If there’s one thing Jim Heintz and Mark Ingram have learned in their combined 45 years in direct marketing, it’s that consumer data can be a messy business. The degree to which it can be cleaned up largely determines the success—or failure—of marketing efforts.
Both men built their careers within Charlotte-based United Mailing Service, representing the company’s leadership for more than 20 years. In 2011, the pair took over as owners and rebranded the company as UMS, showing a renewed determination to stay abreast of continuing developments in marketing technology and a commitment to continually exceed industry standards and bring new product and services to their clients.
As UMS celebrates 30 years serving the Charlotte community, Heintz and Ingram take pride in the proprietary processes they have developed, including cleansing data for use in direct marketing to improve industry-acceptable levels.
Targeting Appropriate Data
UMS is a full-service marketing communications company that focuses on data refinement and processing, direct marketing and printing. Its mission is to provide a full range of data resources, marketing analytics and technology to help customers accurately and powerfully target the best-qualified buyers and increase their sales and profit margins.
“Direct marketing is an ever-changing target,” acknowledges Heintz, chief executive officer for the company. “We use a number of services and approaches including print, analytic tools, direct mail and email.”
The partners describe the company as data-driven. “We’re focused on data and what it tells us is the best approach for the client,” says Ingram, who functions as chief marketing officer. “A lot of companies try to force a square peg into a round hole. We let the data help us understand the needs of a client from the facts, their history and goals. We then look at their marketing budget to devise a custom solution.”
Ingram explains that clients’ customer profiles are developed from data, which includes customer lead lists, detailed demographics and transactional reports of purchases. “These items are the holy grail of their business every day—and ours.”
Purchasing information and lists from data suppliers does not guarantee that a client’s message will reach its desired audience. Three to 10 percent of new purchased data will be unusable according to Ingram. “This is the acceptable level in the industry. Most customers live with that percentage of bad data, but we don’t,” he explains.
“We’ve created a process that reduces the bad data to one percent or less on purchased or customer data,” touts Heintz. “Plus, we no longer have to buy data with the typical level of bad product, as we now have our vendors using our process to get the data to one percent before we purchase it.”
“Our data cleansing process is critical for us and for clients with large databases,” says Ingram. “Instead of spending money on print, mail and postage on 100,000 pieces, we segment the list to the 90,000 that we know will actually get delivered.”
According to the partners, this is made possible through strategic partnerships with experts in related fields. “We’ve combined our knowledge to come up with new services and products that address client’s needs,” says Heintz. “We also get inspiration from our clients who come to us with challenges targeting very specific vertical markets.”
“UMS offers access to the most complete set of business and consumer data in the industry, along with an unmatched commitment to service and the success of our clients,” says Ingram.
After each marketing program is executed and delivered, follow-up services include providing results to clients in the form of response analysis, leads, sales and return on investment.
“The process to refine targeted customer lists and profiles is continuous,” says Ingram. “For certain vertical markets, no one else is using the data the way we are.”
Advancing with Technology
Both Heintz and Ingram had already been in their respective leadership roles prior to buying United Mailing Service from its founders. Each of them came up through the ranks learning the business firsthand.
Heintz started working at UMS as a shipping clerk in 1991, one day after arriving in Charlotte from his native Buffalo, N.Y. “One of the previous owners was from Rochester, so there was a connection,” says Heintz. “Plus, I was eager to start working.”
“I came right out of high school; just a young teenager wanting to get out. I’ve lived here longer than I lived in Buffalo now, so I’m a real Southerner. I eat my grits and my greens,” he says with a smile. “I love Charlotte. It’s a great city.”
Heintz worked his way up to machine operator, production manager, plant manager, vice president of operations, to president in 2008, and finally co-owner in 2011. “Being co-owner is definitely my most challenging role to date and I take a lot of pride in the 23 employees who decide to work here.”
Ingram started out in advertising after graduating from N.C. State University with a degree in business management and marketing. In 1993, he began work as a sales representative for United Mailing Service and was named executive vice president in 2007, before joining Heintz as co-owner in 2011.
Ingram has been instrumental in UMS’s growth from a conventional direct mail company to a complete turnkey marketing operation. They have accomplished this by using direct marketing techniques that include: data append, database mining and profiling for specialized list purchases, email marketing, digital and offset printing, QR codes, Purls (personalized URLs), as well as more recent advances in developing custom marketing portals.
“Originally, United Mailing Service focused on printing and direct mail,” says Ingram. “We wanted to push other technologies forward. We felt that the company had grown a bit stale and that there was more we could be doing to help our clients.” That was the impetus to the partners’ rebranding of the company—changing its name, logo and colors to indicate the new direction.
Other milestones along the way have included the move from a 13,000-square-foot facility to its current 50,000-square-foot facility. Of course, there always is continuous upgrading of machinery and restructuring staff to have key employees in the right positions.
“We’re growing and growing very fast; faster than any of our direct competitors,” claims Ingram. “We are on track to achieve 50 percent growth this year over last—a large increase over the moderate growth we saw after our first two years as owners.
“Some of that growth can be attributed to a second company that we started in December of 2011, SENIOROI, LLC, focusing only on marketing for retirement communities. In three years we have secured a national client base because of products and services that were designed specifically for the industry.
Multi-channel Marketing Strategically
UMS clients are spread across numerous industries including, travel, automotive, health care, and retirement solutions. Fifty percent of the company’s clients are located regionally, with others scattered around the country. “Most of our clients have been with us a long time and trust us,” says Heintz.
Both partners readily admit direct mail works, but not for everyone. UMS’s inclusion of email and social media marketing has added a new dimension to traditional direct mail which brought in new clients whose operations are more tech-savvy. At the same time, it has given the company a fresh opportunity to approach older customers with new services.
“A lot of our customers don’t yet recognize who we’ve become, or the refinements and specialization we’ve brought to the marketing process,” says Heintz. “But they trust us with their most important asset—their customers—and they know we value those relationships.
“One of our biggest challenges is to communicate to them who we are now and all the new things we can do.
“For example, with some customers, we can switch services from direct mail to email marketing which can free up substantial savings in print and postage to spend on other marketing services more wisely. In addition to marketing, they can also switch their billing process from paper to email.”
As marketing programs are refined, it becomes clear how much direct mail versus email or social media can generate for a given client, say the partners. The goal is to know who is more receptive to print; who prefers email or social media.
Direct mail contracts feed the printing contracts at UMS. For this reason, Heintz points out, “Printing companies—even if they are calling themselves marketing professionals—won’t attempt to switch clients to email as it represents a loss of business for them. Most printers and mailers are not open to offering this solution because they don’t understand how to make it a profit on the other side. With us it’s about what is best for our clients.”
But UMS is a full-service, multi-channel marketing company, and Ingram says that approach works best for most clients. “For some, we prospect with email, and then send direct mail to a smaller group after analyzing the results. It really depends on what approach will provide the highest return on investment for our clients.”
“UMS has just scratched the surface on social media,” Ingram continues. “Everybody is trying to figure out how to monetize social media; we are learning how to best use it.”
Recently, the director of Southeast sales for Twitter came to speak with the Charlotte Direct Marketing Association; Ingram sits on this board. “Getting this type of information is vital for our business. Right now, only the biggest brands in the country are using Twitter and other social media platforms to generate sales but that will increase—it will eventually trickle down.”
Print, Data, Direct
Sending out massive quantities of mail doesn’t happen without some daily challenges. For UMS, many of them center on working with the U.S. Postal Service (USPS). “It’s just about keeping up,” says Ingram. “Mailing rates are constantly changing. We have to upload new software between dates to enact immediate changes without any downtime.”
Regulations allowing for discounts also change frequently. “We pride ourselves in knowing the regulations and securing every discount,” assures Heintz. “The U.S. Postal Service has a lot of not-so-obvious rules; our years of knowledge about these rules are invaluable to our clients. We are the longest tenured direct marketing company in Charlotte.”
Email comes with its own set of regulations, set forth mostly by the different Internet service providers. These, too, change frequently as does the technology that delivers them.
Scheduling can also be tight at times, particularly with inevitable last minute changes to the design and production schedule. “Sometimes we’re waiting days for a client to complete their layout, photography. But we’re still held to the original mail schedule,” says Ingram. “We always do our best to accommodate our customers.”
UMS enjoys unusually high staff retention in the industry and the partners attribute this to fair treatment and extra perks and benefits.
“We truly appreciate our staff. They really stood behind us when we took over. They could see growth, consistent business, dedicated owners and increased job security,” says Heintz. “We ask a lot of them but we provide for them.”
UMS works with many non-profit companies and helps support them with sponsorships. “We try to give back,” notes Ingram.
The “Print, Data, Direct” mantra will continue for UMS, with an emphasis on providing the cleanest data possible. “We don’t see other companies developing their own processes. Some in the retirement industry have tried to copy ours but haven’t succeeded. It took us a lot of years to develop, but it sets us apart,” says Ingram.
“We’re in a great position for growth,” says Heintz. “We have room to grow in our facility. We’re getting ready to install additional equipment to further upgrade our services. Over the next year we plan to add five to 10 new employees to our staff.”
“I am very happy with our business at this point. I rose from shipping clerk to owner, but it’s not over yet,” says Heintz. Ingram contributes, “And we think the best is yet to come—for us and for our customers!”
CEO Tom Duncan greets visitors to China-based Positec’s North American headquarters with a firm handshake and huge smile. Then, he ushers them over to a completely furnished workshop stretching the entire right wall of the reception area, complete with a huge workbench, drills, table saws, circular saws, replacement bits and blades, and more. He walks through the shop with a gleam in his eye; he says he gets to work his dream.
“Whether it’s an end user, a retail client, or a product developer, Positec is dedicated to providing a hands-on experience here at our Charlotte headquarters,” explains Duncan. “This workshop has been created so that we can not only test out our new products, but also provide our buyers with a totally immersive experience.”
Duncan laughs as he admits that he often feels like a kid in a toy store when new products arrive for testing in the workshop.
As is evident from the company’s name, short for Positive Technology, Positec’s entire approach to creating home improvement technology is one that centers on innovating for the customer. On display are many of the company’s products including a new battery powered string trimmer and a wheelbarrow that can transform into eight separate forms. One display shows off several of the company’s over 2,000 patents and Duncan says that another 2,000 are currently being processed.
Duncan cites the Worx TriVac patent as an example of the company’s innovative problem solving. The Worx TriVac is both a leaf blower and a vacuum, changing functions with the flip of a switch. Duncan describes how other leaf vacuums require a long, cumbersome barrel so that users can’t injure themselves by reaching into the vacuum.
Positec’s engineers decided to design a unit with a short barrel with a slight bend at the end to keep hands out of harm’s way, resulting in a blower/vacuum combo that is only slightly larger than a traditional hand vacuum.
“Because of one small, innovative change, the entire concept of a blower/vacuum combo has been turned on its head,” Duncan remarks, most satisfied.
Looking for a Start
After graduating from the University of Virginia in Charlottesville, Duncan describes his “first real job” with Lawler Ballard Advertising in Nashville, Tenn., where he wrote sales brochures and managed a few accounts.
“It was a great first business job. I’d compare it to the hub of a wheel—I dealt with different types of businesses. I’d visit a liqueur account in the morning and, while still in my suit, a dairy farm in the afternoon to learn about its forage grass for cows. The next day I’d visit a bank.
“I was hearing about the coming formation of the European Union, and that interested me,” Duncan continues. “I decided to get an M.B.A. in international business studies; I left my job and enrolled in the University of South Carolina (USC) Moore School of Business.
“As part of the program, I took an intensive German language course and then spent eight months in Germany as an intern at a packaging machinery company. Learning a language in school and then having to speak it in a business setting is one of the most humbling experiences you can have.”
“I’ve always had an international outlook when it comes to business. In fact, I think a lot of Positec’s success is due to that. I meet business owners all the time who are focused solely on their specific regions, and many are afraid to step out of their comfort zones,” he says. “I am completely comfortable in international communities. I enjoy the diversity, learning the culture…it’s all part of the fun.”
With his business degree in hand, Duncan went to work for Vermont American, a joint venture of Emerson Electric and Robert Bosch in 1992. “I was recruited because I knew German,” he says. “In 1998, I was promoted to vice president, and in 2000 Bosch bought Vermont American. He stayed on as vice president of international with the Accessory Business Unit of Robert Bosch Tool Group for a couple of years, but was intent on starting his own company.
“At that point, I wanted to do something entrepreneurial. So I left in 2003 and acquired the rights to use the Rockwell name for power tools. Rockwell International had sold premium-priced tools for professional tradesmen and serious do-it-yourselfers under the name until the early 1980s, but not since.
“I planned to reintroduce the brand with a new line of tools and sell them through stores like Sears, Lowe’s and Home Depot. So, I started looking for investors and a factory to make them.”
Making a Connection Abroad
“It was right about then, in 2004, that I met Don Gao in Shanghai.”
In the mid-1990s, Gao was a contract tool manufacturer with his own factory. He manufactured private-label hand tools for clients (as an OEM, original equipment manufacturer) such as Sears. He won a huge order for angle grinders from U.S. tool titan Black & Decker. In one year he shipped 700,000 of them, Then, Black & Decker cut its orders, deciding to make the grinders itself—and right in Gao’s own city, Suzhou.
But with Gao’s setback came inspiration. “Chinese companies are too focused on price,” he says. “You can succeed only if you build loyalty,” and he was convinced brands were the best way to do that.
So he started Positec to manufacture and distribute his own branded power tools, rolling out his Worx label in 2004.
“I think too often Americans have a negative perception of Chinese companies,” says Duncan. “But I have a unique perspective. I was impressed with Positec’s operation, which was entrepreneurial and driven by innovation.
“He was starting the Worx brand of tools and was interested in joining forces, so we began talking,” says Duncan. In late 2005, Gao hired Duncan to head up his North American operations to sell Worx and Rockwell lines of home improvement tools.
