Jim Kent’s rubber-soled shoes gripped the top rung of the 15-foot ladder as he worked to install a new jib crane at his Kent manufacturing plant.
His wife, Pat, had pleaded with him countless times to be more sensible about doing heavy work at TechniDrill Systems Inc. He was nearly 50 years old and president of the company. He paid other people to know how to do these things.
But TechniDrill’s success, Jim mumbled to himself on such occasions, was due to his hands-on management. Jim had started the company with a few partners after watching his previous employer go bankrupt in 1985. Thanks to his own hard work, TechniDrill was flourishing. Its net income had hit $200,000 on $1.8 million in sales-a margin that he considered respectable. Jim had sold the jobs, engineered the designs and installed new equipment.
Pat could nag all she wanted, Jim thought to himself, but he knew what was best for the company.
This time, on Oct. 14, 1994, she was right.
Jim doesn’t remember his foot slipping from the rung or the 15-foot fall. He doesn’t remember landing on the concrete in almost a sitting position, square on the base of his spine, and then slumping over unconscious.
A yelling worker brought Pat out of the office, where she worked as the bookkeeper. “I ran out and saw him with his head bleeding. I knew it was serious,” she says.
Jim was rushed to the hospital, where he was diagnosed with a broken vertebrae, fractured skull and a ruptured artery in his brain.
Doctors told Pat that they didn’t see any way he would survive. They’d do their best, but if he did make it, he’d never walk again. He might have brain damage.
Jim lay unconscious for a week and has no recollection of waking up. His health remained “touch and go,” he says quietly, for two weeks after the fall.
After surgery, six weeks in the hospital, and months of rehabilitation and old-fashioned rest, Jim did, in fact, recover almost fully.
But in the year it took to once again focus on business, the accident had nearly killed his 9-year-old company.
Jim Kent had made one of the most basic mistakes: He never set up the company to run without him.
Trained as a mechanical engineer, Kent left Firestone Tire & Rubber Co. in 1970 to become chief engineer for Phillips Precision Drilling, which built drilling equipment for the flourishing oil industry. Its reliance on a single industry that took a downturn, plus an illness by the owner, put the company out of business in 1984. The 54 employees lost their jobs.
Kent found a new paycheck-designing packaging for frozen pizzas at Stouffer Foods-but within weeks began getting phone calls from old customers asking where they could get parts for their Phillips equipment.
Along with three former Phillips co-workers, Kent and investor Vince Reinfeld founded TechniDrill to step into the void left by the old company.
Demand was strong; TechniDrill was one of only four companies in the United States that could build or service the specialized drilling equipment, which allowed a manufacturer to bore a hole in 14 minutes that would take up to three hours with standard machinery.
The first order was an 80,000-pound machine priced at $380,000. Too big for the company’s 3,600-square-foot facility, it was assembled in the parking lot.
As the oil industry regained its health, four more contracts worth more than $1.2 million found their way to the young company’s door.
That business financed TechniDrill’s move to a more suitable 11,000-square-foot plant.
Then in 1987 Kent got an inquiry about designing and building equipment to drill camshafts for Ford Motor Co. Ford said it would send an assessment team to determine whether TechniDrill was a worthy vendor.
A wave of intimidation washed over Kent when he realized the assessment team would be larger than his five-person staff. So he recruited four relatives and two employees from a pair of vendors to come in that day to help fill out the plant.
“We had everything but a dirt floor,” he chuckles. “I’m sure they weren’t impressed.”
Still, Ford awarded the company a $700,000 contract. TechniDrill has since supplied Ford with four more machines, and provided a cam shaft drilling system for a joint venture involving Ford, General Motors Co. and Chrysler Corp.
By 1994, TechniDrill was well-regarded in its niche, and services were in high demand from companies ranging from gun manufacturers to suppliers of aerospace landing gear.
Kent routinely turned away jobs because, while he now had 14 employees, he couldn’t handle the workload.
It was Kent who calculated prices, engineered designs and managed local contractors. He oversaw assembly, followed the job through installation and handled customer follow-up.
His influence was so strong that when he took time off, so did everyone else.
“When I went on vacation [two weeks every other year],” he says, “I’d have a plant shutdown.”
“It was impossible for him to do everything and be everywhere at the same time,” Pat says. “I told him, but a lot of times he didn’t like what I said.”
Kent was released from the hospital Dec. 1, 1994, six weeks after his fall.
He returned to the office Dec. 23, with two 9-inch rods implanted in his back.
“I really wasn’t able to get around,” he recalls. “I walked from the car to the office then laid down for 20 minutes to rest. Then I went out to the plant to talk to the guys for a little bit and came back to my office to lay down again. Then I went home. I just wanted to make my presence known.”
He returned full-time at the end of January, but still couldn’t focus on anything but the most immediate matters, like walking without a cane and getting by without the heavy pain medication he was encouraged to take. “It was very difficult to think when you’re on all of that stuff,” he says.
But the business screamed for his attention. Six employees, nearly half the staff, had taken other jobs.
“Everybody was saying, ‘Jim’s gone and he’s going to die. What’s going to happen to TechniDrill?’ So they left, and I can’t blame them,” Kent says.
At the same time, the company had taken on more work than it could possibly deliver. By mid-1995, TechniDrill had 14 jobs on backlog, worth roughly $2 million, most of it not priced accurately because Kent had never bothered to develop or teach a pricing system.
“Nothing was getting shipped,” Pat says. “Nothing was getting invoiced, nothing was getting done.”
Customers waited as long as six months for their orders, resulting in costly penalties that crushed the already troubled margins.
