving my country (you’re welcome). There is nothing worse than a glass-guy-know-it-all who has just left the military. I was soon to be humbled.
I joined a company that had just purchased a large, bankrupt fabricator with sales upwards of $20 million per year. Why did it go under? It certainly wasn’t due to a lack of sales. They had all kinds of equipment. It was the kind of plant that looked impressive when you entered the back door. So what went wrong? More importantly, what do we do now?
The consultant charged with the turn-around hired me as one of the production managers. On my first day he told me to go out and identify ten things wrong with the plant.
No problem, I thought. After all, I knew it all. Two hours later he held a meeting. After going around the circle with most of the new team talking on various subjects, he points to me and says, “So Bill, what do you think?” I started telling him about all of the problems that I had seen. Then he stopped me, pointed his finger at me and with a very stern look on his face, said “Fix it!”
Me? See, I thought that I could just complain about how messed up things were and somehow someone else would magically make things better.
Well, the turn-around was a success and I would like to share some of my experiences with all of you in the upcoming months. Until then, I have some homework to give out. All owners and managers need to take a day or two away from their routine and stand in their factory or shop. Just observe. Then find ten areas that require some sort of improvement. I am talking about physically going out there yourself and looking out of your own eyes. Then and only then shall the truth reveal itself. Oh, and one other thing, fix it!
© Copyright Key Communications Inc. All rights reserved. No reproduction of any type without expressed written permission.