Also that year, the company selected Charlotte for its North American headquarters. It chose the Queen City over Atlanta and Chicago because of its proximity to Mooresville-based Lowe’s Cos. Inc., which has become one of the company’s largest customers.
“It just made all the sense in the world to be right next to the second-largest home-improvement retailer,” Duncan says. “It was the best decision we ever made. Our business with them has really expanded, and I think being here and having this office so close just makes doing business so much easier.”
Some of the same advantages apply since it is also relatively close to the Atlanta headquarters of Home Depot.
Duncan adds that it was also “because of the people.”
“There are so many talented professionals in the Charlotte region,” he says. “We have some of the best, brightest, and most experienced in the home improvement technology industry right here and we couldn’t pass up the opportunity to tap into that.”
Launching the Brands
Rolling out Rockwell and Worx brands of home improvement tools through Positec here in the U.S., Gao and Duncan faced stiff competition from some of the biggest names in the industry including Black & Decker. At first, breaking in with retailers such as Lowe’s, Home Depot and Sears was not easy. Sears and other clients weren’t receptive to the company’s brands, preferring instead that the company continue to provide the private-label tools carrying the store’s brand.
Fortunately, Duncan reached back to his experience at former employer Robert Bosch GmbH with television marketing directly to consumers, and in 2008 Positec aired its first infomercial around a lightweight, cordless lawn trimmer—the Worx GT. That year, the company sold 400,000 units, Duncan says, more than doubling the entire market.
As sales climbed, consumers began asking for Worx and Rockwell products, resulting in a change of heart from the big-name buyers. Retailers such as Lowe’s took notice and agreed to carry the products on their shelves, finding that infomercial products sold at a higher rate than most other brands.
Positec became a supplier to Lowe’s in October 2009 and was named its 2010 Innovator of the Year among Lowe’s 2,500 suppliers, becoming the first company to win a Lowe’s Supplier of the Year award in its first year as a vendor.
Positec was also awarded 2011 Product of the Year by DIY Weeks, the leading European trade magazine, for the Rockwell Sonicrafter oscillating tool and the G-Force angle grinder in the power tool category and the TriVac blower/vacuum and the Eco cordless mower for the garden tools category.
Also in 2011, Positec Tool Corporation settled into its present location in 25,000 square feet—the entire third floor—of the Linville Building, which is co-located with its 26,000-square-foot reverse-logistics warehouse facility in the Perimeter Woods Business Park in the Huntersville area.
In addition, the company relocated its retail distribution facility from Long Beach, Calif., to about 120,000 square feet of industrial space in Huntersville Business Park.
Today, Positec maintains facilities in China, Italy, Spain, Brazil, and Australia, and here in Charlotte, Memphis and Chicago, and also in Canada.
Positec’s U.S. sales last year totaled over $200 million and made up over half of the parent company’s total revenue. With consumers spending more on home improvement, Duncan expects Positec’s U.S. business to achieve double digit annual growth over the next few years. Further, with certain products such as lawn trimmers, Positec is gaining market share and creeping up on industry giants such as Stanley Black & Decker Inc.
“We’ve created more than 100 high-paying jobs in the United States,” Duncan notes, “and also a number for our business partners here.
All told, the global Positec Group is made up 4,000 employees operating in 12 subsidiaries worldwide with roughly $400 million in revenue. Gao is still sole owner.
Gao, who remembers leaving a state-owned company to start his business with the help of suppliers who allowed him to defer payments, says he has enough money. Except for one possibility he’s happy to contemplate: “Unless I buy Black & Decker,” he says with a smile.
Serving the Marketplace
Positec Tool Corporation’s customer service center is located right in the same building. Customer service representatives answer phone calls and emails from end users, retailers, and manufacturing and distribution partners.
“What we’ve found is that, in order to truly deliver value to our customers and partners, we have to be close to them. You can’t get closer than our headquarters.”
Innovation is Positec’s calling card, Duncan says. The company has developed a robotic lawn mower and a safe chainsaw called the “JawSaw.” The latter features a blade that’s partially enclosed to prevent injuries.
“It’s an industry with giants,” he says. “We’re definitely the smallest guy in the block. But we can offer innovation that maybe they don’t have or can’t provide. Or maybe we’re quicker on the draw than they are. That’s kind of been our niche. The only way we’re going to win is by being different.”
“What we’ve done,” Duncan continues, “is strike out on our own with premium pricing. Sure, you can get home improvement products cheaper elsewhere, but our products will outlast the competition year over year. Our premium pricing is designed to provide extra value for customers, most of whom will not need replacements or repairs, even through heavy use.”
Regarding Chinese manufacturing and its role and image within the United States, Duncan points out that the tide is slowly changing. In the past five years, wages have almost doubled for Chinese workers, placing many manufacturing centers in the country at a disadvantage.
Additionally, he notes, shipping large, bulky items from China is becoming cost prohibitive, causing many companies to begin investigating the benefits of transferring tasks to the United States. “We’re even considering transferring some functions that are now done in China to our North Carolina facility,” Duncan notes.
With the Worx and Rockwell brands putting out innovative products year after year, it seems that Positec is right on track to gain market share in the home improvement industry. At the company’s headquarters, engineers pore over customer feedback in order to define what needs to be done to create products that not only serve to make home improvement tasks easier, but also to construct design ideas that minimize cost and space while increasing efficiency.
“What our team is most committed to,” maintains Duncan, “is making life easier for home improvement enthusiasts the world over.
“Give us a home improvement task, and we’ll make it easier to complete and help you get it done faster. We know that in Charlotte, we’ve got the right people to help our customers get the job done.”
Who knew the 2013 Color of the Year would be cobalt blue, or that the Fall/Winter 2014 hues would be bright jewel tones and soft romantic neutral tones? Who created the dyes and swatches of the Spring/Summer 2015 palette featuring a “rainforest” theme of tropical colors? And who makes those colors into a standard format that can be communicated to a global supplier base?
That would be a very well-known company in the textile industry—perhaps not so well-known here in Charlotte—but nonetheless right in our backyard: DyStar LP. Very simply put, DyStar LP and its parent conglomerate DyStar communicate major retailers’ constantly changing colors to international suppliers.
DyStar LP is a manufacturer and supplier of dye, chemical auxiliaries, specialty chemicals and services to the textile and leather industries throughout North America. They work to make sure colors in manufactured products are true to the intent of the retailers.
It is an impressive challenge that extends across all industries. DyStar LP relies on the resources and the reach of the DyStar group to interact with companies globally and to support their customers at all stages in the textile chain, from the first inspiration of a designer, through production and testing, to the finished product in the store.
DyStar prides itself on consistency and exceptional results. How do they do this? To understand, you first need to appreciate the company’s impressive lineage.
A Colorful Lineage
As it’s constituted today, DyStar’s lineage is a Who’s Who of over 150 years of integrations, mergers and acquisitions. At the same time, it also is a paradigm for successful survival of the decades-long exodus of apparel and textile production to Asia.
DyStar was a direct product of major changes that came to the textile industry during the 20th century—technological innovations, synthetic fibers, logistics, and globalization of the business.
By the late 1980s, the apparel segment was no longer the largest market for fiber products, with industrial and home furnishings together representing a larger proportion of the fiber market. Industry integration and global manufacturing closed down many smaller firms in the 1970s and ’80s.
Here in the U.S., 95 percent of the looms in North Carolina, South Carolina and Georgia shut down, and Alabama and Virginia also saw many factories close.
In the mid ’90s, globalization of the industry within Germany resulted in reorganization of companies and production chains, resulting in a vertical integration of the global value chain—from development to production to sale, a dynamic illustrated in the transformation of DyStar.
DyStar started as a joint venture in 1995 between the textile dye divisions of Hoechst Celanese and Bayer, functioning as a coloration specialist. It then embarked on an impressive expansion by strategic acquisitions of BASF, Mitsui, Zeneca, Color Solutions Inc. and Yorkshire Americas.
These acquisitions were pivotal in transforming the company into a solution provider, offering brands, retailers and their industry partners a complete range of colors, chemicals and services.
By 2004, DyStar was widely recognized as a leader in the textile market, and was acquired itself by private equity firm Platinum Equity for a price analysts estimated at $680 million.
With subsequent acquisitions of Rotta Group (2005), Boehme Group (2006), and Texanlab (2007), DyStar grew in strategic market segments—covering auxiliaries and leather, and becoming a full solution provider.
In the early 21st century disruption of the textile industry continued with advances in electronics, shifting global economics, and more restrictive chemical and environmental regulations. Massive consolidations among European producers were met with the expansion of Indian, Chinese and Asian firms closer to new consumer product makers.
Given the rapidly changing market, the complex collection of DyStar companies proved difficult for its private equity owner in the ‘credit crunch’ era: In the fall of 2009, facing liquidity pressure, DyStar’s German operations filed for insolvency.
In February 2010, China’s Zhejiang Longsheng Group (Lonsen) together with India-based Kiri Dyes and Chemicals purchased the assets of DyStar’s German operations and most of its global subsidiaries for a reported $70 million, and later that year, also Dystar’s North American operations for a reported $10 million.
Longsheng was a major manufacturer in dyes, intermediates and chemicals in China, and also a conglomerate with interests in steel, autoparts, real property and financial investment.
Kiri was one of the largest manufacturers and exporters of reactive dyes and intermediates in India, particularly known for its reactive “blacks” in the industry.
The acquisition included access to DyStar’s 16 manufacturing plants in 12 countries, its brand, patents, technical know-how and most importantly, a 21 percent global market share.
Able to acquire the assets of DyStar without liabilities, Lonsen and Kiri turned around the DyStar business, making it more cost-effective and moving it more towards the growing Asian textile market.
DyStar has continued to expand and diversify in recent years. In October 2012, DyStar acquired the exclusive dealer for DyStar products in Andean countries—Anglostar LLC and its subsidiaries.
And just last fall, DyStar acquired Lenmar Chemical Corporation of Dalton, Ga., a specialty chemical products manufacturer, to further diversify its product portfolio and technical expertise into the textile and carpet, fiber processing, laminate floor, water treatment, oil and agriculture industries.
Since 2012, all DyStar operations come under the umbrella of DyStar Global Holding (Singapore) Pte. Ltd., with shareholders Lonsen (63 percent) and Kiri (37 percent).
Today, the DyStar Group has 14 production facilities in 12 countries and sales companies in all major areas, over 2,000 employees worldwide, and serves about 7,000 customers. Last year, DyStar earned nearly $850 million, with 45 percent coming from Asian markets and 55 percent split between Europe (30 percent) and America (25 percent).
In the first half of 2014, DyStar has achieved a 13 percent increase in revenue compared to the same period last year and doubled the earnings after tax.
In Charlotte, DyStar’s operations include DyStar LP and Color Solutions International.
Color Solutions was itself a product of the textile consolidation going on here in North Carolina. In 1999, John Darsey and Freddy Miller combined businesses to form Color Solutions Inc. Initially focused on creating cotton color standards, they were able to attract major retailers—their first account being Wal-Mart—and transitioned beyond to meet customer needs.
In 2002, DyStar acquired Color Solutions Inc., changed the name to Color Solutions International (CSI), and provided the financial resources, global exposure and technical expertise to expand their product line and services.
Ron Pedemonte serves as president and CEO of DyStar Americas, DyStar LP and CSI . With a background in chemistry, Pedemonte started his career with DyStar in 1991 as a research chemist focusing on developing novel reactive dyes and then was relocated to Germany to continue on new product developments.
Since 2000, he’s been in Charlotte as regional America product manager for reactive dyes, three years later becoming the regional business manager. In 2007, he was promoted to his current position and is also responsible for global textile services. He is the inventor or co-inventor of more than 25 patents in the field of reactive dye chemistry and has published numerous papers in biochemistry.
Although headquartered in Singapore, DyStar’s global head happens to reside here in Charlotte as well. In early 2012, Harry Dobrowolski took the reins as group president and CEO.
Dobrowolski brings a strong financial background to his leadership at DyStar. A native of Ravensburg, Germany, he has lived in the United States since 1985. He received his education in Germany, with a degree in business administration and finance.
He started with DyStar in 2005 as the head of Finance and Business Services for the Region Americas. Previously, he was CFO for Rohwedder North America, an automation systems provider and before that, he had a 20-year career with Siemens Company, which included management positions in Germany and South Africa, as well as the U.S.
Speaking of the 2010 acquisition of DyStar by Lonsen and Kiri, Dobrowolski says, “This was a totally new beginning for us. Since 2010, we’ve had very positive and sustainable growth in our results.”
Dobrowolski attributes the financial turnaround of the company to the right strategy and support from shareholders as well as integration of the supply chain. DyStar now has offices, competence centers, agencies and production plants in over 50 countries.
“This helps to ensure our expertise is both local and global for brands and retailers, mills and dye houses,” he reports. “What’s more, there are no superstars. We used to have very good managers; now we have the best team.”
Dobrowolski paints the larger picture: Following the reorganization in 2009, DyStar instituted several changes in operations. It closed some production plants in Germany and Indonesia as they had become outdated and were highly energy-intensive.
Production was shifted to more modern plants, primarily in China, where DyStar invested in state-of-the-art production technology. The new shareholders also helped to integrate the supply system and continue to be an important part of the leadership team.
“It is more than a partnership,” says Dobrowolski, “They need us to sell product and we need our shareholders to provide both suppliers and marketing information,” says Dobrowolski. “We work together very closely on a daily basis.”
A Colorful Presence
DyStar LP operates out of two production sites in Reidsville, N.C., and Dalton, Ga., and four warehouses located in Reidsville, Dalton, California and the Dominican Republic.
Through its CSI division, the company uses DyStar dyes to create over 5,000 CSI formula colors for fabric manufactured across the globe. These colors are developed through face-to-face contact with designers and color managers who have a specific color in mind.
“Globally, we are establishing color standards for more than 100 well-known brands,” says Pedemonte. “Some dyes have a lineage of 50 years or longer.”
“A retailer comes to us with a color palette for the season, whether it is spring or summer, fall or winter, holiday or back to school. They ask us to replicate the color in such a way that it can be communicated to their supply base,” describes Pedemonte. “We are smack in the middle of the textile supply chain, supplying color standards.”