As the bills mounted, so did receivables. Again, the company didn’t have a strong collections process, and many clients withheld payment for as long as their shipments had been delayed.
Pat was fending off creditors for amounts as small as $5. “I don’t know how we ever paid our bills,” she says. “I had to make sure I had money for payroll, and we never missed it.”
TechniDrill did, however, stretch its $500,000 credit line.
Being close to the books every day, Pat was frightened by the situation, but she couldn’t get through to Jim.
“I think Jim knew what was happening but he couldn’t accept it. He didn’t want to admit it.”
Pat took her concerns to the other shareholders. Two own 30 percent, as Jim does; two others own 5 percent each.
“They turned a blind eye to it. They didn’t think it was as bad as it was,” she says.
Shareholder Howard Calhoun, an attorney with Calhoun, Waddell, Ufholz & Hunt in Akron, says that during Kent’s six weeks out of the office, he tried to keep a stronger presence by making almost daily appearances and keeping tabs on the big-picture finances.
Despite that, he acknowledges Kent’s absence demonstrated how dependent the business was on one person. “That created a crisis and we kind of limped along,” he says.
In addition to his own increased involvement, Calhoun brought in management consultants and temporary engineers and focused on improving TechniDrill for the long term. “I never had any question we would pull thr
ough.”
Kent’s recovery dragged on for nine months-until August 1995-until he felt strong enough to take control of the nightmare. He restored sanity to job- scheduling; fulfilled contracts; stepped-up collections; and tried to regain client confidence.
Financially, though, the company was still on the edge.
Bob Littman of SS&G Financial Services in Akron has been TechniDrill’s C.P.A. and business adviser since 1991. He realized the scope of the problem in spring 1996, during a routine monthly meeting when the issue of pricing was discussed.
“They knew they had a problem, but we didn’t have a system that could track costs at the time of the build. What they would say is, ‘Oh, look, we had a terrible loss here.’ By that time, the invoice was sent. It was too late.”
Kent was reluctant to make the changes needed to save the business. “I was here and working, but you do all kinds of things you don’t remember,” he says. “I was just not aware. People would say there were problems, but I wouldn’t listen.”
In early 1996, Kent’s partners finally started paying attention.
“We lost everything we had put into the company over 10 years,” Kent winces. “That was $1 million in equity.”
The partners hired a new vice president of operations from outside to take some pressure-and authority-away from Kent. One of his first actions was to fire the bookkeeper-Pat Kent-who from the start had been the only person talking about the money problems.
Littman agrees the situation was bad, but says the solution was worse. The new executive clashed with employees, vendors and customers. “Bringing him in was one of the worst things they did,” Littman says.
Perhaps it took watching someone help run his company to force Jim Kent to snap out of it. “Jim went into a meeting [with the shareholders],” Pat says, “and said, ‘Look, enough of this. This company is going to collapse if we don’t get him out of here.'”
After some eight months, the unwelcome executive was discharged, Jim was back in control, and Pat was back on the payroll.
Now came the hard part: Overhauling the business piece by piece. It was not only hard work; it went against his nature.
“I think ego is a big part of it. I wanted to do it all,” Kent says. “I didn’t really want to let go of anything.
“I can’t believe I didn’t see these things,” Kent laments today. “I don’t know. I guess I wasn’t paying attention. I was worried more about sales than managing the business. I’m a good example. I’m a bad example.
“I just said to myself, ‘What can I do to make sure this never happens again?'”
He had to start with the gut-wrenching process of evaluating every employee, many of whom were friends and former co-workers not suited to the job that now had to be done.
By 1996, though the company had grown to 30 employees, Kent estimates at least eight never should have been hired.
Some he let go; others he tried to work with. Some were in their 50s and had trouble finding new jobs. “I felt bad for them,” Kent says. “I still talk to them…. But I had to separate business and friendship. It gets to the point that to survive, you’ve got to run it like a business. I had to learn that.”
Also difficult was his realization that others could perform some responsibilities better than he. He had resisted, for example, workers’ attempts to move to a new method of deep-hole drilling. Giving in last year, he found that the process reduces labor time by a third. Now nearly all drilling uses this new method. “I wasn’t wrong,” Kent says. “I just wasn’t right.”
Other business improvements were more clinical, such as establishing a pricing structure and a system for cost analysis.
Today, TechniDrill, which is remarkably healthy, is a better company. Gross profit has increased 9 percentage points since 1994, and the net margin is up nearly 3 points in the same period.
Littman, who has seen his share of turnarounds, calls this one amazing. “There were some times,” he says, “when it was close to going under.”
Last year, TechniDrill repaid its credit line, and by April 1998, the beginning of its fiscal year, the company already had contracts worth $6.1 million, up from $5.7 million for 1997. Kent is projecting 12-month sales of $8 million.
Now, he’s expanding again, with a $225,000 addition that will double the plant’s size by early 1999. At that point, TechniDrill will hire 10 to 15 new machine tool assemblers.
He could have saved money by adding a second shift instead, but he selected expansion for two reasons, perhaps three.
He believes he has a better chance of finding good workers in a tight labor market by offering a day shift. Besides, a second shift would mean added management costs, he reasons.
The third reason? Kent still likes to be in control.
“I used to think it couldn’t run without me, but now it can,” he sighs. “That makes me feel bad sometimes. … I used to be terribly important. Now I’m not important anymore.”
Still, he admits, “I’m really uneasy about a second shift. We had [one] about a year and a half ago. I wondered about efficiency.”
Kent pauses. “I just like to be here. I just need to be here.”