“We take a retailer’s inspirational color pieces and make them into a standard format that can be communicated to a global supplier base,” continues Pedemonte. “Not only are we providing a service, but we are producing a color standard that is produced with dyes found in other countries; we lend technical support.”
The product offered to retailers consists of a certified standard (dye recipe with DyStar dyes) that is sold to global textile mills and vendors via the international website. The textile mill customer then uses this formulation to produce its fabric samples and production using DyStar dyes.
There are limitless applications for DyStar products—apparel, automotive, carpet, specialty chemical, denim, military/workwear and retailer/brand are their seven key markets.
DyStar LP maintains strong relationships with its customers; Pedemonte says that of the top 50 customers, 15 have been with the company for at least 10 years. Its diversified and well-balanced customer base of leading companies across a broad range of industries protects it from market fluctuations. High profile customers include Hanes, Fruit of the Loom, Shaw, Mohawk and Guilford Performance Textiles.
DyStar always has products in development. One of its current focuses is the denim industry. With a history of almost 120 years of producing Indigo, DyStar has developed a patented DyStar Indigo Vat 40 percent solution which represents the state-of-the-art in pre-reduced Indigo liquid. It allows for cleaner denim production and a reduction of the sodium hydrosulfite usage by 60 to 70 percent.
Coloring In the Future
As one of the premier companies in the field with a truly global reach, DyStar operates in many different legal jurisdictions and cultures and is responsible for complying with the laws in the countries in which it works. Additionally, the company aims to conduct business across boundaries with integrity and the highest ethical standards.
“It is our vision to become the world’s most sustainable and responsible supplier of colors, chemicals, and services to the global textile industry,” states Dobrowolski. “Our commitment to sustainability covers all three of its pillars, namely economic, environmental and social sustainability.”
Increasingly, rising wages in China and other countries, combined with higher transportation costs and new environmental regulations, have prompted a number of foreign and American textile companies to consider returning to the U.S. Also, with more consumers looking for ‘Made in the USA’ labels, some companies are turning back to American products.
Wal-Mart, for example, has pledged to buy $50 billion over the next decade in American-made products, including towels and washcloths.
Dobrowolski believes the trend back to Americas will continue—at least for the next few years. He adds that the textile industry itself is expanding because of consumer consumption.
“One of the factors undergirding a growing textile industry is the fact that consumers are buying more,” he says. “People don’t just buy what they need; they buy because they want the latest style or fashion color.”
With a growing industry and an expanding company, Dobrowolski expects DyStar to continue its growth path. But managing a large company with a complicated global supply chain can be challenging.
“We have to make sure our products—and the processes we use to produce them—are safe, follow strict environmental guidelines,” says Dobrowolski, “and their quality is top-notch and consistent worldwide.”
Last year, SEM Products, Inc. celebrated being in business for over 65 years delivering quality American-made products. This year the company continues to celebrate as May marked the biggest revenue month in the company’s history. Clearly they are doing something right!
“Our success comes from empowering our people,” says President Steve Fussy (pronounced FOO-cee ). “We give them the room and the tools to do their jobs. We make everyone feel like what they do matters—because it does.”
SEM Products is an unusual manufacturing company in that it is employee-owned. Founded in 1948, SEM manufactures a broad array of specialty aerosols, adhesives and coatings for the automotive, aerospace, marine and industrial markets.
Providing innovative and superior products and services has benefited its customers, partners and employee-owners since the mid-1980s when visionary owners Don and Marilyn Scranton sold 49 percent of the company to their employees. Don passed away in 2002, but Marilyn remains SEM’s chairman of the board.
“The Scrantons had the vision to see that if they took care of their employees, their employees would take care of the company,” explains Fussy. “Not only does ownership spin off dividends for the employees, it also creates an asset that’s worth more as the company grows in value. It’s a win/win situation.”
Moving into the Right Place
SEM Products was created in 1948 by two former Navy men, George Schneckner and William Elliott, who started a house paint manufacturing operation in Belmont, California. The acronym SEM was created from Schneckner-Elliott Manufacturing. Without much capital or equipment, they continued to make and sell house paint for many years.
In 1972, the company came up for sale. Don Scranton, then vice president of sales at Kelly Moore Paint, decided to purchase it. Scranton’s background was in architectural coatings, and he planned to diversify SEM’s operations to manufacture industrial coatings for other markets.
However, while still at Kelly Moore, Scranton had heard a presentation from a chemist on a new product to renew the color of car vinyl tops. Kelly Moore had passed on the opportunity, but Scranton pounced on it. He hired the chemist, Burt Cole, as SEM’s technology director and they promoted the new product under the name “Topper.” This led Scranton and SEM into the automotive aftermarket. It was their first step into flexible coatings and that technology grew into multiple product lines.
Scranton saw the growth opportunity in the automotive collision repair aftermarket and started to phase out the other markets that had formed the company’s early revenue base. The transition from being an architectural, multifaceted coatings manufacturer to primarily an automotive collision repair coatings manufacturer took place gradually between the late 1970s and early 1980s as Scranton refocused the company’s resources. Eventually the paint and body market became the company’s primary market, and by the mid-’80s the company was completely out of the house paint business.
During the ’80s and ’90s, Scranton made three key decisions that would play a large part in shaping SEM’s future. First, he married his former secretary at Kelly Moore Paint and appointed her customer care manager. Marilyn Scranton has a passion for people and is as concerned about SEM’s employees as she is its customers.
She has always planned employee events to celebrate both company milestones and individual successes, and helped Scranton develop the SEM culture in which employees are treated with dignity and respect, knowing that their contributions to the company’s success are truly valued.
Then, in the early 1980s, Scranton decided to sell a portion of the company to his employees. He believed that if everybody at SEM cared about and shared in the future of the company, it would create a powerful bond that would pay off in terms of quality and productivity.
“Don Scranton was a brilliant CEO,” says Fussy. “He knew what he was doing and that if he empowered the people who worked for him, they would ‘watch the box’ and nothing would go out the door if it wasn’t right. Everyone would work together to pull the cart in the right direction.”
In a third key decision, Scranton decided to move SEM from California to the Southeast in 1992 after the city of Belmont made it prohibitive for SEM to stay located in town. Believing that California had too many unnecessary regulations that discouraged the growth of paint manufacturing plants, he directed his sights to Atlanta, Charlotte and Memphis. When he decided on Charlotte, 26 of 32 SEM employees elected to move with the company. (The six who chose not to relocate were not the primary breadwinners in their families.)
After relocating to Charlotte, SEM opened a second plant in Rockingham in 1999. The company grew to 85 employees and a former accountant named Fussy, from a small town in Minnesota, joined the SEM team.
Fussy had grown up in a town so small it didn’t even have a stop light. There were 47 students in his high school graduating class. He graduated from St. Cloud State University with a B.S. in accounting, but after two years he realized he was in the wrong field. Outgoing and charismatic, his talents made him a natural salesman.
In 1997, Fussy was living in Seattle and working in sales for 3M when he attended a trade show in Los Angeles. There he met Tom Oliver, SEM’s vice president of sales, who indicated their head of marketing had just retired. He insisted Fussy apply for the position.
“I wasn’t looking for a job,” laughs Fussy. “I didn’t even have a resume.”
However, he traveled to Charlotte for an interview and accepted SEM’s invitation to move to North Carolina as director of marketing. He ascended the ranks of vice president and COO, before finally becoming president of SEM Products in 2008.
Carrying on The Scranton Vision
The economic recession hit hard in 2008. It was a tough time to be at the reins of a manufacturing company as SEM was forced to lay off 17 percent of its employees.
“That was the hardest thing we ever had to do,” says Fussy. “It’s why my hair turned gray so quickly,” he adds, only half joking.
Still, where others saw a catastrophe, Fussy and the leadership team of SEM saw an opportunity to create a more efficient, “right-sized” company and to redirect its path. The first thing he did was recommit to what he calls “The Scranton Vision.”
“The company had become numbers-focused,” explains Fussy. “The Scranton Vision is Don and Marilyn Scranton’s legacy. It is how they built a successful company.”
The Scranton Vision is based on the fact that SEM is an employee-owned company. It calls for creating a work culture that treats everyone with dignity and respect, making each employee feel valued. It also calls for building high quality products that really work. It demands spending conservatively, while still investing in the things that will help people and the company grow. It focuses on activities that develop people’s skills and add value to products with fewer meetings and more productivity.
“Basically, The Scranton Vision outlines a way to manage the company for the long term rather than for quarterly or yearly results,” says Fussy. “We need to make decisions that are good for the long-term health of the company and its employees.”
In 2009, Fussy went ahead with plans to sell the Charlotte and Rockingham plants and consolidate all of the company’s operations under one roof, moving to a 100,000-square-foot facility in Rock Hill, South Carolina.
“We invested $7.1 million in SEM’s future at the height of the recession,” explains Fussy. “We were able to sell the Rockingham plant quickly, but it took two and a half years to sell the Charlotte facility because the commercial real estate market was so depressed.”
In addition to recommitting to The Scranton Vision and consolidating operations, SEM also focused greater attention on its sales efforts. It was able to hold its own in 2009 and, since then, the company has doubled, increasing over 90 percent in sales and over 100 percent in income. May 2014 witnessed the largest number of sales in the company’s history.
SEM leads through technology to the autobody repair aftermarket. Fussy describes SEM’s strength as marketing to niches within the autobody market. Its primary customer is the body shop technician, and SEM focuses on developing products that solve problems for these technicians. These products are sold through distributors.
“We can’t compete with the big multi-billion dollar companies like BASF, DuPont, PPG, etc.” states Fussy. “We focus on satisfying the special repair needs of the automotive body technician.”
To meet those needs, SEM manufactures paint and paint products, including coatings, undercoatings, primers, rust protection products, trim paints, truckbed liners, adhesives, fillers, seam sealers, prep products, and much more. Most of its products are available in aerosol cans. All of these are manufactured and packaged in SEM’s state-of-the-art-facility in Rock Hill.
SEM’s Rock Hill facility has everything under one roof from its own body shop to its in-house laboratory, a training center, and expansive warehouse. Its marketing, training, sales, production and distribution departments are all in one location. This creates an efficient organization with the goal of operational excellence and lends itself to prompt and accurate order delivery.
In addition, SEM offers a nationally recognized training program for distribution partners and professional auto body and interior repair specialists. Technicians are instructed on the proper use of the SEM product line and each participant receives a certificate of completion.
“We want our customers to know how to use and sell our products,” maintains Fussy. “We bring customers in on Friday and visit Stewart Haas race shop, take them carting and out for dinner, and then Saturday and Sunday they are at the plant in Rock Hill for hands-on-training. It’s a complete package.”
SEM is a member of the I-CAR Industry Training Alliance. SEM School offers training programs in Metal Bonding, Plastic Repair & Refinishing, Foam & Sound Dampening, and Corrosion Protection.
While auto body shops have been SEM’s primary target for the past 25 years, the market is rapidly changing. There are only 40,000 body shops in the U.S today; down from 60,000 just a few years ago. Not long ago there were 6,000 auto body paint stores; today there are just 3,000.
“This huge consolidation poses a real concern for the future,” acknowledges Fussy. “As the auto repair industry consolidates, we will need to find new niche markets.”
In an effort to develop new markets, SEM has expanded into the aerospace and marine industries. In addition, Fussy says the company is looking at other industrial avenues. He believes the company will continue to grow by paying careful attention to quality and continuing to improve current products, as well as by developing innovative new products, forming strategic partnerships and expanding globally.
Fussy says Rock Hill is a great place to live and to do business, and Waterford Park—where SEM is located—is a particularly good business park with its golf course and walking paths. However, Fussy says that for manufacturing companies to stay in North and South Carolina and not move to offshore locations as many of SEM’s competitors have done, some greater issues need to be addressed. These issues are primarily federal ones.
“The bigger issue is that there is less and less manufacturing in our country,” says Fussy. “Something has to happen in regard to all the regulatory and safety requirements for manufacturing companies. We have to make sure we’re doing what makes sense to be safe and to have a safe working environment, but we need to eliminate the regulations that don’t add value to a product or safety for an individual.”
Despite the concerns about markets and regulations, SEM Products is a strong company and getting stronger. SEM is poised to do business for another 65 years forward, continuing to deliver quality American-made products, formulated and packaged in Rock Hill, into the future.
“Don Scranton was a great visionary,” Fussy asserts. “By creating an employee-owned company, he put quality of workmanship in the forefront. Our employees are running a marathon and not a sprint. We’re making decisions that are good for the long-term health of the company and its employees.”
While climatic variance and geopolitical crisis may dampen the World Bank’s predictions for global economic growth from time to time, there is no longer any doubt that globalization is the dominant business environment.
Increasingly connected marketplaces afford businesses a potential of more than 7 billion customers. But navigating and thriving in this global environment requires different and specialized knowledge, tools and training. It requires that business leaders have a new mindset—a global mindset.
Educating these new global business leaders is the mission and goal of the College of Charleston’s School of Business. The School of Business is one of six undergraduate schools that make up the 244-year-old college located in the heart of the city’s vibrant historic district.
With almost 300 students majoring in international business, the school has a substantial commitment to educating global business professionals, and under the leadership of its dean, Dr. Alan T. Shao, all students of the School of Business will graduate with a global mindset.
“I’m working to integrate global topics throughout the entire school of business curriculum,” says Shao. “A business education today is not complete without an understanding of global business. As we implement our initiatives, our students—whether they are a finance, marketing or supply chain major—will have an understanding of what globalization is all about.”
A Global Mindset
The confluence of education and globalization came early for Shao. “My destiny was determined in the crib,” he jokes but he’s not far off the mark. Shao’s father was a professor at Old Dominion University for almost 40 years where he taught management information systems, accounting and finance. The youngest of four brothers, Shao is the fifth Ph.D. in business in his family.
Shao credits his interest in globalization to his family as well. “I’m bi-heritage. My father is Chinese and my mother is an American from South Carolina so, by definition, I’m an international person.”
But what really “lit the fire” for Shao’s interest in globalization was studying abroad. “Thirty-six years ago I studied for one year at the National Taiwan University in Taipei, Taiwan,” he explains. “It was the best learning experience of my life. It taught me how to live in a culture where I didn’t understand the language and how to get along with people I didn’t understand. It went far beyond the books. From that point on, I was sold on devoting my academic life to foreign markets.”
Shao earned a B.S. in general business and an M.B.A. with a concentration in management from Old Dominion before obtaining his doctorate specializing in global marketing and marketing research from the University of Alabama in 1989.
In 1990, Shao joined the faculty of the University of North Carolina at Charlotte as an assistant professor and director of their international business program. In his 19 years at Charlotte, Shao rose to Associate Dean of Professional and Global Programs and North Carolina Ports Professor of Marketing, but more important to Shao than the titles was what was accomplished in his tenure at Charlotte.
“I was challenged to start revenue-generating, self-supporting programs in foreign markets. We successfully began MBA programs in Hong Kong, Taiwan and Mexico, as well as a dual degree Masters of Science program in Economics in Denmark. It educated our students and gave foreign students the opportunity to get our degree, but it also generated money for our local students at Charlotte. We were able to create scholarships and significant faculty development funds through the revenue generated.”
“I loved every minute I spent at that university and in the city of Charlotte,” says Shao. “Charlotte is an amazing city.”
In 2009, Shao’s global background was welcomed at the College of Charleston when he accepted the position of dean of the School of Business. The internationalization of the campus is a “top tier priority for our campus strategic plan,” Shao explains.
“Globalization opens up a whole new perspective on business,” he continues. “Educating someone to have a global perspective allows them to think differently; to open up their mind to a different way of looking at business.”
Currently, the school’s students in the one-year accelerated MBA program visit a foreign market where, for three weeks, they visit foreign manufacturing and service companies to get a local perspective on how business is done. The foreign market visits are a requirement of graduation.
“Ideally, a student’s study abroad would include learning from a foreign professor and interacting with foreign students and local people,” Shao says. “Exposure to both academics and actual business experience through tours, internships and the like allows a student to see how business is actually conducted in another country.
“And the global experience shouldn’t end when the student returns to the U.S. Each class should have globalization embedded in the curriculum. Hearing export strategies from a Chinese business person who actually exports to the U.S. adds interest and value to a curriculum.”
Shao also emphasizes what he calls diversity of the mind. “Optimally, our business classrooms should be filled with students from a variety of cultures. If you have students from Germany, Russia, Mexico and Brazil in a class with American students all doing a case study each might look at it very differently because their cultures are different.
“They may come up with a solution that is very different from someone with only a U.S. perspective and it can open the minds of all the students involved to understand and appreciate different perspectives on how to attack a problem. Different perspectives create that diverse mindset.”
The “Ready-to-Work” Graduate
Shao’s passion for a global education for his business students is only equaled by his passion for the ultimate outcome of their education. “My goal for each one of our graduates is to be a ‘ready-to-work’ graduate,” he says. “That’s so important. So how do you create a graduate who is ‘ready-to-work’? You create it by working closely with businesses.
“The more closely linked the business school is to the business community, the better equipped our students will be for employment. We’re designing our curriculum needs around the needs of the business community so when they need to hire, our students’ learning already fits those needs.
“For example, BMW, Boeing and Michelin told us that student knowledge of an ERP (enterprise, resource and planning) system would be very beneficial, so we ordered the software and we’re integrating that into our curriculum. This gives our graduates the added advantage of a skill these businesses are looking for in hiring.”
“In our halls, it’s difficult to tell who’s a practitioner and who’s an academic,” says Shao. “We have the business community through our halls every day. They are part of what we do.”
Chief Executive Officer for InterTech Group Anita Zucker is a current executive committee member and past chair of the board of governors who supports Shao’s push for globalization at the school.
“International trade is vital for my companies,” says Zucker, “and it’s becoming more vital for this region. Now that Boeing has come to Charleston, they’re bringing people from all over the world here who are interacting with the people working and living in South Carolina. We have to make certain that a global perspective is incorporated into the teaching at the school. Our community needs to have that level of knowledge and experience.”
Another board of governors’ member, Marco Wirtz, is president and CEO of German-based Daimler Vans Manufacturing which assembles Sprinter Vans for the U.S. market in their plant in Ladson, S.C. Wirtz is pleased with the internationalization focus at the school and especially with its new offering of a major in supply chain management, available in fall 2015.
“International business is about logistics,” says Wirtz. “It’s crucial for an internationalization effort. Logistics methods and processes change as the world changes. It’s wonderful that businesses can get students from the college with fresh knowledge and fresh ideas into their companies to help them change with market changes and remain competitive.”
Global Mindset from the Top
Shao also emphasizes the importance of government’s role in supporting globalization efforts at the school. Current board of governors’ members include Speaker of the South Carolina House Bobby Harrell, State Senator Paul Campbell and past member and current U.S. Senator from South Carolina Tim Scott who spoke at the school as recently as a few weeks ago.
South Carolina Governor Nikki Haley has also spoken at the school twice in the last two years. But political support of the college’s global initiatives is part of a larger realization: global trade is a major economic driver for South Carolina.
“Gov. Haley has charged Charleston and South Carolina with developing the economy,” Shao explains. “The governor understands the business advantages of globalization and she and South Carolina Secretary of Commerce Bobby Hitt are doing a very good job of educating businesses and consumers about it. The state’s global mindset comes from the top.”
And that mindset and economic development plan appears to be working. Many global companies call South Carolina home.
The first 787 Dreamliner aircraft rolled off Boeing’s North Charleston Final Assembly Plant in April of 2012 bound for the Air India fleet. Boeing employs about 6,500 people in the plant and is a huge presence in the area; it has recently acquired additional land with the intention to grow.
“When you have such a behemoth of a business in the region, you create global interest,” says Shao. “Many smaller businesses—vendors of Boeing—have built up around the Dreamliner plant.”
Another global behemoth that’s found a home in South Carolina is BMW who recently announced that it will make a $1 billion investment to its Spartanburg plant to increase production up to 450,000 vehicles by the end of 2016. In 2011, BMW exported more than 192,000 vehicles worth $7.4 billion, making it the largest auto exporter in the U.S.
Those 192,000 vehicles, destined for 130 different global markets, were all exported from the centerpiece of the state’s global trade engine: the Port of Charleston.
A Global Portal
President and chief executive officer of the South Carolina Ports Authority James Newsome, III, calls the Port of Charleston a “major strategic asset of the state.”
“Businesses locate in areas of global sourcing and global manufacturing,” says Newsome, who is also on the school’s board of governors. “Businesses locate near a great port because it gives them access to the world.
“I think there is universal acceptance in the state that the port is an important asset. I know that not only from statements made, but also from the money invested. In addition to what the port is investing, the state has set aside some $700 million for various infrastructure-related port improvements.”
With growth in fiscal year 2013 of over nine percent and expected growth of more than six percent in fiscal year 2014, the Port of Charleston is growing at more than twice the rate of the general U.S. port market.
A new container terminal located at the former Navy base that will expand capacity by 50 percent is one of the improvements earmarked for the money, but the lion’s share of dollars will be spent on deepening the port’s harbor to 50 feet or more.
The Charleston Harbor Post 45 deepening project is in study phase currently but at its projected completion in 2018, the harbor will be able to accept larger post-Panamax container ships, further enhancing the port’s contribution to the state’s economy.
The expected growth at the Port of Charleston is a good reason for a better connection with Charlotte according to Newsome. “As capacity increases in Charleston, we’re going to need more capacity to move containers by rail,” he says. “With the new intermodal facility in Charlotte, it makes sense to grow that connection. There could be synergy between South Carolina and North Carolina in moving freight so we need to work more closely together.”
Shao also sees Charlotte’s potential in global business. “I know Charlotte well,” Shao says. “Charlotte is well-positioned to continue their upward trend toward being a global hub of business.
“Charleston has a jump on the global mindset. We already see global business as an economic engine. Charlotte needs an aggressive campaign by the academic community, business and government to get out the word that it’s good to be global and to show how other states and regions have been able to lift their profiles by taking advantage of markets outside the U.S.
“With advancements in transportation and technology, no place is too far anymore. Businesses need to understand the opportunity.
“Certainly, Internet search engines can show you trading opportunities worldwide, but trade councils, U.S. Export Assistance Centers and the Department of Commerce’s Gold Key Program all do a tremendous job of promoting international trade.
“I would suggest getting your toes in one market first. There’s a lot to learn when exporting or importing into a foreign market. It’s good to learn the basics of international trade through one market before expanding all over. And there’s no substitute for travel abroad. Do your homework before you leave but definitely go to that market and see if your product works.”
There is more growth ahead for the College of Charleston. Although efforts to pass a University of Charleston bill in the state legislature that would allow the school to offer doctoral programs was defeated last month, that’s one mission incoming President Glenn McConnell has said he’s going to undertake.
McConnell has advocated doctoral degrees along with research programs linking logistics with the Port of Charleston or programs tied to work at Boeing. He believes that to strengthen the institution, “what you do is build in these other areas where there’s a perceived need. The college has to be relevant to this business community and to the demands of today.”
As Shao and College of Charleston School of Business work to advance the global mindset, as Shao says “developing business students who understand that we live in one world and that world is one huge market,” it is clear that they are on the fast track to success.
“One of the most fundamental obligations of any society is to prepare its adolescents and young adults to lead productive and prosperous lives as adults. This means preparing all young people with a solid enough foundation of literacy, numeracy, and thinking skills for responsible citizenship, career development, and lifelong learning, states the seminal Pathways to Prosperity report of the Harvard Graduate School of Education.
Yet the report continues to say, “there are profoundly troubling signs that the U.S. is now failing to meet its obligation to prepare millions of young adults. In an era in which education has never been more important to economic success, the U.S. has fallen behind many other nations in educational attainment and achievement. Within the U.S. economy, there is also growing evidence of a ‘skills gap.’”
The report lays the foundation for study of the how much and what kind of post-secondary is really needed to prosper in the new American economy.
“What the whole world wants is a good job,” Gallup Chairman Jim Clifton states more bluntly in his best-seller The Coming Jobs War. He acknowledges the global jobs war and maintains that “the next 30 years won’t be led by political or military force. Instead, the world will be led with economic force—a force that is primarily driven by job creation and quality GDP growth.” He says leaders and legislatures must realize that every decision they make should consider the impact, first and foremost, good jobs.”
He also advocates that school leaders think beyond curricula and their graduation rates; “students don’t want to merely graduate; they want an education that results in a good job.”
Out of Sync
No one has better first-hand experience with the subject matter than Charlotte’s own Bill Anderson. As a principal in the Charlotte-Mecklenburg School System (CMS) for over 25 years, Anderson witnessed thousands of graduates walk across the stage and into their futures, knowing full well that at least one-third of them had no idea what they were doing next. Anderson is now executive director of MeckEd, a private non-profit organization committed to excellence in public education.
“Although approximately 60 percent of them would enroll in college according to national statistics, only about 59 percent of that number would graduate within six years,” he comments. “Few knew what they wanted to study as a major and fewer still had any experiential learning behind them that could lend itself towards a career.”
Anderson witnessed what is occurring all over the country: high school students heading off to college or out into the world with little, if any, tangible knowledge of career options. Compounding the problem, a college education no longer guarantees employment that parallels the investment in time and money. Nearly half of 2010 college graduates work in jobs that do not require a bachelor of arts or science degree. Many cannot find a job at all and, for the students who did not graduate from high school or enter into post-secondary education, unemployment rates have shifted into double digits.
Meanwhile, companies across the United States are lamenting their loss of workers to retirement and wondering where replacements will be found as they see an up-and-coming workforce that is unprepared to meet the old and new demands of business operations. Plus, importantly, the rapid changes that continue to occur in science and technology are outpacing the typical liberal arts classroom while companies are in great need of workers that are highly and specifically trained.
This is particularly true in advanced manufacturing, information technology, health care and engineering. “What’s really happening is that so many fields have begun to flourish and require very specific one-to-two-year certifications. There are now lots of very valid careers that don’t require a four-year degree,” says Anderson.
Collaborative Workforce Development
MeckEd was established in 2006 with a mission to educate, engage and impact the Charlotte-Mecklenburg community through work that supports strong, vibrant and successful public schools. Over the years, it has made conscious efforts to increase high school graduation rates and to have students understand the importance of secondary and post-secondary education. In so doing, it has sought to raise awareness among educators, students, parents and the business community that higher education should rightfully mean different things to different students.
MeckEd has taken up the charge to lead a strategic partnership with Charlotte Mecklenburg Schools, Central Piedmont Community College (CPCC), and the University of North Carolina (UNC) Charlotte to implement a Collaborative Workforce Development Plan to address the disconnect between education and the country’s need for a qualified, highly technical, workforce and its ramifications. The Collaborative Workforce Development Plan identifies twelve key initiatives that align education with workforce needs.
MeckEd’s critical role is to serve as a link between the schools and the Mecklenburg business community to build relationships and guide businesses to establish opportunities for students to learn about career options and gain hands-on, on-site experience in various fields. These opportunities can be fulfilled through seminars and workshops, guest speakers, site visits, job shadowing, internships and apprenticeships.
Access to Career and Technical Education coursework for students in high school is also very important to the process. Now, high school students can take courses that are specifically designed to align with and lay a foundation to the coursework needed to fulfill degree, diploma and certification programs at CPCC and at UNC Charlotte.
“There are hundreds of students who don’t know what they want to do or can do who could have their interests ignited by these programs,” espouses Anderson who joined MeckEd in 2010. “Many of these students lose interest in school or simply muddle through because they lack information to understand the relevance of their studies to real life. Participation by the business community allows students to discover what they like to do and what they need to learn to be able to do it. They are then able to make an informed choice as to what kind of education they need.”
The Collaborative Workforce Development Plan is modeled after the work and ideas of Robert Schwartz, academic dean and professor at the Harvard Graduate School of Education who heads up the Pathways to Prosperity project which has met with broad success.
The report stresses how far the United States has fallen behind other countries, especially in manufacturing, and how this has greatly diminished the middle class. It questions the modern-day validity of our beliefs about education and concludes that the ultimate implication of too great a focus on academia is that America has ceased to be a leading force in the world of making things.
It points out that the four-year-degree mantra is actually harmful for some students who need, instead, a sharper focus on their career goals. And it recognizes that to achieve success in meeting workforce demands, employers must play a greatly expanded role in supporting career pathways.
Conventional Wisdom Flawed
For the past few decades, generations of Americans have relied upon the notion that to be successful in career and life, one must earn an undergraduate, perhaps a graduate degree. This idea was fueled by good intentions of society, particularly parents, who wanted their children to experience greater success and have an easier life than they had working in factories and sweat shops, garages and mines or on the farm where the labor was hard and the environment dirty.
“Offshoring labor was an easier way to make money and a cheaper way to get products,” explains Clifton Vann of Livingston & Haven, a Charlotte-based industrial solutions provider that offers apprenticeships under the Collaborative Workforce Development Plan. Vann maintains that the U.S. has drifted away from manufacturing, outsourcing to other countries, and towards a nation driven by service industries.
“We’ve come to a point where we can’t chop our own wood anymore,” declares Vann. “When we were selling tractors and appliances, we had something tangible of value. When we started selling each others’ mortgages we collapsed our middle class which is what supports manufacturing. So much talent has gone to unemployment.”
Today, with incredible advances in technology, the manufacturing workplace is a far cry from factories where workers stood all day and got dirty and greasy. Today’s manufacturing is carried out in pristine, computer-controlled laboratories, the operation of which requires specialized training. Also, manufacturing jobs garner paychecks that often exceed those of workers holding a four-year degree.
Still, it’s a hard sell to persuade parents that two-year community college degrees and certification programs are as good as, and carry the status of, four-year degrees as pathways to rewarding careers. This is particularly true for families whose children are the first generation to attend college. The effort must go beyond facts and deal with the hopes and aspirations of parents for their children. It’s also about pride.
As the nation chose higher education as the single track to help students transition from school to career and adolescence to adulthood, most other tracks were left with a stigma attached to them, particularly those jobs in the trades or “blue collar realm.” This stigma continues on, not just in the job market, but also in the selection of coursework by students. The path to offering more choices and greater flexibility will require impressive marketing and public awareness campaigns, points out MeckEd’s Anderson.
“We do respect the college path,” insists Anderson. “It is the perfect path for approximately 60 percent of our youth. But we also need to have students graduate with some practical experience towards their career path.”
Changing the Culture
Parents and students are not the only segments of the population that need to be moved to change, businesses also need to come forward to work with and help students decide what they want to do after high school.
Internships and apprenticeships are needed from every cluster including advanced manufacturing; automotive and logistics; business management, entrepreneurship and financial services; construction and energy; industry cluster; engineering; health care and human services; information technology; and public safety and first responders.
“Employers need to understand that getting involved in their own workforce development is an investment in time, money and knowledge versus charity,” says Anderson. “Workforce development means continuous operations and the ability to attract new customers. Community leaders need to understand that companies who are interested in moving their operations here must find a skilled workforce waiting.”
“We’re all about building a talent pipeline; not just vocational pursuits but arts, as well,” says Richard Zollinger, vice president for learning and workforce development for CPCC. “All of our programs are linked to jobs. We are creating a foundation that will supply skilled individuals for high demand jobs in advanced technical skills.”
Zollinger says that the community college is starting to see students with success stories transferring into advanced manufacturing. “We have a long way to go, but we’re finding success because we are immersing in hands-on experience. You don’t learn about welding by reading about it. You see it demonstrated; then you do it.”
The Collaborative Workforce Development Plan is currently in place within four CMS high schools. “For every CMS high school in the system, there are probably 500 students that want an internship but they aren’t available. It’s an issue of supply and demand. Students want to do these things. We need business partners, small and large, to increase supply,” says Anderson.
A European State of Mind
According to the Pathways to Prosperity report, “If you look at the U.S. secondary education system through a comparative lens, one big difference becomes immediately apparent: most advanced nations place far more emphasis on vocational education than we do.
“Throughout northern and central Europe especially, vocational education and training is a mainstream system, the pathway helping most young people make the transition from adolescence to productive adulthood.”
Mecklenburg doesn’t have to reinvent the wheel to implement much of the Collaborative Workforce Development Plan. It can look to European countries that have been using a similar model all along. In Europe, business and education are required to work together. Together, they assure that students finish their studies and are ready to go to work. Consequently, there is a more vibrant middle class in countries such as Germany and they have weathered economic downturns with less unemployment.
The Pathways report describes the European system generally: In Austria, Denmark, Finland, Germany, the Netherlands, Norway, and Switzerland, after grade 9 or 10 between 40 and 70 percent of young people opt for an educational program that typically combines classroom and workplace learning over the next three years.
This culminates in a diploma or certificate, a “qualification,” with real currency in the labor market. In virtually all of these countries, vocational education also provides a pathway into tertiary education for those who choose to take it.
Upper secondary vocational education varies more from country to country, but there are two basic models. The first, usually referred to as apprenticeship or the dual system, has students spend three or four days in paid company-organized training at the workplace, with the other day or two in related academic work in the classroom.
Germany has the oldest and best-known apprenticeship system, which offers programs leading to recognized qualifications in about 350 different occupations. Switzerland also has a very highly regarded apprenticeship system.
Other countries have opted for a model in which vocational education is mostly provided in school-based programs, although they all incorporate at least some work-based learning. These countries typically introduce students to a broad cluster of occupations (e.g. health care or IT) before narrowing the focus of training in the third year.
These models provide food for thought as it becomes an economic necessity for the U.S. to revaluate its preparation of the workforce. It is as elementary as the lesson from the nursery rhyme, “Tinker, tailor, soldier, sailor…Oh it’s such a lot of things there are and such a lot to be.”
We must do something to get back in sync with workforce reality. “And,” concludes MeckEd’s Anderson, “partnerships between education and business are essential to the task.”
Randy Austin is a true enigma. The slow talking, unassuming businessman who started a metering company nearly 25 years ago measures his words before he speaks. Shake his hand and converse awhile, and you’ll see why the seemingly quiet man is at the helm of one of the largest independent distributors and renovators of electric and gas meters and related equipment in the United States—maybe the world.
Not parking meters, mind you, but the gadget-y ones on the outsides of homes and businesses and atop utility poles. Meters that measure electricity, meters that measure natural gas, intelligent meters that can’t be tampered with, and meters that report directly back to utility companies for reading, connection or disruption of service.
Talk about utility meters with Austin and his demeanor changes. He’s blunt, shoots straight from the hip, and is passionate about the not-so-simple round gauges and related gadgetry.
“We are a small company in a very big building,” says Austin about his 264,000-square-foot building in York, S.C. “Our customers know where we are and that’s all that really matters.”
Most of those same utility powerhouses don’t know that Austin’s company, Vision Metering, LLC, got its start in a basement shop in Belmont, N.C.
Surplus Consignment is a Start
Austin, now 60, grew up in Detroit. He began his fascination with electricity, its properties, and how it makes things work as an electrician in the U.S. Navy for eight years, traveling the world. He also worked stints at Westinghouse Electric and Ekstrom Industries Inc., a meter socket adapter manufacturer.
It was in 1983 that Austin moved to Belmont, N.C. He was consulting for Brazilian metering company Nansen, importing their product, and selling it to electric utilities in the U.S.
“Our price was the driving factor. We had a better price than anyone else,” he says proudly.
It was during that time that Austin met Debbie Ruth, now Vision Metering’s executive vice president, while the pair both worked at Process Systems and APTECH, Charlotte companies and leading manufacturers of isolation relays and protection devices used by electric utilities.
What followed next can only be called fate—the kind of fate that any businessperson dreams of.
Friends in the meter department at Georgia Power asked Austin if he knew where to sell their surplus electrical equipment. Austin had lots of ideas. He didn’t hesitate and sold a shipment of solid-state recorders the following day.
“They took us in to a warehouse and wanted us to sell surplus equipment,” Austin recalls. “It was all sorts of equipment related to meters, metering parts and more. They said, ‘Take all of it!’
“We had 12,000 square feet of space back in Belmont, and were looking at a consignment contract to sell 300,000 square feet of equipment!” remembers Austin.
So that day in 1991, Austin and Ruth rented a Ryder truck and transported the equipment—and that was the start of Austin International, Inc. They had leased the basement of a building next to Sammy’s Restaurant in Belmont, and would eventually buy the town’s closed Family Dollar and Food Lion stores just to have space for their growing inventory.
“We created a newsletter called MeterScene and sent it out to all the potential customers we could think of,” says Ruth of pre-Internet catalogs. “The newsletter detailed all of our surplus parts and grew from two pages to 52 pages at one point.”
Austin notes that their first sales markets grew in Central and South America, leading to sales in the Philippines and then the Caribbean basin. “We now have a factory in the Philippines to build special elevated metering equipment,” says Austin.
The consignment business eventually parlayed into $14 million in annual revenue.
“The significant part of the history of our company was the consignment factor. There was no outlay of cash really. The constant business helped keep us going,” says Ruth, 56.
With constant business from Florida Light & Power, Georgia Power, Virginia Power (now Dominion Power), as well as Duke Energy, the pair knew they needed to grow in size, and look beyond surplus goods to manufacturing and refurbishing meters as well. The need was there. How to meet it?
Through a vendor tip, the pair showed up at an auction in York, S.C., in 2001 and nabbed the town’s former Cannon Mills/Fruit of the Loom plant built in the late 1800s. Austin and Ruth, who now lives in York, paid $300,000 for 264,000 square feet of manufacturing space on 25 acres.
“It’s all on one long, long level building with lots of docks. It’s been perfect for us and our employees,” says Ruth. “It was a steal.”
In August 2001, the company consolidated all of its metering operations in the York facility and began branching out into manufacturing and refurbishment to meet the needs of their growing customer base.
Moving Forward with Selective Manufacturing
Over the last 10-plus years, Austin’s company has become one of the largest utility products and service providers in the U.S., if not the world. The company has developed its own trademarked product, the Vision, which is a family of smart grid solid state electrical meters for residential, commercial and industrial use.
In 2011, Austin decided to change the company name to Vision Metering, LLC, an Austin International company, to reflect the fact that electric and gas metering had become the most significant part of the business. The ownership, management and personnel remained the same.
Visitors to the Vision Metering’s massive, glossy pine-floored York facility can imagine the former 1880s textile mill as it was, but now there are boxed meters and meter parts spread as far as the eye can see. The building consolidates the company’s headquarters and operations under one roof.
The electric and gas meter shops are largest division of Vision Metering, a cost-effective operation providing cleaning, testing, retrofitting and meter retirement services for utilities in the wake of deregulation. Vision’s engineering department designs and builds the Vision family of meters, data-on-demand smart grid products, data recorders, totalizers and isolation relay equipment.
The company still works with the purchase and sale of surplus electrical equipment in the electrical industry and has a second facility located in Belmont, just over 100,000 square feet on 15 acres, used primarily for inventory.
Vision Metering now has 150 employees, including seven engineers, and enjoys a culturally diverse workforce with talented individuals from Russia, India, Laos and Latin America. Austin adds that his employees talk of two ghosts from the Cannon Mill days that roam the building. He scoffs at the idea but still seems intrigued. Asking an employee if she has seen a ghost, she shyly replies, “We heard a woman scream loudly once when no one was here.”
Ghosts aside, Vision Metering has made almost every aspect of metering equipment big business, working not just on refurbishing old meters and building new ones, but developing new innovative products to meet utility giants’ needs.
“We discovered early on that surplus sold better if we made it look better,” says Austin. “So we began big business in meter refurbishing or even transformers. We clean, paint. We do whatever it takes to make it look like new and perform like new.”
The company’s biggest customers are Florida Power & Light, Dominion Power, Public Service Electric & Gas in New Jersey, and Entergy, which provides utilities for parts of Arkansas, Louisiana, Texas and Mississippi. FirstEnergy is another large customer, based in Ohio, serving a 65,000-sqare-mile are in the Midwest and mid-Atlantic regions.
In the past, the company also worked closely with Duke Energy refurbishing meters until Duke brought the work in-house after its merger with Progress Energy. Vision Metering did complete an automatic meter reading project for Duke from 2001 to 2004, retrofitting meters for new technology. Austin estimates Vision worked on 1.6 million meters for Duke in those three years.
He maintains that Vision attracts and maintains business from utility giants “because we are affordable and our project quality is beyond anything they see elsewhere, including overseas.”
For example, a clear replacement cover for a meter might cost $6 from one manufacturer, while Vision charges $3. “They would much rather buy it from us with our volume discounts. It saves them time and a tremendous amount of money in the long run,” says Austin.
Vision Metering also has a contract with the South Carolina Department of Corrections. State prisoners work on building the bases for standard electric meters that are then sent to the York facility to be assembled and finished.
Austin is complimentary of his team of employees, from testers to assemblers to administration. “The team I’ve built here is strong and they are self sufficient,” he adds. “I don’t have to micromanage.”
Vision Metering now works with both electric and gas meters, offering new Vision meters, using two state-of-the-art testing facilities for both gas and electric meters. They service over 1.5 million gas and electric meters a year. Austin estimates that the company spent about $1 million in preparation to add gas meter production, testing and refurbishing to its list of services.
Keeping It Smart, Preventing Energy Theft
Products and services offered by Vision Metering are in even more demand now that technology has made meter reading by humans nearly a job of the past. That’s because engineers, like those who work for Vision Metering, are designing and building smart grid products and isolation relay equipment.
“Smart grid” refers to new digital technology that utilities are adding to substations, power lines and metering to modernize the grid. It also includes new computer systems to manage all of the new devices. Smart grids make it easier to prevent and repair outages, allow for faster and more accurate meter reading, and provide controls for energy usage and costs.
Isolation relay is designed to isolate and protect network components for safety and security. It can be used for both pulse replication and pulse isolation applications, where a utility needs to isolate their billing meter’s pulsed output from a customer’s energy management system.
Many utility companies now use radio transmitters within meters that transmit the kilowatt-hour usage reading directly to the company. Utility companies can also disrupt service or connect service using the same smart meters, according to Austin.
Austin explains that he is working closely with Florida Power & Light which has 100 percent of its service using smart meters.
One of Vision’s newest and most promising projects is its HawkEye Compact Meter along with an enclosure secured by electric circuit breakers to prevent utility theft.
“We are very focused right now on electricity in developing countries and the theft of energy,” says Austin. “In some of the Central American countries we are working with, as much as 40 percent of generated power is being stolen.”
Vision Metering has developed a new approach. In the past, electric utilities have resorted to clusters of electric meters on top of utility poles to divert theft of energy. It has resulted in metering that is difficult to read and bill, disconnect, reconnect and maintain, says Austin.
The company’s HawkEye Compact Meter measures roughly 4 inches by 4 inches by 2 inches compared to the large meters of the past. Up to 50 of the compact meters can be placed in a large metal compact enclosure, framed by an electric circuit to prevent theft or damage.
“Non-technical losses have always been a large concern for utilities in developing countries,” says Austin. “This low cost solution helps address that issue, and enables utilities to take control of energy theft. We are always trying to solve customers’ problems.”
According to Austin, his company has been working on the technology for about two years for parts of Asia, Africa and the Middle East and delivered the first meters last October. Production units started shipping in April.
“Right now about 75 percent of our business is in service with the other 25 percent in new metering products. I expect new products to dwarf our current set up very soon,” says Austin.
“New technology is being developed by our engineering team using 4G LTE modems inside meters for Georgia Power that will provide a way to communicate via a cellular system,” he adds. “Utilities currently have to have access points or nodes on top of poles to communicate. That will get rid of that utility-owned communications infrastructure completely.”
Whatever they aim their sights at, Vision Metering certainly has a vision for the future. As Austin says, “It’s the way of the future, and we are right there every step of the way.”
About an hour northwest of uptown Charlotte is the small Gaston County town of Cherryville. With quiet tree-lined avenues and a corner drug store on Main Street, Cherryville is a throwback to a simpler time when life moved at a less frenetic pace.
Formerly a bustling textile center and the home base of Carolina Freight Carriers, once one of America’s largest trucking companies, Cherryville saw its textile mills move offshore and its hometown trucker move out before being sold over 20 years ago. The resulting economic distress has been long lasting, as the still-vacant storefronts on Main Street attest.
But out on the west side of town, in a building once occupied by Bernhardt Furniture, a company named Farris Fab is helping Cherryville participate in the rebirth of American manufacturing. Farris Fab fabricates a wide variety of specialty parts that wind up in a diverse mix of commercial products including heavy trucks, earth moving and construction equipment, and subway cars.
Leveraging an available base of skilled workers with low real estate costs, Farris Fab is showing that by making quality products fast and efficiently at a fair price, manufacturing can once again become an important part of the American economy.
A Second Generation Family Business
Farris Fab traces its beginnings to 1979 when Corwin Farris opened a small 1,200-square-foot machine shop in the rural Gaston County countryside outside of Bessemer City. Initially focusing on fabricating parts for the textile manufacturing industry, the company quickly developed a commitment to quality and customer service that survives to this day.
By the late ’80s, Corwin was planning for retirement, so he looked to his oldest son Bryan to follow in his footsteps. Bryan had worked a variety of odd jobs in the family business since he was 13, but after graduating from high school in 1988, Bryan decided he wanted to work full-time at Farris Fab.
“Right after graduation break, I was back working six days a week for the next 15 years,” chuckles Bryan, who is now owner of the company with his brother Greg, who joined the business four years later. “I was basically self-taught and I learned how to manage by failing and then making it right. My dad let me fail to help me learn.”
Bryan could see that textile manufacturing was leaving the Carolinas, so he knew the company had to move in another direction to prosper. He began calling on larger OEMs (original equipment manufacturers) and began diversifying the customer base away from its roots in textiles.
“We’ve never had a dedicated sales staff,” admits Bryan. “Management handles the sales calls, and I think customers like dealing with someone who can actually make things happen for them.”
As his experience grew in the early ’90s, Bryan began taking over more and more of the day-to-day responsibilities. He can’t pinpoint the specific date when his father officially turned the company over to him, but he does vividly remember the day when he realized Farris Fab was becoming his to run.
“I remember telling my dad I needed some help,” he recalls. “I told him I was unloading trucks, programming parts, and buying lasers, while also trying to help chart the course. I told him he needed to hire somebody to help me. But as he was walking out the door, he turned around just said, ‘Don’t tell me—it’s not my deal.’ He was telling me if I needed help, I was the one who needed to make it happen.”
Today, Bryan is president of a company with three locations, just under $30 million in sales, and just shy of 200 employees. His brother Greg has also been instrumental in setting direction for the company and serves as a vice president while also running day-to-day operations at two other related family businesses—an industrial supply company and a conveyor business.
While contract non-disclosure obligations prevent publication of the names of their major customers, Farris Fab manufactures parts for a diverse range of multi-billion dollar OEMs that are a who’s who of American business, and whose names and logos are known worldwide. Farris Fab-manufactured parts can be found in numerous places including trucks, construction equipment, forklifts, subway cars, and large electric motors.
Specialization Versus Volume
Farris Fab’s specialty is contract manufacturing, with a focus on more specialized jobs. Bryan calls his business a “convenience store for manufacturing,” contrasting it with higher volume manufacturers, many of which might be located in Mexico or China.
“We say you don’t have to order way in advance or in massive quantities,” he explains. “We don’t deal in the millions or hundreds of thousands. We deal in thousands and hundreds. We can make your products faster and more efficiently, and what we do can be more dynamic and responsive to changes.”
Adds General Manager Mike Bumgardner, “A lot of what we make continues going through engineering changes. Whether it is every six months or every year, we see a lot of changes. China or Mexico can’t respond to that as quickly as we can.”
Many of Farris Fab’s projects start on one of the machines that cut sheets of material to pre-programmed shapes. The core of their cutting operation consists of several large laser cutting machines, but they also have a Waterjet machine which uses highly pressurized water to process more exotic or thicker materials that would be difficult to cut on a laser. Bumgardner compares their cutting operation to using a pair of scissors to cut out a shape from a piece of paper.
Once the metal has been cut to shape, it often moves to one of the press brake machines which bend the material to the often complex shapes required to fabricate the customer’s parts. Multiple bends are frequently required for each part.
If parts need to be joined together to create a sub-assembly, the next step is often welding. The company employs certified welders for lower volume welding jobs, but for higher volume and more repetitive tasks, the company’s robotic welders can be programmed to create the required welds more efficiently with outstanding quality.
Many of the assembled parts also require machined components. Farris Fab’s computerized metal lathes remove material from rotating round or cylindrical parts, creating a specified shape for the customer. Their computerized milling machines cut and/or remove material from the surface of a piece of material, creating a part with a specific required shape.
The final steps often include other finishing processes like painting, sand blasting, powder coating, and final assembly before the parts are shipped out to the customer.
Farris Fab works with all ferrous and non-ferrous metals as well as modern plastics, which can also be turned, milled, and even bent. They can also fabricate parts using the new state-of-the-art 3D printing processes.
With five engineers on staff, the company can also help their customers with part design and requirements definition, including reverse engineering and 3D modeling.
“It’s sort of like LEGOs,” laughs Bryan about their overall workflow. “We’re just making the blocks to put this puzzle together. We join it up or fashion it in some way and send it on down the line.”
A Big Bet Pays Off
Farris Fab’s main facility in Cherryville is 110,000 square feet and contains corporate offices as well as laser cutting machines, the machining area, press brakes, and both human and robotic welders. A secondary 50,000-square-foot facility in nearby Bessemer City contains assembly operations, metal prep and clean up, and powder coating. A third 35,000-square-foot facility located between Cherryville and Dallas contains their Waterjet cutter, another press brake, and their wet painting operation.
Cherryville’s long-standing local economic issues, coupled with the Great Recession of 2008-2009, allowed Farris Fab to acquire its Cherryville facility for a fraction of what it might have cost otherwise. With no external debt to weigh them down during the recession, the Farrises took the gamble to invest heavily in the business, positioning the company to profit from the eventual economic rebound they believed would come.
“We spent a million and a half dollars for this building and spent another million and a half updating it,” says Bryan. “We bought machinery, we bought crane systems, we bought lasers, we bought press brakes—we invested in engineering software, office software, and computers—but it was all at bargain basement pricing.
“We were looking at a 10-year plan, so that when the recession ended, we would be the best on the block. Other companies would be damaged with no advancements and no engineering, and we would be ready to take over a lot of business.”
Bryan says they were also able to gain market share during the recession by being willing to take smaller orders without raising unit prices as many of their competitors were doing.
“Our competition was increasing their prices 20 percent to 50 percent because of smaller production runs, but we were willing to take the small quantities for the larger quantity price,” explains Bryan. “When we came out of the recession and everything got back to normal, our name was out there. We took over hundreds of thousands if not a million dollars of new business. It was an investment in our future.”
Both Bryan and Greg see many of Farris Fabs’ customers beginning to bring manufacturing back to America as other countries begin to see their own standard of living rise and the wage advantages they have enjoyed versus America begin to erode. He also says that the pro-business climate in North Carolina is a big positive for his company, as is his location in Cherryville.
“Cherryville’s downfall makes it great now,” says Bryan. “There is low cost land, and the county and the state really want to work with you here. This is considered an out-of-the-way place, but how out of the way is it really? We’re only just a little over 40 minutes from the Charlotte airport.”
The Cherryville location also allows them to tap into a pool of experienced skilled labor in Gaston, Lincoln and Cleveland counties. Bryan says the company can even attract workers from as far away as Rutherford, Catawba, and Mecklenburg counties. But he goes on to say that finding employees with the skills they need is still the biggest challenge they face today—even more than increasing operating costs and increasing health care costs.
“A lot of manufacturers have big buildings and great equipment, and we have all of that,” adds Bumgardner. “But we truly believe in our people and building teams. It’s not just a buzzword for us. We know about the people that work here. We know about their husbands, wives and their kids. We’re concerned about them. So it truly is a big family.”
Looking to the future, Bryan wants to diversify without straying too far from their core expertise. He sees growth opportunities in the aerospace industry as well as potential opportunities from future natural gas exploration and production activities in North Carolina. Farris Fab may also explore building products of their own rather than just supplying parts for other companies’ products.
“There is great opportunity here because the South is a growing place,” says Bryan. “Probably 95 percent of our business is done within five hours of Cherryville. Manufacturing is not that big in the Charlotte area itself, and we need more emphasis on manufacturing here, but it is still growing, you just don’t see it on every corner.”
“Companies are starting to bring operations back from overseas for greater control,” Bryan concludes. “Mexico does a great job when they can set up something repetitive, but when you need to make it fast, efficient, with high quality, and in smaller quantities, you can’t beat America. We are the best in the world.”
A polymath, derived from the Greek polumathçs “having learned much,” from polu- “much” + the stem of manthanein “learn,” is a person of wide knowledge or learning, whose expertise spans a significant number of different subject areas. Such a person is known to draw on complex bodies of knowledge to solve specific problems or, as here, to bring broad perspective to the interpretation of historical events.
While the term is most often used to describe great thinkers whose expertise spans a significant number of different subject areas, in less formal terms, a polymath may simply be someone who knows a lot about many different things.
In either case, it would aptly describe Chase Boone Saunders. A Charlotte native and a fifth generation North Carolinian, Saunders is an attorney with the McNair Law Firm and experienced mediator, a retired N.C. Superior Court judge, a savant of many subjects, and an accomplished artist.
He graduated from UNC Chapel Hill, where he studied history and English, obtained his law degree from UNC as well, and has taken various financial planning and real estate courses at local universities and business schools.
In addition to practicing law, Saunders is a volunteer or otherwise involved in a number of professional, historical, business, civic and charitable activities, and has been widely recognized for his achievements in his profession and in the community. In his “spare time,” the passionate historian watercolors “the changing face of the two Carolinas.”
He is one of a growing number of Charlotteans heralding the zeitgeist to position Charlotte as the global hub for international trade on the East coast of the United States, advocating that increased commerce means greater prosperity for the region—more business, more jobs, more wealth, more innovation, more opportunities for all.
“We have the opportunity to build a new city—and that happens rarely in someone’s lifetime,” Saunders says straightforwardly and profoundly.
A Rare Opportunity
In his series of watercolors titled UPTOWN FROM, Saunders describes the city thusly:
“Charlotte is a work-in-progress, Information Age City ever creating its future by coupling a mid-East location astride pre-Columbian, Indian trade routes to the energy of her people. Named by her founders for the English Queen Charlotte, and later called the Queen City, her towers of commercial power are visible over a verdant forest canopy as the center of a region with significant business activity.
“Charlotte is a city built on hard red clay which only the value of hard work made productive. And it is no different today! Charlotte continues to welcome and acknowledge the successes of those who come here to work hard, live, and play.”
This Renaissance man has a clear vision and enthusiasm for Charlotte that is as evident as the sparkles in his eyes—and contagious.
“Charlotte is on the threshold of another boom driven by its strength as a logistics center. Representative of that is the new intermodal facility at the airport which makes Charlotte a ‘city of ports’ rather than a singular port city.
“And we have the opportunity to build that new city,” he maintains.
Saunders is a member of the Charlotte World Affairs Council and Charlotte World Trade Association, and a presenter and promoter of Regional Development Initiatives and the Charlotte 2030 vision theme: Create It, Make It, Move It with Central Piedmont Community College (CPCC) President Tony Zeiss and nationally-recognized urban planner Michael Gallis. He is founding member of the global vision leaders group, community and civic leaders who believe that time is of the essence.
He characterizes the group as a “21st century, open-source entity”—a collaborative forum linked by a common goals, common interests, and digital communications. Described more from the wealth of materials amassed at www.CLTglobal.com, and referenced with respect thereto, various group leaders have made and can be scheduled to make presentations of CLTglobal materials and updates can be requested and resources shared at the website.
This grassroots group is aptly named. Its goal is to advocate, promote and stimulate Charlotte and its surrounding region as a global hub of international trade—a great inland port that’s an economic powerhouse.
In the Create It, Make It, Move It initiative, the group highlights three key components of that goal: innovation and entrepreneurialism; manufacturing, especially advanced manufacturing; and a distribution infrastructure that moves goods efficiently and for a lower cost around the world.
While the goal may seem a stretch to some, there are real indicators that support the global vision for Charlotte. Charlotte is already a growing center of energy, finance and health care, and its standing as a transportation and distribution hub has been elevated exponentially with the merger of American and US Airways, the improvements to the airport and the new intermodal distribution facility.
Charlotte has also been recognized for its global competitiveness in an IBM and Site Selection magazine report which named Charlotte as one of only 12 U.S. cities to make its Top 100 Global Cities.
The seed of the global vision leaders group began simply enough two years ago, when Saunders shared his visualization of Charlotte through four distinct booms and busts with Zeiss at a Rotary Club meeting. Together, they decided that the time was right for Charlotte to be proactive and create a model for the city’s next 50 years—a vision for a new city. But what would that new city look like?
“To determine that, you first need to pull back and say where has Charlotte been? What is its history?” explains Saunders, a former president of the Mecklenburg Historical Association.
A Perspective on Charlotte
“Charlotte is a story of place and people,” Saunders starts out.
“At its most fundamental, Charlotte exists because of its location. It’s located at a crossroads of trading paths which were Indian paths, and before that, most likely, animal migratory paths.
“Charlotte was built on the high ground between two creeks. In Europe, castles would have been built on the location, but in America, we built towns. The crossroads of what is now Trade and Tryon was situated on a trading path called the Great Wagon Road that ran along the Piedmont from Philadelphia through Lancaster County on the east side of the Appalachians.
“The trading path, about 745 miles long, ran through Charlotte on its way to Augusta. In the early 1700s, it was the path that the new immigrants took south after they arrived in either New York or Philadelphia.
“In the 1740s and 1750s, the British had worked out a peace with the Cherokees so that the path could be enlarged into a road. And relations were friendly with the Catawba Indians, so the area around Charlotte and South Carolina was available for settlement.”
Saunders points out that the people who settled in the Charlotte area were independent and self-reliant—a defining force for its future.
“In the Battle of Culloden in 1746, the Scots were wiped out as a power in England,” Saunders explains, “and 40,000, 50,000, maybe even 60,000 Scots immigrated into America, settling in western Pennsylvania.
“Other settlers in the Colonies were the Scots-Irish, driven from Northern Ireland because of wool tariffs and other economic privation. They were Scots and Presbyterians. America was the place where everyone who wasn’t an Anglican was sent or was encouraged to go, and that included Puritans, Anabaptists and many different sects. All the religious dissenters—the people who thought differently—came here. When all the land in Pennsylvania had been acquired, they migrated south along the Great Wagon Road and settled our region.
All you have to do is look at the names of present-day South Carolina counties: York, Chester and Lancaster. All of those counties were named after western Pennsylvania counties.
“So if you think about the people who settled here, they were oftentimes run out of their countries. They had to travel across the sea, and then they had to travel down a wagon path with whatever they could carry. Only the toughest of people who had no other choice would do that,” remarks Saunders.
“That gave rise to a highly independent, fairly well-educated, self-reliant group of religious dissenters. And they also had no great love for the English. The end result was the Mecklenburg Declaration and Resolves in 1775 when Charlottetown left the Crown.
“This dislike of the English and the control the Crown exerted over the colonies led to widespread tensions and gave rise to the Regulators in Alamance County who rebelled against excessive taxes, dishonest officials and the building of the Royal Governor’s palace in New Bern. Locally, the major source of contention was the Vestry Act.
“That was a damnable piece of legislation,” asserts Saunders. “The Vestry Act required all landowners to pay money to the Anglican Church to support local Anglican preachers who were basically reporting back to the Crown on the status of things. Presbyterians were paying preachers from another faith to impose their practices on the Presbyterians—spying on them, performing their marriage and death ceremonies, and educating their children to be good little Anglicans.
“That didn’t sit well with the people. They decided they should create a town that would allow them to have a charter and be a political entity which could negotiate with the Crown. So in 1768 they created Charlottetown.
“By this time the Regulators were in open revolt and Governor Tryon needed a military force, provisions, and guns to fight them. So the people of Charlottetown struck a deal and provided troops and provisions with the agreement that the Royal Governor wouldn’t enforce the Vestry Act—and the people of Charlottetown could educate their children and have religious freedom.
“But afterwards, the English Parliament, who had to approve the agreement, refused to honor the deal. So the people decided they couldn’t trust the British. By 1775, concurrent with the Battle of Lexington, Charlotte declared itself independent through a declaration and a number of resolves; the event was called The Mecklenburg Declaration of Independence.
Boom No. 1: Gold!
“Charlotte’s location along the Great Wagon Road made it an important supply center throughout the Revolutionary War, but its first real economic boom came in the 1790s as gold was discovered in Cabarrus and Mecklenburg counties. The largest deposits of gold were found in rock from which it had to be extracted. That took skill. That brought in miners, financiers, and mining engineers and a mining industry began.
“There was enough gold here that it became the local specie and until the California Gold Rush, Charlotte was the leading gold producer in the nation. Charlotte petitioned for and received a branch of the U.S. Mint in 1838.”
At the turn of the century, the economy also depended upon the movement of raw materials and produce along the rivers where they could enter the Landsford Canal. Saunders cites canals as the area’s way to transport goods in the early 1800s but by the 1840s high technology was carriage by rail…the new transportation of the day.
“So forget canals,” Saunders says. “Charlotte had to have a railroad. Eastern North Carolina already had a railroad. Initially they didn’t want to extend it all the way to Charlotte, so folks from Charlotte started talking to people in Upstate South Carolina. Camden, which was the richest part of the Upstate, didn’t like the idea but Columbia was just getting started and they said it looked good to them.
“That caused the businessmen in eastern North Carolina to rethink running a railroad to Charlotte and, by 1856, Charlotte became the intersection of both a North-South and an East-West railroad—each of a different gauge—but we were nevertheless at the crossroads. Salisbury, the largest city in western North Carolina at that time, missed out on that important opportunity. It made Charlotte part of the East Coast supply chain and reinforced our logistical position.
“Cotton had been a significant crop in Charlotte, as it was in the rest of the South,” Saunders continues. “In the 1850s, cotton factors sprung up to handle the financial transactions, warehouses were built and the population of Charlotte doubled between 1850 and 1860. This was the real beginning of Charlotte as a center of commerce.
“The existence of two railroad lines meant that a factor could sell his goods—primarily cotton—either to the North or to the South, wherever the price was better.”
Charlotte’s railroads also featured prominently in the Civil War. “The North blockaded all of the Southern ports on the East and Gulf coasts,” Saunders explains, “and they could bombard any of the factories in the coastal cities, so the Confederacy had no safe place to make engine shafts for their blockade runners, or cannon balls or gun shells.
“Charlotte was inland but it was on the railroad, so the naval arms industry with its engineers set up the naval works for the Confederacy in Charlotte. After the war, Charlotte had some assets to restart its economy. Charlotte wasn’t burned down by Sherman’s troops like Columbia, S.C., and other southern cities, so we had a leg up on growth and the emerging new technology—electricity.
“Electricity allowed you to build and power cotton mills wherever there was a decent body of running water, but you needed engineers to set them up. Because of the Confederate Naval Yard, the engineers were already here.
“J.P. Morgan had the monopoly on electricity in New York and the Middle Atlantic States. In the South, James B. Duke, who made his first fortune in tobacco, decided that he would invest in the same technology and build a regional economy with it. Electricity powered mills, lighted buildings, lighted streets, and powered street cars and electric trains.
“As events unfolded, he was helped in this effort by the governor.” Saunders explains, “In 1916, North Carolina was hit by two Category 4 hurricanes causing more than three days of downpours. Tremendous flooding destroyed most of the bridges on the East Coast and in the mountains and flushed any of the towns along rivers. Just west of Charlotte, the Catawba River crested 47 feet above flood level.
“It was so bad that food had to be brought in by railroad to keep people from starving. As a result, the governor determined that couldn’t happen again and proposed to Duke that if he dammed up all those rivers, he could develop steam plants at the dams to help pay off the expense.
“So that’s how Duke came to control the authority of the dams from the mountains to the county line and ultimately down into South Carolina. It was the beginning of the energy business in the Carolinas. It was a wonderful stroke of luck for Charlotte. It gave us an energy business which is critical to our regional economy.”
Booms No. 2, 3 and 4: Military Base, Textiles and Banking
World War I brought Charlotte’s second economic boom. “With war clouds inevitably coming,” Saunders says, “Charlotte sensed an opportunity, sent a delegation to Washington and persuaded Congress to give Charlotte a military base.”
Camp Greene is built in just a few months on the acreage of the Dowd Farm and 60,000 men from all over the country arrived by train into Charlotte. “Each one of these soldiers,” says Saunders, “was getting $8.00 a month and $4.00 had to go home, but he had $4.00 he could spend here.
“The military base was a real boon to Charlotte. It brought in a lot of cash and all the support businesses associated with it but it also, importantly, brought awareness to the rest of the nation. Now there was a place called ‘Charlotte,’ and it was where their sons were.
“Because of the base and the growth of the local textile businesses, local banks thrived and a branch of the Federal Reserve was established in Charlotte in 1927. This meant that Charlotte was a financial player and was able to affect the flow of money through its branch of the Fed throughout the region.”
So by the 1930s Charlotte had regional roads, trains, electricity, telephones, radio, automobiles, and trucks. Commercial aircraft were the next technology.
“In the early 1930s,” Saunders continues, “planes are the ‘the next new thing’ and Mayor Ben Douglas decided that Charlotte was a growing city and needed an airport. By this time Charlotte was in the Great Depression and Douglas had to figure out how to put people to work. He got a grant from the Works Progress Administration and put the word out that Charlotte was going to build an airport and anybody who wanted a job should show up. People walked, thumbed and drove to the west side of Charlotte and built an airport.
“In the beginning there wasn’t much traffic at the airport, but it was important because of its location. Airmail and travelers moving between Florida and New York were the primary source of business. The airport would expand during World War II when it was taken over by the U.S. Army and made an essential part of the war effort. After the war, it would service a number of traveling salesmen selling goods manufactured in Northern companies and abroad throughout the region. By the 1950s, the airport joined the list of logistical resources which would contribute to the economy. Mayor Belk led efforts to expand it.”
“By the 1950s Charlotte was in its third economic boom as a leading regional textile center,” Saunders continues. “Threads, elastic, fibers, and fabric were being produced. Some of the materials were sent to Michigan to be put in automobiles. Some were used in North Carolina cities for the furniture upholstery. And much of it was used to make articles of clothing ranging from socks to pants to sweaters.
“The expansion of the textile industry led to growth in the area’s trucking. Charlotte’s location, which allows access to half the U.S. population within a day’s drive, gave Charlotte a tremendous advantage in distribution…another logistical, supply chain asset.
“You overlay that with the development of the interstate highway system in the 1950s and Charlotte gets I-85 and then I-77 with its easy to access I-40. About the same time, WBT led the way in building a huge transmitter with East Coast range and WBTV later came on to make Charlotte the broadcasting center for the region.
“Because of good transportation, a favorable labor environment and the airport, foreign companies start to make Charlotte their home. Especially German companies, which produced machinery and chemicals used in the textile industry, located in Charlotte and all of the surrounding counties in North and South Carolina.
“Charlotte’s fourth and most recent economic boom resulted in the city becoming the second largest banking center in the country. But it all started because some very entrepreneurial bankers decide they had to get bigger, and to do that they had to cross state lines.
“Hugh McColl smartly took advantage of a Florida loophole at a time when interstate banking not the law of the land, acquiring a trust company in Florida. Thereafter, he was instrumental in getting federal laws changed to permit interstate banking and began to aggressively acquire bank after bank in the Southeast and then, nationally. He led local bankers in perfecting this expansionary model. The Charlotte banking community grabbed market share and surprised the nation by becoming a huge force in the industry.
“There’s synergy to banks,” Saunders says. “Once you have banks, people and businesses start moving to where the money is. And they could do this by air.”
In 1979, the airport became a hub servicing many cities. Another piece of the logistics story fell into place.
“But the airport still had a modest model,” explains Saunders, “so in 1997, Airport Director Jerry Orr and transportation and logistics expert Michael Gallis started thinking of ways to grow the airport and increase freight flow to build revenue. They met with Norfolk Southern executives and decided, with city support, to build a state-of-the-art, 21st century intermodal facility…the most efficient location for the exchange of cargo among trains, trucks and planes. Norfolk Southern agreed, invested $92 million, and the intermodal facility opened at Charlotte Douglas International in 2013.
“With this intermodal facility, Charlotte has a unique asset for moving goods faster. This means the city is now a player in the global logistics supply chain. Outside of Long Beach, California, the three largest intermodal facilities are Chicago, Houston, and now, Charlotte, North Carolina. The new intermodal facility is a logistical Lamborghini. It is designed to race. It is designed to compete. Now it just needs a driver to realize its potential.”
The Age of Fulfillment
“The next big age is going to be the Age of Fulfillment driven by logistics,” asserts Saunders. “It’s the age of ‘I want it,’ ‘I want it now,’ and not only that, ‘I want it to spec.’ Silicon Valley is designing the software that will allow the customization of mass to make this a reality.
“Ford today can make a million variations of its F-150 truck because it can design and test all those variations on a computer. They want to let you determine the features you want and the computer sends the instructions to the machines that make the truck customized to your needs. And once it is made, today’s consumer wants it delivered tomorrow so that he or she is fulfilled!
“What’s also important about this customization revolution is that it is part of another movement, that of the end of inventory. Inventory has costs associated with handling, spoilage, deterioration, damage and storage. Ideally, a manufacturer wants to make it and move it to the end user without delay. That places a premium on locations where you can do that.”
“All of this is part of the re-shoring and next-shoring of American industry. That is what the new industrial revolution is all about. ‘Real nations make things,’ says Chris Anderson in his cutting edge text Makers. And it matters where you are located.
“The driver of Charlotte’s this next boom will center on logistics. Logistics means flow. The faster and less expensive the flow of anything, the more successful a business or a city can become. To do an inventory of local ‘flow’ assets, we need only consider our regional crossroads location and the companies involved in the ‘flow business’ using highways, planes, rail to Eastern, Gulf and West Coast ports, oil and gas pipelines, communications platforms, financial data pipelines, and big data pipelines moving all of the information supporting the cloud and streaming content to our smart phones. (This is why Google, Apple, Amazon, and Disney are in the region.)
“Add to that a critical, human resource pipeline, a ‘workforce pipeline’ to provide a trained workforce, which is being built by Heath Morrison of the Charlotte Mecklenburg Schools, Tony Zeiss of Central Piedmont Community College, Bill Anderson of MeckEd, and Phil Dubois of UNC Charlotte,” confirms Saunders.
“Access to these pipelines means businesses can operate smarter, faster and cheaper. Successful 21st century businesses, manufacturers and distributors must locate where they can get their stuff to the largest markets the fastest and the cheapest without inventory. Charlotte is one of those singular locations on the planet with all essential pipelines.
“Remember cities like Tyre, Athens, Corinth, Venice, Pisa, Genoa, Carthage? All of those places used their logistical assets to grow as acknowledged by the history books. Logistics matters.
“The country has been divided into seven economic megaregions. Not only is Charlotte in the center of one of them (the PAM or Piedmont Atlantic Megaregion), but she is also the only major distribution location midway between the North and South and the East and Midwest.
“We’ve got to leverage these assets to attract new domestic and international businesses. We’ve got to educate everyone and explain to them the opportunities which they present. This needs to be in the consciousness of our business and civic leaders,” says Saunders, clearly a man on a mission.
“We’ve got to have a strategy to leverage all business sectors with these assets because we are in a global competition for jobs and opportunity. Other cities are aggressively positioning themselves for the future. We have to realize we’re in a global competition,” Saunders emphasizes.
“And we need leadership with local solutions, because we can’t count on anybody to do this for us. We can’t count on Raleigh or on Washington to solve all of our problems. Charlotte’s going to have to come up with its own solutions. Business people have done it before.
“The task is doable. All we have to do is look how we got here. We started a city. We started a gold mining industry. We started a military base. We started a manufacturing and textile powerhouse. We started a banking center. We started an energy hub. These and other things were started by the people of this community who had a dream, who had a vision. All of it was the result of individual and collective creative energy!”
Creating a Global Crossroads of Commerce
As part of this focus on global commerce, the U.S. Commercial Service and the North Carolina District Export Council are gathering the U.S. Commercial diplomats from 14 countries in North and South America here in Charlotte in October to provide information about access to world trade.
From Saunders’ perspective, this is a propitious time in the history of this community because we now have the opportunity to play on a global scale. This has never happened before. The event in the fall will more formally introduce the foreign trade community to Charlotte, to be followed next year by the completion of the Panama Canal expansion allowing transit by the huge post-Panamax cargo ships.
They will deliver the commerce of the world to the ports (in most cases the newly expanding Port of Charleston) where it will transit by rail to Charlotte’s intermodal facility for further distribution. That will help make Charlotte a true inland port city in the center of a thriving global commercial marketplace.
“Creative energy, making things and moving things is what we have done in Charlotte since the beginning. Our tradition is summarized in the phrase “Create It, Make It, Move It.” It is the elevator pitch that sums it all up. We can use it to attract business and investment capital to the region and aggressively pursue domestic and international trade and business opportunities.
“There is no reason we cannot build a 21st century economic city-state with our assets to create a new city with new trade routes, using new technology and new energy to become a major player in this new age.
“It is time for Charlotte to envision how she will become a new regional city in a global marketplace. It is all about thinking BIG,” emphasizes Saunders. “Charlotte—a place where we create it, make it, and move it better and faster than anyone else. Why not here and why not now?”
When the nation found itself in a mortgage nightmare after 2008, American Security Mortgage Corp. held on tight and persevered.
It might have been the Charlotte-based firm’s sense of attitude and excellence. It might have been the ethics and strong banking reputations of both founders Jim Abbott and Phil Mahoney. Or it might have been the free hugs.
Yes, employees at the mortgage banker participate in endless hugs when they come to work each morning, all part of an “unwritten” rule of sorts that has done wonders to boost morale and employee support.
“Our employees are the best in the business, and basically most come to American Security Mortgage and stay. We have longevity—people stay and even retire with us,” says Mahoney, the 63-year-old president and CEO of the company.
The difference between American Security Mortgage Corp. (ASMC) and other mortgage groups is also the fact that they are mortgage bankers as opposed to brokers. Mortgage brokers traditionally receive any number of rate sheets for a vast array of mortgage products from wholesale lenders. However, mortgage bankers issue mortgages from their own bank account.
Employees of ASMC closely watch pricing every day to stay competitive, and, they know their products. That’s what enables ASMC to secure and provide the most favorable mortgage financing products and pricing to meet the unique needs of each borrower customer.
Celebrating 15 years of in the mortgage banking business, Abbott and Mahoney are proud of their book of business and the company’s strong referrals and repeat financing.
They are at the top of their game. As a mid-size mortgage banker they are continually ranked in the top 10 of mortgage companies in the Charlotte metro area. Mahoney says it all began by paying their dues in the Carolinas’ corporate banking world and having a strong work ethic.
A Powerhouse Pairing
Both Abbott and Mahoney began their mortgage banking careers upon graduating from college. They worked “in the trenches,” they are proud to say, calling on Realtors and homebuilders and assisting customers with mortgage financing.
Chairman Jim Abbott was with First Union Mortgage Corp. for 34 years and from 1980 to 1995 as president and CEO. During his tenure, First Union Mortgage was generally ranked in the top 10 in the United States in home loan originations and loan servicing.
Abbott had hired Mahoney straight after his graduation from East Carolina University in 1974, when inflation reigned and jobs were scarce.
“I graduated on a Friday and was at work on Monday,” remembers Mahoney. “I actually had the job three and a half months before graduation. Just having a job during the recession was very lucky. I’d say 60 to 70 percent of those I graduated with didn’t have a job. My father also helped me with a strong work ethic—he worked 12 to 14 hours a day.”
Mahoney’s stint at First Union lasted 10 years with Abbott serving as a strong mentor, good friend and occasional golf partner. Mahoney went on to serve for another 10 years at Wells Fargo as Southeastern U.S. regional loan production manager and later as group head of mergers, acquisitions and joint ventures.
“At that time,” says Mahoney, “I was flying about 100,000 miles a year. Jim approached me and said, ‘Let’s start a mortgage banking business so you can see your son grow up.’ Frankly, that sounded very appealing. The banking corporate world had given me a great platform and experience, but I was ready for something different.”
So in June 1999, the duo fronted the funding for ASMC and opened their doors in a 4,000-square-foot suite in the same glassy office building in SouthPark on Rexford Road in which they are located today. They had six employees.
Today, the company employs 143 altogether—64 in their Charlotte headquarters and loan office and the rest in their other locations in Fayetteville, Gastonia, Hickory, Indian Trail, Jacksonville, Clayton, and Lake Norman.
They handle residential mortgage lending in South Carolina, in Wilmington and Morehead City, and also have a satellite office in Northern Virginia. ASMC holds licenses in the District of Columbia, Maryland, North Carolina, South Carolina, Tennessee, and Virginia. They now occupy 18,000 square feet at their Rexford Road headquarters.
Together, Abbott and Mahoney have been a good match. Both have served as president of the Mortgage Bankers Association of the Carolinas. Abbott also received the Distinguished Service Award in 1990 from the Mortgage Bankers Association of America, its highest honor.
Given their breadth of experience, Mahoney says they are intimately familiar with all the lending and customer service components necessary for all parties in a home sale.
Mahoney is also frequently quoted in area publications about the mortgage industry, and its highs and lows. In December, he served on a panel at UNC Charlotte about the current stabilization in housing markets across the country and the role played by the government takeover of Fannie Mae and Freddie Mac, as well as the Federal Reserve’s investment in mortgage-backed securities during the recession.
Finding Their Balance Quickly
When U.S. home prices declined steeply after peaking in mid-2006, it became more difficult for borrowers to refinance their loans. As adjustable-rate mortgages began to reset at higher interest rates (causing higher monthly payments), mortgage delinquencies soared. Securities backed with mortgages, including subprime mortgages, widely held by financial firms globally, lost most of their value.
“In 2008, frankly if you survived, you were lucky,” says Mahoney. “Only the truly good people made it. We had clean balance sheets, no repurchase risks. We found our balance quickly.
“We understood that the world was changing and we had better be able to work within government regulations. We never ran our ship ashore. We’re smaller, more nimble, and we adapted quickly.”
In response to stricter mortgage requirements that stem from the 2010 Dodd-Frank Act, Mahoney says his company is working hard to, as he says, “figure out the new system and work it.”
“We’re a good size for Carolinas; nationwide we’d be small. We’ve probably added seven people just in compliance areas—just checking the checkers,” he adds. “The rules are just now being promulgated; the full effects are yet to be determined. It’s made credit more restrictive. But has it made mortgages impossible to get? No. People have to jump through a few more hoops now.”
After the 2008 financial crisis, many mortgage lenders introduced guidelines that went beyond requirements for mortgages backed by the government. Some now appear to be relaxing those guidelines.
Mahoney says, “The pendulum had swung too far. Now we’re just trying to find that equilibrium. As a matter of fact, we’ve even been able to drop the minimum credit score a number of points for a government-backed loan.”
Loyalty and Longevity
Mahoney says loyalty and longevity are the two factors that contribute to employee buy-in to the mortgage banker. ASMC is doing its best to keep customers happy and to keep employee retention high. The principals believe happy employees who can process and approve loans at great rates and good credit scores make for loyal employees.
The tone in the Charlotte headquarters is collegial. Three larger-than-life headshot posters of Mahoney are mounted in the hallway, his contribution to the office for hugs while he is traveling, he says, laughing.
All three of them have been defaced with a red grease pencil. In one he is an angel with halo and feathered wings, in another he is a devil with horns, mustache and pointed chin; in the last one he is a pirate, complete with eye patch and missing tooth.
“I’m not sure which one I like the best, but I hope they like that one,” he says, pointing to the angel. “We have tried to have fun, and when I say that I mean business fun.”
During the real estate turndown last fall, ASMC laid off six employees. “Then we then went to our top-earning 18 employees and said, ‘Will you take a 10 percent pay cut so we have no more layoffs?’ And they did, and we did.
“Those people were underwriters, supervisors, people in processing, closing, financial,” he says. “We allow people to have the whole story of what is going on here. We are good communicators. They gain real insight into this business.”
And his favorite way to gauge employee success? “We have a litmus test for them. When I put my arm around them and introduce them to a customer, when that employee walks away I don’t have to apologize for them. That’s been very successful for us,” he says.
“In this industry people tend to move around. The ups and downs of real estate finance and trends affect them,” Mahoney adds. “Look at the big banks—they have lost thousands of people in the last five to six months.”
“If you look at our company, we have a lot of longevity. When people come here they tend to stay,” he says. “We offer an opportunity to move up, good pay and good benefits. They have the kind of jobs where when they wake up the look forward to coming to work. I truly believe that.”
Doing It Right
American Security Mortgage doesn’t exactly rely on advertising for customers. Their one brochure for potential residential homebuyers is relatively spare. Web presence? They are everywhere, it seems.
Their message: AMSC was founded on the core belief that home loans need to be handled by a team of in-house professionals and that by controlling each phase of loan processing, underwriting and funding, they are able to provide clients with exceptional customer service and on-time closings.
They are strong words of promise, but they appear to be performing to them. Customers come to ASMC looking for variety of mortgage products, including conventional, jumbo, FHA, VA and USDA loans.
Customers seem to be as loyal as the group’s employees. Kathy Adair of Charlotte says it was ASMC’s quick work and Mahoney’s attitude that spur on the popularity of the company. “I think Phil’s customers believe he is a fair and reasonable mortgage banker, and that is hard to find in this day and age.
“Customers might not realize this, but he still uses common sense,” she says. “He is a very caring and compassionate man. His customers are his employees, his borrowers, Realtors, builders, and mortgage peers.”
Abbott is very purposeful about the company’s vision: “To be recognized by our borrower, Realtor, and homebuilder customers, our employees and our competitors as the model of excellence in residential mortgage banking.” He encourages employees to keep that vision in mind at all times. By keeping it top of mind, he believes it helps employees to better participate and act on it.
“We’re so grateful to be where we are now,” Mahoney says humbly. “There was a time when American Security Mortgage was an unknown. Although Jim and I are both fairly well known in the industry now, we still appreciate it when we pick up the phone and people allow us some time. We are so thankful to the people that have helped make it happen.”
Mahoney doesn’t think ASMC will ever make the mistakes so many mortgage bankers made six years ago. “It’s obvious now that some of the Wall Street crowd thought they had they had assessed the risk in different types of lending, and guess what? They were wrong. They didn’t assess different types of risk,” he says.
Both Abbott and Mahoney, and their hugging employees, see a brighter future in processing and underwriting home loans.
“We will continue to expand the business until we hit our ‘sweet spot,’ which is a size that still allows us to know all of our employees and customers,” says Mahoney.